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Strengthening cooperation to promote the development of the high range Blue Economy

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The “blue” industry, especially the high range one, is one of the main development areas for the economy also in the near future.

 China, which has always tried to strike a balance between maritime power and terrestrial equilibria in the Heartland, is the right place to think – for the first time – about a complete water geopolitics, as well as a real global industrial project.

The products that will be the axes of the new future technological revolution will increasingly come from the sea: energy, fast transport; rare metals, but also the most common ones; desalinated and processed water; DNA for study purposes and for medical applications, as well as oil and finally various traditional and non-traditional forms of food.

 If, from now on, we create a global market for the Blue Economy, we will have safe and peaceful world development. Otherwise, if we repeat the old land struggles on the new sea – possibly with the same violent acquisition logic – we will have such new wars that the experience of land clashes cannot even make us imagine.

The Earth is finite and limited. Now we have to work on the sea, but we have to do so all together peacefully and with win-win actions.

 It is estimated that the most environmental-friendly marine industry is currently worth 1.5 trillion US dollars and it is expected to be worth at least twice as much by the end of 2030.

Nowadays China dominates in all these blue economy areas. China’s fishing in foreign waters accounts for 44% of the world’s entire product and the same applies to ocean fishing, which accounts for 52% globally. This also holds true for China’s marine wind energy which accounts for 20% in the world. Also 50% of all the most active ports in the world are Chinese. Unfortunately, China also holds negative records such as 56% of all rivers polluted by plastics in the world.

Half of the world’s industrial fishing is Chinese. Hence, nowadays, China is already the world’s largest sea farmer.  It has already organised the exploitation of its largest marine area for deep-sea mining, thus focusing on a deep-sea area that is four times the size of Switzerland.

 Either you do good business with China in these areas or it is better staying at home.

 Therefore, it is necessary to think about a sea “Silk Road” and not only to reach the Mediterranean.

 A Silk Road to quickly change the whole paradigm of the world economy.

Hence, at the same time, it will also be necessary to reduce polluting emissions and possibly start the construction of many ocean parks, with a view to making the sea recover the products that are extracted from it.

 Fixed cycle of nature, stability of economic cycles.

 Among the companies in the various sectors of the Chinese Blue Economy, the collaboration with selected companies will be particularly useful both for the actual production of marine materials and for environmental protection. It should be recalled that the latter is a side of the Blue Economy coin. China does not think that environmental protection can be separated from the extraction of marine products.

 In Europe, the Blue Economy system is still in the development phase. Hence the figures are still quite small: in 2017, the turnover of the whole sector was 658 billion euros, with a gross profit equal to 74.3 billion euros and a number of employees amounting to 4 million throughout the EU-28.

 Within the European framework, the Blue Economy envisages the usual sectors of the Chinese one, albeit with a specific focus on underwater defence, which in China is calculated separately, in addition to putting all marine biotechnologies into a single category. The EU also envisages sea renewable energies as the greatest sector for future development.

 The traditional European demography is another factor to be considered: 45% (214 million) of the EU population lives on the coasts and the Northern ones always record a higher GDP than the Southern coasts.

 The successful European activities in the Blue Economy are still the traditional ones: tourism, spa and health services and some standard biotechnologies.

Obviously there are also maritime construction and repairs, but in specific areas of the European coasts – activities that now tend to be off the market.

Hence an EU Blue Economy linked to labour-intensive technologies, with insurmountable natural differences in the maximum use levels of the various areas.

 Never as in the case of the Blue Economy do large expanses and boundless areas count – all the dimensions that, as Hegel said, have always been lacking in the physical and geographical dimension of the Eurasian peninsula.

 The Jews called the Mediterranean “the Great Sea”, but this expression does not describe its physical dimensions, but only its historical and cultural ones.

Furthermore, coastal tourism in the EU is worth 54% of all “Blue” jobs and it is still growing, while the transport-related marine economy sectors are decreasing and the remaining maritime sectors are growing very slowly or are stable.

 The problem lies in the fact that the Blue Economy is a global project for transforming the production systems and lifestyles. It is not just a matter of hotels by the sea or deep-sea fishing.

For the EU – which is not a Blue competitor of China, but an area of possible integration of tasks and functions – the living resources of the sea still account for a mere 14% of all “Blue” jobs in the EU. It is, indeed, a very low percentage.

 The extraction of metals from the seabed is scarce in the EU. It accounts for 4% of employment in the whole Blue sector.

Clearly this also includes oil and gas. And both sectors are declining in terms of profit and investment.

There are 600 active offshore platforms in the EU.

