In January, International Co-operative Alliance director general, Charles Gould, was in Beijing for the 2016 kickoff of the B20, the business advisory group to the G20, which China hosts this year. Here is his update from the event.
The tenor at the B20 Kickoff was provided by the recent movements in the Chinese economy. Net capital outflows from China were almost US$700 billion last year; another net $600bn is projected to leave this year. En route from the airport to my hotel, the driver spoke the entire way of the Chinese stock market, roiled by sharp declines recently.
On the day of the B20 kickoff, it fell another 6%, in spite of Central Bank intervention to the tune of $70bn that day alone, bringing the decline for the first month of the year to more than 20%. The market has 100 million investors and is the means by which many average Chinese have hoped to share in the economic growth.
In January, economists and business leaders, including the Alliance’s president, Monique Leroux, met at Davos, Switzerland for the World Economic Forum, a media-commanding venue that provides the narrative for economic stories for the year ahead.
In spite of the turbulence of January in the world markets, the Davos message was overall one of optimism, showing confidence in the growth of the major economies. In spite of the turmoil in China, the World Bank projects its growth for 2016 at 7% (down from an average 10% this past decade).
But the message of hopeful optimism emerging from Davos is not one of universal hope.
There is wide awareness of growing income and wealth inequality. The Davos message was surrounded by attention to a rising populism in many democratic countries. And at the B20 kickoff, Chinese vice premier Wang Yang acknowledged that “we must deliver the benefits of economic growth to all people”.
In the business community, restricted access to financing can lead to the same inequality of income opportunity that we see on an individual level.
Serving on the SME Development Task Force for the B20, we discussed the financing gap that exists for small and medium enterprises, a category where most co-operatives find themselves. It was in recognition of this that the International Co-operative Alliance created a Blue Ribbon Commission on Co-operative Capital, which has been evaluating current sources of co-operative financing and considering new means of ensuring inclusive finance.
This thoughtful work will be useful input to the B20 deliberations. Other task forces at the B20 will work this year on financing growth; on trade and investment; on infrastructure; and on employment.
The Alliance will provide input and feedback to each of these, to ensure that a co-operative perspective is shared. Trends toward aggregation of control are never easy to overcome, but the open conversation on the dangers surrounding the recent concentration of wealth are promising.
There is an opportunity for correction that does not need to be convulsively ideological, but can be responsibly argued and implemented. In fact, raising the tone of the discourse would be helpful. Co-operatives have not only the substantive experience to share, but also a history of mutual respect, of inclusiveness, and of solidarity that makes our message especially timely.
- This article was originally published by the International Co-operative Alliance here.