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The 13th CF40-NRI Finance Roundtable

On June 18, 2022, China Finance 40 Forum (CF40) and Nomura Research Institute (NRI) jointly held the 13th China-Japan Finance Roundtable themed “A World of Drastic Changes: Global Governance and the Economies of China and Japan”.

With the world under the cloud of the pandemic and the Ukraine crisis, major economies are going separate ways on monetary policy, and global governance is faced with grim challenges. On top of these, China and Japan have their own headwinds to battle in both the short and the mid to long term. How can the two countries stabilize their economy, reduce financial risks, and cushion external blows? What are their major considerations on global economic governance and multilateral cooperation? The event gathered a group of distinguished experts to probe into these pressing issues.

The roundtable consisted of two sessions, the first moderated by CF40 Secretary-General Wang Haiming focused on the economic situation in China and Japan and global economic governance, where participants explored options of policy mixes for maintaining economic stability, safeguarding overseas asset safety, and improving international governance and cooperation. Yu Yongding, Academician at the Chinese Academy of Social Sciences (CASS) and Chairman of Pu Shan Foundation, Wang Xin, CF40 Member and Director-General of the Research Bureau at People’s Bank of China (PBC), Ryozo Himino, Executive Fellow at NLI Research Institute and former Commissioner of the Financial Services Agency (FSA) of Japan, and Kazuo Momma, Executive Economist at Mizuho Research & Technologies and former Assistant Governor of the Bank of Japan (BOJ), delivered keynote speeches.

Prof Yu discussed the “global imbalance” of international payments with a special focus on the trade deficit of the United States and China’s policy adjustments. He cautioned against the spillover of risks to China and Japan as a result of the Fed’s monetary tightening and urged East Asian economies to take measures to avoid debt crises. Wang Xin introduced recent moves by the PBC to boost the Chinese economy and domestic consumption and explored the role of supply chain decarbonization in improving global governance.

Ryozo Himino expressed concerns over increasing deglobalization sentiments as a result of the Ukraine crisis, especially from a financial point of view. He foresaw future global supply chains to be, to a large extent, shaped by the policy choices of China and the US and suggested building more resilient, multi-layered supply chains. Kazuo Momma talked about major challenges facing the Japanese economy, both in the short term—especially against the backdrop of Fed tightening and a depreciating Japanese yen—and in the mid to long run including a shrinking and aging population, and proposed policy recommendations accordingly.

The second session revolved around the economic transformation and financial stability of the two countries. It was moderated by Tetsuya Inoue, Chief Researcher of the Nomura Research Institute. What lessons and experiences can China learn from Japan in pricking the real estate bubble and disposing of banks’ non-performing loans? How can the two economies become less reliant on traditional growth models? And how can finance play a better role in enabling economic growth under new models? Four keynote speakers provided food for thought, who were Xiao Gang, CF40 Nonresident Senior Fellow and former Chairman of China Securities Regulatory Commission (CSRC), Gao Shanwen, Member of CF40 Academic Committee and Chief Economist of Essence Securities, Nobuyuki Kinoshita, President and CEO of Tokyo Financial Exchange and former Executive Director at the BOJ, and Shin-ichi Fukuda, Professor at the Graduate School of Economics of the University of Tokyo.

Xiao Gang reiterated the importance of financial stability with a review of past episodes of financial crises across major economies, pointed out new challenges facing China today and suggested several measures to protect financial safety. Gao Shanwen, speaking on “Structural Transformation of the Chinese Economy”, shared some of his data- and fact-based observations of China’s economic growth trajectory and model. In his eyes, China’s economic transformation is oriented toward high-end manufacturing and the service sector and is mainly led by the private sector.

Nobuyuki Kinoshita, whose presentation themed “Non-Performing Loans in Japan: Background and Coping Strategies”, offered a series of pragmatic recommendations for China to handle bad loans based on Japan’s experience, including speeding up the exits of zombie firms and improving institutional arrangements with a proper order of priority. Shin-ichi Fukuda’s speech centered on “Transformation of Economic Institutions and Financial Stability”, in which he combed through Japan’s economic development over the past decades with a focus on bad loan disposal and its implications for the financial market and growth, and envisaged possible ways for the Japanese economy to get out of the current quagmire.

This is the latest episode of the CF40-NRI exchange program that is carried out on an annual basis.