 Shipyards account for 8% of employment in the sector, while the maritime product from seaweed processing is very low, with China already accounting for 46% of the world market and with only 6 EU projects currently active for aquatic biomass.

There are only 11 major desalination plants in the EU, mostly owned by large multi-sector companies.

Moreover, we should never neglect the coastal control of climate change, which can become a big global industry.

However, since the time of the report by the Club of Rome that, in 2009, invented the very concept of Blue Economy, his author, Pauli, has always stressed that the Blue Economy is part of the Green Economy – which is always a sustainable practice – and that it is based on new technologies.

 And here we revert immediately to China.

China has always been particularly interested in the Blue economy and in technological innovations, with the construction of marine areas of economic innovation. Just think about the Blue Economy Zone of the Shandong Peninsula, established in 2011, where, four years later, an integrated marine economic system began, which in 2020 is expected to become a great mechanism of ecological Blue economy with a high rate of innovative technology.

 In 2012, it was the turn of the Quingdao Blue Silicon Valley, a city for the new maritime scientific technologies.

Later China established other industrial areas for the protection of biodiversity and for new marine technologies, mainly in the Yangze River Delta.

 Since China’s 13th Five-Year Plan, the Blue Economy has been an ever-growing part of China’s GDP.

 Hence, from the Deep-Sea Dragon, a system for producing experimental deep-sea and surface platforms.

There are also the White Dragon’s explorations in the Arctic, albeit with a future research base in the Antarctica, and the Global Multidimensional Network for Ocean Observation, i.e. the network of stations that can be connected to all the scientific, climate, technological and energy observation stations that already operate in other parts of the two thirds of the Planet, namely those covered with water.

We should also recall the collection and processing of minerals extracted from the seabed.

In this case, the international regulations are already very detailed, but it is currently very hard to predict the aggregate effects, which are mutually reinforcing and with unpredictable percentages.

 Nor should we neglect the Great Lakes Observing System (GLOS), which is one of the 11 associations in the world that scientifically study the Integrated Ocean Observing System (IOOS).

It initially regards the Great Lakes region between the USA and Canada, but it is also much studied in China.

 And the network of Chinese marine sensors will certainly be connected to the large areas of global verification and study.

Hence the problem will increasingly be to control both internal and external waters at the same time.

With specific reference to the Chinese political practice, the 2018 great reform of the State Council, which placed sustainable development at the core of China’s planning, was decisive.

 Since then, there has been a Minister for Natural Resources responsible for all land and sea natural areas, as well as for the economic use of land and for the protection and rehabilitation of the most endangered areas or of the already polluted ones.

While in almost all Western countries these powers and responsibilities are divided between various Ministries and Administrations, in China the already efficient chain of command is in the hands of a single political body and of a single Minister. The maximum efficiency for a chain of command.

 Moreover, China is currently going through a particular phase: from the fast and traditional development to an even faster one, albeit characterized by high environmental, social, ecological and technological quality.

 A new “development way”, which does not imitate Western traditions, but places science and technology into a new vertical and fast political system.

 In the Taoist philosophical tradition, to which Mao Zedong essentially belonged, quality and quantity are not always separated in reality and can be analysed, but only through multiple analogies.

Said analogies never stop and cannot be logically separated.

Still today, this is the basis of the political and economic action of the Chinese Party and State.

 Not an ordinary imitation of capitalism, but new and free efficiency of a technical-scientific network that is directed with market criteria of mutual interest, completely open to controls.

Hence development based on technology but, above all, on the protection of the environment and therefore of human and animal life, as well as of the life of the elements – and all at the same time.

Once again, the Taoist tradition.

Obviously the protection from pollution is central to the Chinese Blue Economy project. Just think about the project for the ecologization of the Bohai Sea, started in November 2018 –  a three-year plan that will lead to the stable cleaning of 73% of all the Bohai Sea coasts.

 Rapidity, efficiency and no operational difference between environmental recovery activities and actions to make income from the sea.

 In essence, China’s Blue System is divided into two sectors, albeit always interconnected: development of innovative scientific and technological products related to the sea economy, and later, during and after the process, the integrated protection of the environment.

 Again to compare China with the European Blue Economy policies, it should be recalled that the EU seas host about 48,000 different species, while the Chinese seas cover an area of approximately 6 million square kilometres, ranging from tropical to temperate climate and up to the Great Cold climate areas.

 There are as many as 32,000 kilometres of Chinese coastline, with 22,629 species belonging to 46 phyla.

 Data not comparable with those of the Mediterranean, but certainly able to permit, from the very beginning, large economies of scale.

In the EU the per capita yearly consumption of fish is 24 kilos, compared to 41 kilos in China.

