Time to stand and be counted

ASIA:A giant golden bull is the first thing you see when you enter the Sofitel hotel hosting the Boao Forum, an annual gathering of government officials and business leaders on the tropical southern Chinese island province of Hainan, reports CLIFFORD COONANfrom Boao, China

The sculpture is there to represent the current Chinese astrological Year of the Ox, but the bull neatly encapsulates the sentiment doing the rounds among delegates.

"Confidence is more important than money or gold. Today, I want to say that hope is also important. It's like a beacon," China's premier Wen Jiabao told the forum.

But it is not blind hope. China's economy was performing "better than expected" and the country's stimulus package was working, although he added that complete recovery would take more time because the global financial crisis was continuing to spread. The upbeat sentiment is evident in the gathering's title - "Asia: Managing Beyond the Crisis".

One of the star speakers at Boao is Nouriel Roubini, professor of economics at the Stern School of Business at New York University. The renowned economist is known for his grim view of the US economy, but is highly respected for the detailed way in which he forecast the global recession back in 2006.

He is less bullish on China's prospects than other analysts, as is fitting for a man who is known as Doctor Doom, and recently issued a far more negative outlook on China than even conservative economists have done, suggesting it could experience an L-shaped recovery similar to Japan in the 1990s.

"The crisis started in the UK and has become a global crisis. I suggest that instead of a decoupling, there would be a recoupling. This time the West was not just sneezing - the US has chronic pneumonia," says Roubini.

Housing bubbles in the US, Ireland, Spain and New Zealand showed it was not just in the US that excesses of leveraging and overspending were causing a problem.

"We have to think about changing the system of global economic imbalances. For the last decade, the US was consumer of first and last resort, but on the other side among surplus countries, producers of last resort were spending less than their income. This system of imbalances cannot continue - the savings rates of US houses have gone down to zero."

Chinese consumers must get their wallets out, is Dr Doom's message. "China's domestic consumption is half that of the US. While the US was over-consuming, I would argue that China is under-consuming," says Roubini.

There needs to be a reduction in savings and increase in spending in China.

Ireland was mentioned at Boao - usually in the same breath as the UK, the US, Spain, New Zealand, and Dubai, and the common thread was overexposure to the property market.

Representing Ireland at the conference was Ambassador to China, Declan Kelleher, who said there was still a lot of curiosity about Ireland in China.

"The key element that I try to push, and that successive taoisigh have pushed, is that Ireland is a very successful model over 35 years of economic development. It has a world-class record in software and technology and also we have gone from essentially a low position in Europe into a post-industrial success story," says Kelleher. "There is Chinese interest in how we've done this, as well as in our membership of the EU.

"The key messages globally are in premier Wen Jiabao's speech - an increase in domestic demand in China, certain Chinese numbers are on the way up, the domestic stimulus package is beginning to bite. He also said there was a clear need to be sober in assessment, but said globalisation links us all and no country is immune. He also stressed the importance of hope and the responsibilities of entrepreneurs to act with prudence and responsibility."

The rising confidence in China is amazing to see in action. Lou Jiwei, head of China's top sovereign wealth fund, China Investment Corp, had a swagger about him when he said he was looking to invest in Europe again, even though he felt slighted when EU officials expressed concerns about his fund's transparency and intentions last year.

"I have to thank these European officials.They saved me a lot of money. Now they come to me without conditions and I am beginning to consider making investments in Europe again," he said.

Forum chairman Zeng Peiyan, a former vice-premier of China who visited Ireland in that capacity in 2006, warned of inflationary risks as countries stepped up bailout efforts, including measures to combat deflation and address liquidity issues.

Zeng, now chairman of a new Chinese government think tank called the China Centre for Economic Exchanges, also displayed a strong degree of confidence when he demanded that Washington protect China's US Treasury bond holdings from inflation, and warned against trade protectionism.

Heng Swee Keat, managing director of Singapore's Monetary Authority, warned that the financial sector has run too far ahead of developments in the real economy.

"The challenge is to continue and possibly accelerate the reform and development of the financial sector so that the financial sector can play an active and constructive role," said Heng.

"We looked at savings, and for Asian markets, savings have grown from 33 per cent to 41 per cent since last year. We need to find better ways to recycle savings within the region, and financial markets remain the best way to channel savings within the region."

Heng spoke of the huge need in the region for social infrastructure such as social services, education, healthcare and other resources, and to fund those successfully, for savings to be channelled into them.

"Finance should remain the servant and not the master. We have seen how far the financial system became removed from the real economy. What is the true value of a particular product or service?" he asked.

Peter Clarke, chief executive of the Man investment group, addressed questions about the future of hedge funds.

"If the regulators had got together two or three years ago, they would have recognised that hedge funds posed a systemic risk to the financial markets," said Clarke.

"It didn't start with the hedge fund community - and the hedge fund community is not immune. It's important to note that hedge funds did de-lever. So where is the bottom for hedge funds? I suspect that it will happen in the second half of this calendar year. The future is uncertain for some hedge funds, and for some the future is less crowded.

"I like to think that it is less crowded for us," Clarke added, continuing that, in the future, "we'll be doing things differently".

A big hit at the conference was former US president George W Bush.

The Texan delighted the audience with his tales of having to deal with domestic issues, such as cleaning up his dog's mess when out for a walk.

He was also gracious about his successor.

"He wasn't my first choice as president but now the election is over, it shows what a great place America is," said Bush.

"East Asia is vital for the world economy. Fifty-five per cent of the world's economy is here.

"Wall Street got drunk and we all got the hangover. Maybe the next time there won't be as much booze," he said.

"The US has been hit hard, but we have the resources and the resilience to recover. We intervened early and aggressively. I'm not going to say how long this will go on, I'm not an economist - you know how economists say on the one hand, and on the other hand and on the third hand," he said, adding how confusing it was to listen to the complicated explanations of how financial instruments worked.

"During my eight years in office our trade with the world grew by 60 per cent and our trade with China tripled. It's important to reject isolationism. It's pointless to have economic discussions without China," said Bush.

Bringing freedom to Burma was a priority in the region, he added, while also calling for the continuation of six-party talks involving North and South Korea, Russia, China, Japan and the US, aimed at resolving the nuclear stand-off with North Korea.

During a question-and-answer section, Bush said that among the memorable events of his presidency were the Beijing Olympics and the APEC summit in Shanghai on the Monday after the 9/11 attacks on US targets in 2001, which he said provided an opportunity for him to show terrorists that they could not stop him travelling to attend the summit.

Other highlights, according to George W, included watching former Japanese prime minister Junichiro Koizumi singing Hound Dog at Elvis Presley's Graceland home in Memphis, Tennessee. He also recalled watching Jiang Zemin singing O Sole Mio.

"What is it that I always remember the songs?" he quipped.

There is much residual affection for the Bush family in China. George Bush snr was envoy to China in the early 1970s, and George W, known in Chinese as Little Bush, visited his father during his time in China and rode a bicycle through the streets, which were then almost exclusively full of two-wheelers.

There is a story about Deng Xiaoping meeting Bush snr as he was about to depart for Washington to become head of the CIA, and asking him whether he'd been spying on him the whole time.

The consensus among most at Boao is that the upbeat sentiment is a sign that the government's 4 trillion yuan (€ 450 billion) financial stimulus package is beginning to kick in, although some economists warn it may be too early to start calling a significant recovery.

But just you try telling that to the bull in the lobby.