Former US Treasury Secretary Hank Paulson said nothing new. Robert Zoellick gave his standard World Bank speech. I was all geared up to write about how global conferences such as the Boao Forum in Hainan earlier this week don’t live up to their billing as thought leadership forums.
You know the scene. Just as Stanley Fischer, central bank governor of Israel (and former chief economist at the World Bank and first deputy managing director at the IMF) was commenting during one panel that the eurozone could lose a few member states, the gentleman seated next to me started to drool, as he snored. Loudly. I learned a lesson there. When conference attendees remove their shoes, beware. They are settling in for a nap.
The truth about such forums is they are about the business done in the hallways between sessions, and the private dinners and drinks late at night. They are about access to bigwigs. Little of significance is said during the actual speeches and panel sessions. And if I had just written that, you would think: so she's just discovered this truism?
Then day two of the conference rolled around, and a panel I was moderating began. It was on shadow banking. I asked the hush-inducing question of whether private lending could come out in the open given the complicated case of Wu Ying. She was once the sixth-richest woman in China, but she stands accused of illegal fundraising and could face the death sentence for it. I expected no answer. What I got was impassioned speeches in Mandarin, raised voices, applauses and a standing room only ballroom by the end of the panel. You could count the foreigners on one hand. It was all in Mandarin, with me receiving delayed and sometimes startling translations.
The gist was no different from what Zoellick had said in the previous panel: China needs to broaden its financial sector. But the passion was personal. Saying that regional regulators need to step up, that money lent to widget companies shouldn’t end up in real estate speculation and that communities should lend (think credit unions) is commonly heard in private, not while CCTV is broadcasting. Ma Weihua, the governor of China Merchants Bank, even defended the reality that private sector lending means astronomical rates for high-risk borrowers, drawing the analogy of catching a taxi in a storm at midnight. The driver wouldn't charge the meter rate. He'd command three times the going fare and you would pay it to get out of the rain late at night.
The morality of that is debatable, but the reality is inescapable. And that is what made this panel so surprising. It was a determined effort to tackle the truth. To talk openly. To seek solutions.
Kittiratt Na-Ranong, the deputy prime minister and finance minister of Thailand, had attempted such open dialogue the day before at a luncheon session on Asean. I attended because I’ve interviewed him before, and know he’s willing to answer aggressive questions.
But none of his peers so much as blinked an eye when he said that a common currency among Asean countries was a bad idea. He pointed to Thailand's experience during the 1997 Asian financial crisis. The ability to float the baht is what got Thailand back on track. But even when the moderator repeated his statement, and called for a comment from his fellow panelists, they ever-so-diplomatically declined to utter a meaningful syllable. Abdullah Ahmad Badawi, the former prime minister of Malaysia, Hoang Trung Hai, deputy prime minister of Vietnam, and Imron Cotan, ambassador of Indonesia to China, didn't want to be drawn into substantive conversation. Rather, they were content to make puff speeches about how there will be Asean financial unity by 2015; but they didn't talk specifics. Leave the goal generalised and accountability is of course harder to pin on anyone.
I'm not naive. Such vagueness has come to be expected at conferences where global decision makers whisk in on their private jets and depart quickly. Kudos to Boao in attracting the who's who of movers and shakers. But a certain level of self-analysis and rigorous debate is required to make Boao more than just an exercise in face for China that it too can offer the world another matchmaking session.
Zoellick, for example, said that money that state-owned entities are able to borrow should make its way back "to the people of China to help them". He said it at a posh hotel and conference centre run by Cosco, a state-owned enterprise. The complex is a bit of a monstrous white elephant, clearly not used much outside the Boao conference, which is supposed to be about sustainable development. It's located in Hainan, which is now clouded by a haze of pollution. The hotels away from the well-guarded complex are surrounded by mostly-empty shells of over-development. The build-it-and-they-will-come mentality has left a once beautiful region mired in soot. In short, just 45 minutes outside the conference you have a real example of how not to develop. And yet this was not discussed.
What the panelists and audience members who asked hard questions and applauded controversial answers on the shadow banking panel I moderated demonstrated, is that people want to talk about the difficult decisions that need to be made. It's time to do that, around the world. China just missed an opportunity to truly lead this discussion.