  It should be reiterated that China has already reached the highest levels of ocean fishing, both in terms of volumes and technologies, outside and inside its territorial waters. Moreover, technologies and economic returns can be useful to everyone.

Worldwide, the actions known as Our Ocean, started by Secretary of State Kerry in 2014, have led in the West only to 36 marine actions to the tune of 550 million euros, and to other commitments, albeit not yet funded, resulting from the 2018 Bali Conference.

Only 64 million euros were allocated for the Mediterranean, and 37.5 million for the South African and Indian Ocean coasts.

Obviously this is positive, but it should be recalled that Chinese investment is already much higher and not only due to the very large size of China’s Blue Area.

Last year the Chinese ocean GDP grew by 6.7%, thus reaching 9.3% of China’s total GDP. In 2018, 17.2 billion yuan were invested in the production of offshore renewable energy.

Excellent data, but this is just the beginning.

An additional 5.5% has been recorded for Chinese maritime transport, while the average yield of traditional fishing is slightly declining. Maritime tourism has already grown by 8.3% in China.

 An excellent rate, not even comparable with the rate in the EU, where tourism is one of the fastest growing sector in the Euro-Mediterranean Blue Economy.

Furthermore, while – without any particular use of advanced technology -the Blue Economy in the EU is still largely a possibility, in China it is already a well-established reality.

 As the philosopher and sinologist Jullien would say, possibility and reality are the same image, albeit seen in two different ways, but not necessarily at two different moments.

Currently tourism accounts for 61% of jobs in the EU Blue Economy. As we can see, it is an old business with a low average return.

The EU aquaculture is still a small sector compared to China’s huge size and technology, even in proportion to the population, but all the sustainable ocean exploitation programmes in Europe are postponed to an indefinite future and are at risk of funding.

  Renewable marine energies will reach 10% of European consumption in 2050-a percentage which already pales into insignificance compared to the Chinese ones.

Apart from bureaucratic and administrative efficiency, with the Chinese Blue Economy we are already on another planet. The Chinese scientists are already thinking about a Blue Economy divided into three major areas: the resolution of water scarcity;the search for deep waters and the cleaning of surface waters.

 They are also thinking about technological innovation, which is scarcely pursued in the EU. China has already developed 100 projects, for 10 years, with 100 million new jobs. All these projects have already begun.

 Finally, in China there will be an integrated marine economy between research and the balanced exploitation of resources.

In particular, the development sectors that China currently likes are deep-sea aquaculture with the use of cages; ocean satellite communication, which is optimal; marine biomedicine; desalination with advanced technologies; the search for minerals in the seabed; offshore oil exploration; research into marine antiseptic and medical materials; the production of renewable energies at sea.

 It is in these areas that China’s greatest ten-year effort will develop.

 The management of the Chinese sea is based on a simple concept: the ecological absorption capacity of the seas.

Protection is based on the criterion of sustainable development, not on the circular economy with a zero return rate. Everything is designed to reduce environmental waste.

Moreover, sustainable development between land and sea -which is another specific issue for China – will be the development and not just the preservation and conservation of coasts.

 The primary concept for doing all these things together is Harmony, a Confucian criterion that relates Man to his Environment.

Hence coordinated development between economy and society.

This is the same deep criterion of the “Silk Road”: a harmonious, global and strategic project that works only with market rules and is connected to a win-win logic, which ensures benefits to everybody.

 According to the latest data available, in China the companies related to the Blue Economy have grown at a pace ranging from 14% to 4%.

 For the time being, the regions directly concerned are the following: Zhejang, which is responsible for implementing the “Maritime Strategy of the East Sea” and focuses on ports and island economies.

 Then there are Guangdong, which hosts the companies operating in the integrated management of the maritime economy; Fujian, where cooperation through the straits is pursued; Shandong, which develops the “Blue Economy Zone of the Peninsula” to create a primary gateway to North East Asia, and finally Tianjin, where high-level maritime technology is put into practice.

As early as 2001, 14.46 million people have already been employed in the Chinese Blue Economy, with a one million increase every year.

The cooperation with Western companies is already in place both at financial level, so as to share cutting-edge technologies, and for the participatory development of regions and companies.

Furthermore, the Chinese Smart Ocean programme also envisages a network of sensors on the coasts, at sea, in flight and in the space.

 All this is designed to build a complete real-time monitoring system of all China’s seas and rivers –  a network that should connect to the equivalent systems in other parts of the globe.

