Remarks by Angel Gurría
Beijing, China, 12 September 2017
(As prepared for delivery)
Dear Premier Li, Madame Christine Lagarde, Mr. Jim Kim, Mr. Robert Azevedo, Mr. Guy Ryder, Mr. Mark Carney, Ministers, Ladies and Gentlemen:
It is my pleasure to be in Beijing for the second 1 + 6 Roundtable Meeting, to discuss the challenges and solutions for globalisation. I would like to thank Premier Li and the Chinese government for their invitation.
Today’s discussions are an important opportunity to take stock of the current global and geopolitical context, and exchange views on how we can ─ together ─ ensure that global openness and integration work for all.
While the OECD’s latest Economic Outlook forecasts a modest pick-up in global growth to 3.5% in 2017 and 3.6% in 2018, important risks and policy uncertainties remain. Global trade and investment growth are weak, productivity growth remains lacklustre, and inequalities of incomes, outcomes and opportunities are far too high. OECD analysis shows that the average income of the richest 10% of the population is about nine times that of the poorest 10% across OECD countries, up from seven times in the 1980s. Here in China, despite huge progress tackling poverty, especially in rural areas, inequalities remain relatively entrenched, with the richest 1% holding one third of total wealth.
All these factors are fuelling global discontent with our economic and financial systems which, in some cases, is evidenced in a backlash against globalisation. Rising protectionism and populism threaten to unravel decades of international co-operation and openness that have lifted more than a billion people out of extreme poverty, fostered cultural diversity, and facilitated the fastest convergence of per capita incomes in history.
We must protect the benefits that globalisation has brought, while recognising the legitimate concerns of citizens who have been left behind, without jobs, and without the skills they need to get one.
OECD Ministers took a deep dive into these issues at our 2017 Ministerial Council Meeting in June. We identified several complex and inter-related challenges that must be addressed to maintain open markets and shape a more harmonious and inclusive globalisation. Let me briefly highlight some of them.
First, we need to prioritise people-centred growth. This requires a wide range of structural policies, from social protection and active labour market policies, to strategic investments in education, skills, innovation and physical infrastructure. It means implementing the ambitious commitments set out in the Paris Agreement on Climate Change and the SDGs. It means equipping people to seize the benefits of rapid digitalisation and technological change. And it also means designing a new social contract for the age of global integration, with a focus on gender inclusion, migrant integration, early childhood education, ageing and strengthening ties between rural and urban areas, to name just a few. In China’s case, as it transitions to the ‘’New Normal’’, it is critical to ensure no-one is left behind.
Second, we need to fight the dark side of globalisation and restore trust in global economies and global integration. The proliferation of high-level corruption, tax evasion and tax avoidance scandals have taken their toll. We need to reverse these trends, complementing social reforms with policies that promote transparency and nurture a culture of integrity. We need an effective and fair global tax architecture, we need comprehensive and multilateral anti-corruption tools, we need instruments to tackle counterfeiting and regulate lobbying, we need robust standards in responsible business conduct and good corporate governance.
Third, we need to make trade and investment work for all and resist protectionism. We must keep building more inclusive global value chains (GVCs); supporting medium, small and micro-enterprises by providing better financing and lowering the costs of regulation; and facilitating access for Low Income Developing Countries (LIDCs). It is also crucial to empower our people with the skills needed to unlock jobs in the most sophisticated sectors. We cannot continue to base our key comparative advantage on low salaries.
The OECD is working with China and many other countries to address these challenges and to ensure globalisation works for all.
Through our New Approaches to Economic Challenges (NAEC) and Inclusive Growth initiatives, the OECD is revising its models and analysis to promote people centred growth. For example, our Productivity Inclusiveness Nexus study is filling evidence gaps on the link between slowing productivity and rising inequality. We have also launched a new horizontal project on harnessing digitalisation for inclusive growth and are supporting the implementation of the G20 Blueprint on Innovative Growth adopted in Hangzhou. In line with the inclusive growth objectives of the 13th Five Year Plan, our flagship Economic Surveys of China include targeted recommendations to improve access to high-quality education in rural areas and equip citizens with the right skills to benefit from rapid digitalisation and technological change.
Globally, the OECD is also working to restore trust. During China’s G20 Presidency in 2016, we took further steps to level the playing field with our G20-OECD Base Erosion and Profit Shifting (BEPS) Project. We took a significant step forward in this work with the launch of the BEPS Multilateral Instrument in June. The OECD’s Common Reporting Standard for the automatic exchange of tax information is also moving forward, with first exchanges beginning this month. Almost 85 billion euros in additional revenues have so far been identified through voluntary disclosure programmes and other initiatives.
We are also working on improving multilateral standards and agreements to make globalisation fairer and more inclusive. The OECD Code of Liberalisation of Capital Movements remains the sole multilateral agreement aimed at ensuring openness, accountability and transparency in cross-border capital flow policies. And our Anti Bribery Convention is the only international legally-binding instrument focused on the ‘supply side’ of bribery. We need all big exporters, including China, to adhere and effectively implement it!
In the area of responsible business conduct, the OECD MNE Guidelines and related Due Diligence Guidance, and the revised G20/OECD Principles of Corporate Governance provide globally-recognised standards on transparency, accountability and ethics. We are also helping countries to pursue a pro-competition agenda through tools like our Product Market Regulation Indicator, which we expanded last year with the World Bank.
Last but not least, on trade, the OECD’s Trade Facilitation Indicators and Services Trade Restrictiveness Index provide stakeholders with measurement tools to open up international trade. OECD analysis shows that fully implementing the Trade Facilitation Agreement would reduce trade costs for Chinese firms by up to 15%, supporting the ambitions of China’s One Belt, One Road Initiative. We are also advancing the mandate from Hangzhou to facilitate the Global Forum on Excess Steel Capacity and taking forward the G20 Guiding Principles for Global Investment Policymaking, which were endorsed in Hangzhou.
Ladies and Gentlemen:
Global openness and integration is not an end in itself, it’s a means to better lives for all. Harnessing globalisation for inclusive growth requires social policies that empower people to access opportunities. It also requires effective and robust global standards that create a truly level playing field.
China is critical to design, develop, deliver and implement the policies needed to make globalisation work for all. And China can count on the OECD’s support to make it happen.