At Davos, all eyes will be on China

Klaus Schwab has long been optimistic that China is on the right path. But as China enters what many are calling a new normal era of medium-paced growth, the 76-year-old founder of the World Economic Forum thinks Premier Li Keqiang needs to let the world know that China will continue to drive the global economy.

When the annual event takes place from Jan 20 to Jan 24 in Davos, Switzerland, Li will join French President Francois Hollande, German Chancellor Angela Merkel and dozens of other state and government heads and 2,500 other participants from more than 140 countries to discuss the world's key economic challenges.

Schwab will be chairman when Li addresses the forum on Jan 21.

"He will share his vision on China's future development and reforms, as well as the country's increasingly important role on the global stage," Schwab says.

Asked what searching question he might put to Li, Schwab gives no clear answer, but indicates that he is still keenly interested in China's economic prospects.

China is still the largest contributor to global economic growth, and the country's success is impressive, he says, adding: "However, with sluggish global economic development, we can't assume that China will remain unaffected."

It will be crucial to find ways to "unlock China's growth potential in a balanced and sustainable way", he says.

For both China and the world it is paramount that the country's economy remain stable and continue to grow.

"I applaud the efforts the Chinese leadership is undertaking in this regard. The transition from mass production to innovation-driven growth is underway, but challenges remain."

When Schwab married Hilde Schwab in 1971 the couple began an adventure that has turned the picturesque ski resort of Davos into a venue for the exchange of global opinions.

The forum has worked in and with China since 1979. Since then the country has undergone seismic changes and its economy has developed at breathtaking speed, having a profound impact on the global economy.

As all this has happened the forum has been a trusted partner for China, and its meetings in the cities of Dalian and Tianjin have served as opportunities for global political and business leaders to gain firsthand knowledge and build closer ties with their Chinese counterparts.

In recent years, as China's global clout has risen, Schwab has sent his son Olivier Schwab, born in the 1970s, to run the forum's Beijing operations. In return, China has recognized the importance of the forum and the platform it offers for dialogue.

For Schwab, Li is a trusty contributor of ideas and opinions. He recalls Li talking in Davos five years ago when he was still vice-premier. The same year Li, unable to attend the winter forum, delivered a written message to it.

Since Li became premier nearly two years ago he has taken part in Summer Davos meetings in China, and Schwab has even chaired a World Economic Forum speech Li gave in Nigeria last year.

"Premier Li is always a very welcome guest at our events," Schwab says. "As China's role has grown steadily in recent years, our partnership has deepened."

As China is discussing the new normal amid the country's economic slowdown, Schwab says the coming meeting in Davos convenes under the theme "The New Global Context". Complexity, fragility and uncertainty are potentially ending an era of economic integration and international partnership that began in 1989, he says.

"We are confronted by profound political, economic, social and, above all, technological transformations. They are altering long-standing assumptions about our prospects, resulting in entirely new parameters for decision-making."

Because this is a global phenomenon, China will not be spared from those challenges, economic or otherwise.

Schwab expects China's leadership will have to further strengthen social inclusion and work on mitigating the risks of fast economic growth and urbanization.

Switzerland and China have signed a free trade agreement and Schwab says he welcomes this step toward economic integration and the promotion of free trade.

Switzerland, while limited in size as a market, can be a good partner to help Chinese businesses make the transition from exporting mass goods to creating more value through high-end goods by emphasizing innovation, research and development, he says.

"Switzerland, in turn, will benefit from better access to China's fast-growing middle class."

Schwab also says China and the EU should act faster to forge free trade ties.

"The question could not be timelier," he says.

Schwab says the Davos meeting will be a perfect venue for exploring opportunities for strengthening Sino-European trade and a roundtable will be organized for trade ministers to discuss existing hurdles to free trade and finding a shared vision for overcoming them.

"In addition, we have invited the World Trade Organization to present its latest findings to our participants."

Fighting corruption is a focal point for the World Economic Forum and its constituents, and the efforts by President Xi Jinping, Li and the Chinese administration in this regard are welcome, he says.

"Our studies show that corruption hampers growth, weakens institutions and creates unfair imbalances in societies."

Looking at how complex and interdependent today's world is, as well as at all the changes the world faces, it is difficult to single out specific challenges, he says.

However, for him it is clear that the rising disparity in incomes and social inequality, and growing geopolitical tensions paired with diminishing cooperation as well as climate change and its potentially devastating impact are among the most pressing issues the world now faces.

"Perhaps the greatest and most persistent challenge is growing inequality. This trend is not sustainable, and if left unaddressed it threatens the very future of capitalism."

Government must lead by promoting a fair and equitable system, one that benefits all groups in society, he says. Business has a critical role to play, too, by investing in innovation and in the talent needed to create high-quality jobs and raise living standards.

China's leadership has set itself an ambitious agenda, he says. The country, with its economic importance and political clout, must play a role in preventing conflict, protecting the climate and creating stronger global growth. This can only be achieved through collaboration, he says.

"But despite all the challenges, it is possible. I've learned that those who are pessimistic about China's development and course are usually proven wrong."