 A turtle strategy that, according to Chinese tradition, epitomizes the North and the Waters, but is also invulnerable, due to its powerful shell.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Financial Bubbles in the Coronavirus Era

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There is reason to believe that the coronavirus will not be going anywhere soon. What is more, IMF experts warn that problems that existed before the pandemic will only worsen in the coming decades. One of these problems is the state of the global financial market, which is more susceptible to all kinds of financial bubbles than ever before.

When we talk about financial bubbles, we usually mean a sharp increase in the value of assets in an economic climate that has either stagnated or started to deteriorate. A similar situation is currently unfolding on the American stock market, which is experiencing an extraordinary rise in the value of hi-tech companies against the background of a record drop in GDP (by over 30 per cent in the second quarter of 2020) and a projected budget deficit (−15.5 per cent). This rise has been caused by three factors: 1) a soft monetary policy as a result of the need to service the rapidly growing public and corporate debt; 2) the huge liquid resources at the disposal of legal entities and individuals that are frantically looking for ways to make a profitable investment in anticipation of the increased risks and systemic uncertainties brought about by COVID-19; and 3) the speculative excitement caused by the technologies of the fourth industrial revolution. In order for us to judge how likely the optimistic sentiments of the global financial markets are to change, let us consider the impact of these factors separately.

The Debt as it Stands

A key element of the “new abnormality” that has characterized both the development of the global economy as a whole and the U.S. economy, in particular, is the debt model of economic growth. Investment and business activity has stagnated as interest rates around the world are hovering around zero, while the U.S. dollar (a key reserve currency) stubbornly refuses to depreciate and has even strengthened its value on the forex markets on a number of occasions, despite the fact that the situation at home is worsening. For example, U.S. national debt increased by $4 trillion in the first nine months of 2020, from $22.7 to $26.7 trillion. This is the largest increase in U.S. national debt ever. A considerable amount of this debt is financed through the extraordinary growth of the U.S. stock market, which currently accounts for over half of the combined capitalization of the world’s stock markets. A correction on the stock market (caused by an increase in interest rates, for example) could trigger numerous defaults on debt obligations. According to Fitch Ratings, more defaults were announced in the first five months of 2020 than in the whole of 2019 and may reach record numbers by the end of the year (the current record holder is 2009). And more than half of all corporate defaults around the world have occurred in North America.

Let us recall that the value of financial assets dropped by $50 trillion during the 2008–2009 crisis. However, central banks and the fiscal authorities compensated for these losses by injecting roughly the same amount of liquidity into the market. But the newly created financial resources did not jolt consumer demand, as had been hoped. Rather, they were largely swallowed up by various segments of the global financial market. International portfolio investments alone more than doubled in 2008–2019 – by $35 trillion.

The history of capitalism is not short on examples where the state tried to solve debt problems at the expense of the market, leading to the creation of financial pyramids. In 1720, for example, two giant financial bubbles burst at almost the same time in Europe. In an effort to clear themselves of the massive debts they had accumulated during the War of the Spanish Succession, the governments of France and England encouraged the growth of cash in circulation. This money was pumped into equity securities of Mississippi Company in France and the South Sea Company in England, which were joint-stock companies created with backing from their respective governments. The companies promised their investors huge profits that would come from overseas territories. The proceeds from the sale of shares were used to buy back government debt instruments. The stock market bubbles that appeared in France and Great Britain were the result of the governments trying to rid themselves of their excessive debt burdens and to stimulate their respective economies through inflation and debt-equity swaps. In a way, the current excitement on the U.S. stock market is reminiscent of the situation three hundred years ago.

A New Digital Bubble?

As of late September 2020, the four largest companies in the world by market capitalization were American digital brands: the computer giants Apple and Microsoft and the internet companies Amazon and Alphabet (Google). The total market capitalization of these companies has more than doubled this year to over $6 trillion. “Pessimists” believe that the U.S. over-the-counter (OTC) market is currently experiencing another boom similar to the dot-com bubble that burst in 2000. Meanwhile, “optimists” point to the huge success of FAANG stocks, Facebook, Apple, Amazon, Netflix and Google, as justification for the current market explosion. Shares in these companies outperformed the market throughout the 2010s, and prices have soared against the background of the pandemic. They currently make up 23 per cent of the total capitalization of the U.S. S&P 500 Index.

The growth in the market value of these companies is directly related to the activities of private and institutional investors around the world, who invest their savings in banks and various investment funds with their highly developed infrastructure in order to receive guaranteed profits. A number of retail investors have given an additional impulse to the dynamics of the OTC market by purchasing shares in newly created companies in the digital economy that have connected to free trading platforms such as Robinhood.

