DAVOS, Switzerland — Chinese Premier Wen Jiabao brought cautious optimism to business and government leaders pondering the worst financial crisis since the Great Depression as the World Economic Forum opened today.
Wen said China, a key market for companies in developed countries, believed it would be able to meet its target of 8 percent economic growth for 2009.
But, he conceded, it is “a tall order.”
“China remains on the track of steady and fast development,” he said, but added that in the fourth quarter, growth slowed to 6.8 percent.
Eight percent would be phenomenal in many countries, but would still represent retrenchment for China, where growth in 2008 hit a seven-year low of 9 percent. That broke a five-year streak of double-digit expansion.
Wen spoke to the gathering of 2,500 political, business and other leaders in the Swiss Alps after an opening day of debate over state-led bailouts and worries that efforts to counter climate change would fall by the wayside.
The annual meeting of politicians, well-heeled business leaders and well-meaning activists and celebrities gathered under a pall of gloom that has seen personal fortunes trimmed, companies shuttered and hundreds of thousands of jobs lost.
People are “depressed and traumatized,” Rupert Murdoch, chief executive of News Corp., said on the first full day of the World Economic Forum in Davos, adding that worldwide some “$50 trillion of personal wealth” had vanished since the crisis worsened with the Sept. 15 collapse of U.S. investment bank Lehman Bros. Co.
“The size of the problem confronting us today is larger than in the 1930s,” said billionaire philanthropist George Soros.
The scope of the decline was evident even among the gift bags that attendees — who pay thousands of dollars to participate — received this year. Instead of loaded personal digital assistants, fine Swiss chocolates and gadgets, they got basic, blue-hued pedometers instead, suggesting shoe leather instead of limos as a way to get to meetings.
Some of the biggest players contributing to the economic slide stayed away, some of them bankrupt or fired. So did top economic policy makers in U.S. President Barack Obama’s new administration.
Previous years saw a raft of A-list star power — Claudia Schiffer, Angelina Jolie and U2 frontman Bono. This year it’s Peter Gabriel and film star Jet Li.
Despite talk of more regulation and government intervention, there were pleas for free market.
“Don’t let’s lose sight of what creates wealth. It is open markets, it is capitalism,” Murdoch said.
Economist Stephen Roach gave a grim forecast for the global economic outlook, saying growth worldwide for the next three years was only likely to be about 2.5 percent — what the Morgan Stanley Asia chairman and longtime Davos attendee termed a “near recession.” That compares with 5 percent growth over the last four and a half years.
But even that was deemed optimistic by some participants.
Experts said stimulus packages by developed nations wouldn’t be enough to pull the world out of the crisis, with some calling instead for a coordinated fiscal response with a greater role for multilateral institutions like the Group of 20 wealthy and developing nations.
“Based on our experience, a capital injection is not enough,” said Heizo Takenaka, the director of Global Security Research Institute at Japan’s Keio University.
Not everyone welcomed the increasing role of governments, but Martin Sorrell, CEO of the British advertising company WPP, said government’s hand was necessary until the system can be restored.
“You will get government out when private industry has re-established confidence,” he said. “We all know government cannot run banks but at the moment no one has confidence in the financial institutions.”
The crisis already is drying up investment in developing nations, said South Africa’s Finance Minister Trevor Manuel. He warned that “hurried interventions” — in the form of huge stimulus packages — may “lead to naught.”
“We see a lemming-like approach trying to get to the precipice first without having any idea what that money will do.”
Among the 2,500 participants in Davos are over 40 heads of state who will discuss this year’s theme of “shaping the post-crisis world” in fields such as energy, climate change and free trade. They include British Prime Minister Gordon Brown, European Commission President Jose Manuel Barroso, German Chancellor Angela Merkel and Japanese Prime Minister Taro Aso.
Russian Prime Minister Vladimir Putin was to give the keynote address today.
In response to Wen’s appearance, dozens of Tibetans and others met near a Davos train station, chanted “Free Tibet” and held signs with similar political slogans. One read: “Change in Tibet W(H)EN?”
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