At the same time, the “optimists” believe that the comparisons with the dot-com bubble of 2000 are not entirely appropriate. A number of arguments support this claim: 1) the ratio between the market value of shares and the total annual profit is lower – 26.9 in September 2020 versus 45.8 in March 2000; 2) companies in the digital economy turn in real profits, as opposed to expected future returns; and 3) Nasdaq OTC hi-tech growth rates are more moderate – 23 per cent per year on average, compared to 43 per cent per year in the seven years before the tech bubble burst in 2000.

The dynamics of the market on the eve of the financial crisis in 2008–2009 were also characterized by an “irrational euphoria” similar to what we are seeing today. Back then, in the depths of the crisis, the G20 introduced a supranational financial monitoring system that was designed to prevent destabilizing spikes and falls in asset prices. However, experience has taught us that regulation cannot keep up with market innovation and is perennially unprepared for new challenges, primarily the digitalization of the global economy.

Technology and Politics

Historically, financial bubbles have tended to form whenever new revolutionary technologies have appeared, be it the invention of railways, electricity, automobiles, etc. Many new technologies have appeared during the Fourth Industrial Revolution (from smartphones and 3D printers to blockchain technologies and artificial intelligence) that have led to the mass automation of business processes and, consequently, the loss of jobs for a large part of the workforce, thus reducing production and operating costs significantly.

At the same time, we have not seen galloping inflation as a natural market reaction during this global crisis (all other things being equal) to the cheap money policy that has dominated the past decade. On the one hand, prices have been kept in check by the pandemic, which has pushed households and companies to hold onto their savings and made consumption more difficult due to the partial blocking of the economy. On the other hand, in the present context, a sizeable portion of the newly created liquidity is immediately swallowed up by the stock market, the U.S. stock market in particular, which continues to grow thanks to the advance funding of new technologies that are being developed at a fantastic pace. Exactly how long such a model can survive depends on at least three factors: 1) whether or not the soft monetary policy of near-zero or negative interest rates pursued by central banks will continue; 2) the ability of the market to adapt to new technological transformations; and 3) the smooth running of the international monetary system based on the U.S. dollar.

As for the latter, its functioning largely depends on the political system in the United States, and on the results of the November presidential elections in particular. One of three things will likely happen after that: 1) the current configuration of the global financial system will remain in place, with a few minor alterations here and there; 2) the existing system will undergo a major upheaval; and 3) the global financial system as we know it will collapse and a new model will take its place.

If the first scenario plays out, then the world economy will most likely continue to function in the same institutional format that we know today. If the second scenario prevails, then the radical reform of the existing system of global institutions could give the RIC countries (Russia, India and China) the bargaining power to insist on more favourable conditions for their integration into the world economy (for example, by moving away from reliance on the U.S. dollar in international transactions, promoting the use of their national currencies more actively, re-evaluating their positions within the International Monetary Fund and the World Bank alongside their partners in BRICS in order to effectively obtain a collective veto power, etc.). The third scenario would make it possible to create regional monetary and financial systems (as full-fledged independent financial structures of the emerging multipolar world) on the basis of various regional financial institutions that already exist, increasing the role of national currencies in mutual settlements and international financial instruments (or through the creation of new international liquidity in the form of national collective settlement monetary units).

Where Does Russia Stand amid the Global Turbulence?

The Russian economy demonstrated greater resilience during the first wave of the coronavirus crisis than the economies of both developed countries and the economies of its partners in BRICS. Despite the sharp decline in world prices for carbon fuel (Russia’s main export), in terms of key macroeconomic indicators, Russia has managed to maintain more stable positions than the G7 countries. As a result, the IMF predicts that Russia will have the lowest budget deficit among the world’s major economies by the end of 2020 (−4.8 per cent), with relatively low unemployment (4.9 per cent).

The Russian Federation is, in a sense, protected from financial bubbles as (unlike the United States) as it is more focused on developing the real sector of the economy rather than the financial sector. At the same time, the main problem of Russia’s integration into the global economy is the lack of stabilizing mechanisms to counter the volatile and hard-to-predict elements of the global financial market. We are talking here about the lack of a reserve currency, something that many countries use to protect themselves against external shocks, especially during periods of global crisis, when the demand for reserve assets rises sharply. Let us consider the following example. Russia has been a net creditor in the global financial system for years. As of year-end 2019, Russia’s external financial assets exceeded its external financial liabilities by $358 billion. Meanwhile, its investment income balance amounted to −$50 billion. This lop-sidedness is down to the fact that Russia places its international reserves in low-yield foreign assets and serves its foreign financial liabilities at higher interest rates. What this means is that the Russian Federation has been subsidizing those countries that issue reserve currencies for years while not always receiving adequate compensation and now living in economic isolation in the form of economic sanctions. In this context, Russia urgently needs to create its own reserve currency similar to the transferable rouble that the Soviet Union used in its trade with the Council for Mutual Economic Assistance in 1964–1990 and which existed long before other collective currencies (such as the special drawing rights, the European Currency Unit and the euro) were developed. This mechanism removed a number of inconsistencies at the regional level (the problem of imbalances in particular) that we are now seeing in connection with the use of the U.S. dollar as a means of carrying out international settlements, loans and investments around the world.

An oft-cited report by Goldman Sachs predicts that Brazil, Russia, India and China (the BRIC countries) will all be among the world’s top five economies by 2050 and, tellingly, the stock market is not the main source of financial resources for any of them. A common problem for the BRIC countries is the need to develop the enormous potential of their domestic markets by implementing large-scale infrastructure projects. A kind of dual system of monetary circulation whereby foreign trade is carried out using monetary units of account could help make this happen. Such a model would make it possible to separate the intrinsic value of money (its purchasing power) from its extrinsic value (its exchange rate). This is necessary to prevent newly created value (through the financial market) flowing from regions with low productivity to regions with high productivity. This is precisely what is happening in the Eurozone, and it is deepening the structural imbalances in the single European market. In addition, such a system would help resolve the issue of creating international liquidity without the need to move the national currency out of circulation to form unproductive national reserves or carry out speculative transactions.

Conclusion

The global economy has fallen into the trap of “new abnormality,” where incessantly creating money does not solve pressing socioeconomic problems. Other countries are following in the footsteps of the United States, repeating its domestic policy. This has resulted in the further deepening of social inequalities and imbalances at the national and global levels. Bearing in mind the fact that the United States’ share of global gross domestic product has been falling over the past 20 years, it is entirely possible that the U.S. dollar may be used less frequently in international transactions, even though the exchange rate proves favourable from time to time. To make matters worse, the unusual reaction of the markets to the monetary policy of the Federal Reserve System, along with the growing political tension in the United States, increases the risk of the destabilization of the current financial system. It should be stressed here that global economic leadership has always been tied to the leading countries consolidating their positions in both the economic and financial spheres. Clearly, we have reached the point where the only thing that will help stabilize the world economy in the long term is the more active involvement of the BRICS countries in the functioning of the global financial system.

From our partner RIAC

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Innovative ideas and investment opportunities needed to ensure a strong post-COVID recovery

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After the huge success of its opening day, AIM Digital, the first digital edition of the Annual Investment Meeting, continued to gain momentum as it reached Day 2. The three-day mega digital event, an initiative of the Ministry fo Economy, under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, concluded its second day with interactive activities that catalysed investment-generation, knowledge-enhancement, and local, regional and international collaborations.

Joined by more than 15K participants from over 170 countries, including 70+ high-level dignitaries from across the globe, the second day of AIM Dıgital witnessed a wide range of major events, from the Conference, Exhibition, Investment Roundtables, and Regional Focus sessions to Conglomerate Presentations and Startups competitions; all geared towards providing opportunities to achieve a digital, sustainable & resilient future.

In his keynote speech in the FDI session, Ministers Roundtable: Adapting to the New Flow of Trade and Investment, His Excellency Dr. Thani Al Zeyoudi, the UAE Minister of State for Foreign Trade, said: “It is my distinct honor to welcome you to the UAE’s first-ever digital edition of the Annual Investment Meeting. Thank you to everyone participating, including our panelists from the Governments of Costa Rica, Canada, Nigeria and Russia. Today’s discussion on how countries are ensuring the free flow of trade and investment could not be more timely, especially as the world grapples with the economic recovery and moves toward building a more resilient, post-COVID economy. The pandemic has significantly impacted global markets that created new challenges for trade and investment. While the challenges ahead are enormous, the UAE sees tremendous opportunity for governments and business leaders to work together through trade and investment to reshape policies, create new partnerships, leverage new technologies, and build a future global economy that is more diverse, inclusive, and sustainable. We know that FDI can bring new technology and know-how, lead to new jobs and growth, and is often the largest source of finance for economies – making today’s discussion even more imperative.”

He further stated that FDI has played a critical role in the UAE’s economic growth, with policies and measures in place, such as the Foreign Direct Investment Law enacted in 2018 to further open the UAE market to investors in certain sectors, and the issuance of Positive List, which allows for greater foreign investment across 122 activities, and increasingthe UAE’s FDI value by 32% in 2019.  He also mentioned that the UAE came in 16th of 190 countries in the World Bank Ease of Doing Business 2020 Ranking due to the country’s digitization strategies and promising business regulatory environment.

His Excellency Al Zeyoudi furthered: “The UAE is continuing to refine and implement policies that will maximize competitiveness, increase collaboration, and provide opportunities to facilitate trade and investment. Our aim is to become the #1 country for foreign investment, target zero contribution from oil to our GDP in the next 50 years, and support research, development, and innovation. The UAE’s trade and investment strategy is centered on economic diversification and focuses on enhanced investment in industries such as communications, Blockchain, artificial intelligence, robotics, and genetics. We are also initiating measures to strengthen our position as a regional leader in supplying financial and logistical services, infrastructure, energy supplies, and other services.”

He added: “The UAE believes that increased partnership and cooperation with governments and the private sector will be key to achieving our objectives. We view platforms such as the Annual Investment Meeting as instrumental in bridging the gap between nations and supporting global efforts to strengthen international trade and investment. Through this platform, we hope that participants will uncover new, innovative ideas and investment opportunities needed to build back better and ensure a strong post-COVID recovery.”

Furthermore, world-class speakers shared their viewpoints in Day 2 of the Conference highlighting Foreign Direct Investment, Foreign Portfolio Investment, Small and Medium-sized Enterprises, Startups, Future Cities, and One Belt, One Road, including H.E. Amb. Mariam Yalwaji Katagum, Minister of State, Federal Ministry of Industry Trade and Investment of The Federal Republic of Nigeria; Victoria Hernández Mora, Ministry of Economy, Industry and Commerce of Republic of Costa Rica; Hon. Victor Fedeli,  Minister of Economic Development, Job Creation and Trade of Ontario, Canada; and Sergey Cheremin, Minister of Moscow City Government Head of Department for External Economic and International Relations, among others.

Two Investment Roundtables were also held successfully at the second day of AIM Digital, concluding  with strategies to facilitate sustainable, smart and scalable investments. The Energy Roundtable was led by Laszlo Varro, the Chief Economist of International Energy Agency, which works with countries around the globe to structure energy policies towards a secure and sustainable future. Among the notable participants include H.E. Arifin Tasrif,  Minister for Energy & Mineral Resources of the Republic of Indonesia; and H.E. Gabriel Obiang, the Minister of Mines and Hydrocarbons of Equatorial Guinea. The Agriculture Roundtable was led by Islamic Development Bank Group, the multilateral development bank working to promote social and economic development in Member countries and Muslim communities worldwide, delivering impact at scale.

In addition, the second set of National Winners competed on Day 2 of the AIM Global National Champions League. Overall,  a total of 65 countries competed at this international startups competition. The top five global champions that will win a total prize of USD50,000 will be announced on the last day of AIM Digital.The competition was launched in a bid to help startups in maximizing their potential to attract funding and promote their business ideas to a global audience, getting utmost exposure and expanding their network.

Participating in the Conglomerate Presentation feature of AIM Digital is Elsewedy Electric led by Eng. Ahmed Elsewedy, its President and CEO. Elsewedy Electric began as a manufacturer of electrical components in Egypt 80 years ago, and Electric has evolved into a global provider of energy, digital and infrastructure solutions with a turnover of EGP 46.6 billion in 2019, operating in five key business sectors, namely Wire & Cable, Electrical Products, Engineering & Construction, Smart Infrastructure and Infrastructure Investments. As part of its commitment to sustainability, it has established green energy and smart metering projects across Africa, the Middle East and Eastern Europe.

The Regional Focus Sessions featured the regions of Asia and Latin America and explored the risks, challenges and opportunities for growth and regional cooperation.  Regional Focus Session on Asia brought together government officials and investment authorities from the ASEAN Member States and discussed their strategies to create a borderless and sustainable bloc that will push organic growth, as well as their approaches to gain resilience in the economy. Regional Focus Session on Latin America highlighted the significance of regional and international partnerships to combat the current pandemic and boost trade, investments and employment within the region.

Moreover, Country Presentations on Day 2 presented the outstanding features and investment opportunities in Colombia, Egypt and the Federal Democratic Republic of Ethiopia which highlighted the countries’ status as attractive investment destinations.

Another highly anticipated event in the largest virtual gathering of the global investment community is the announcement of winners for the Investment Awards and Future Cities Awards which will take place on Day 3 of AIM Digital.AIM Investment Awards will grant recognition to the world’s best Investment Promotion Agencies and the best FDI projects in each region of the globe that have contributed to the economic growth and development of their markets.   Likewise, AIM Future Cities Awards will give tribute to the best smart city solutions providers and for outstanding projects that have resulted to enhanced operational efficiency and productivity, sustainability, and economic growth.

Day 1 of AIM Dıgital welcomed the presence of globally renowned personalities such as the UAE Minister of Economy, His Excellency Abdullah bin Touq Al Marri who emphasised the vision of UAE’s wise leadership for the post-COVID era, reflecting great significance to enhancing the readiness of the country’s government sector, raising efficiencies and performance at the federal and local levels. Keynote remarks were delivered by H.E. Juri Ratas, the Prime Minister of Republic of Estonia; H.E. Rustam Minnikhanov, the President of the Republic of Tatarstan; H.E. Dr. Bandar M. H. Hajjar, the President of Islamic Development Bank Group (IsDB Group); H.E. Mohammed Ali Al Shorafa Al Hammadi, the Chairman of Abu Dhabi Department of Economic Development (ADDED); and Dr. Mukhisa Kituyi, the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD).

The UAE Minister of State for Entrepreneurship and SMEs, His Excellency Dr. Ahmad Belhoul Al Falasi, underlined in his Keynote Address for the SME Pillar, that it is crucial for Startups and SMEs to be given opportunities to bounce back from the impact of pandemic and provide a conducive environment that will empower them to have the capability of supporting growth and success.

The Global Leaders Debate featured prominent keynote debaters such as Armida Salsiah Alisjahbana, the Under-Secretary-General of the United Nations and Executive Secretary of United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP); Mohamed Alabbar, the Founder of Emaar Properties, Alabbar Enterprises and Noon.com; Mohammad Abdullah Abunayyan, the Chairman of ACWA Power; and Arkady Dvorkovich, the Chairman of Skolkovo Foundation, who discussed the strategies to restructure the economies in overcoming the consequences of the pandemic.

The first digital edition of the Annual Investment Meeting with the theme “Reimagining Economies: The Move Towards a Digital, Sustainable and Resilient Future, will be held until the 22nd of October 2020.

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Economy

H.E. Dr. Thani Al Zeyoudi: Our aim is to become the #1 country for foreign investment

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It is my distinct honor to welcome you to the UAE’s first-ever digital edition of the Annual Investment Meeting. Thank you to everyone participating, including our panelists from the Governments of Costa Rica, Canada, Nigeria and Russia. Today’s discussion on how countries are ensuring the free flow of trade and investment could not be more timely, especially as the world grapples with the economic recovery and moves toward building a more resilient, post-COVID economy.

As you know, the pandemic has significantly impacted global markets, creating new challenges for trade and investment. According to the United Nations’2020World Investment Report, global FDI flows are estimated to decrease by up to 40% this year, dropping well below their value of $1.54 trillion in 2019. This would bring global FDI below $1 trillion for the first time since 2005. Global FDI flows are expected to decline even further in 2021, by 5% to 10%, and only in 2022 do we expect to start seeing markets recover.

While the challenges ahead are enormous, the UAE sees tremendous opportunity for governments and business leaders to work together through trade and investment to reshape policies, create new partnerships, leverage new technologies, and build a future global economy that is more diverse, inclusive, and sustainable. We know that FDI can bring new technology and know-how, lead to new jobs and growth, and is often the largest source of finance for economies – making today’s discussion even more imperative.

For the UAE, FDI has played a critical role in our economic growth. In 2019, the UAE was the largest recipient of FDI in the region, largely due to our increased focus over the years on enhancing local conditions to attract FDI. With policies and measures in place, such as our Foreign Direct Investment Law enacted in 2018 to further open the UAE market to investors in certain sectors, and the issuance of our Positive List, which allows for greater foreign investment across 122 activities, the UAE was able to increase our FDI value by 32% in 2019. The UAE also came in 16th of 190 countries in the World Bank Ease of Doing Business 2020 Ranking due to our digitization strategies and promising business regulatory environment.

The UAE is continuing to refine and implement policies that will maximize competitiveness, increase collaboration, and provide opportunities to facilitate trade and investment. Our aim is to become the #1 country for foreign investment, target zero contribution from oil to our GDP in the next 50 years, and support research, development, and innovation. The UAE’s trade and investment strategy is centered on economic diversification and focuses on enhanced investment in industries such as communications, Blockchain, artificial intelligence, robotics, and genetics. We are also initiating measures to strengthen our position as a regional leader in supplying financial and logistical services, infrastructure, energy supplies, and other services.

The UAE believes that increased partnership and cooperation with governments and the private sector will be key to achieving our objectives. We view platforms such as the Annual Investment Meeting as instrumental in bridging the gap between nations and supporting global efforts to strengthen international trade and investment. Through this platform, we hope that participants will uncover new, innovative ideas and investment opportunities needed to build back better and ensure a strong post-COVID recovery.

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