Davos 2017: Chinese president Xi warns against trade wars - Day 1 as it happened

Graeme Wearden in Davos

from on 2017-01-17 23:11 (#295ND)

Rolling coverage of the opening day of the World Economic Forum in Davos

Earlier:

5.44pm GMT

The first day of the World Economic Forum is nearly over, so we're going to take a break. I'll be back if there are any major developments - in the meantime, here's our news story on president Xi's visit:

5.43pm GMT

Columbian singer Shakira, who collected a WEF Crystal Award last night, has been discussing her work building schools in the most downtrodden parts of the country:

"Sometimes we encounter a tremendous lack of infrastructure. No portable water in many cases, no electricity, no paved roads, so it definitely means that we have to work twice as hard in order to offer a quality education."

Not only that, but many of the children concerned are affected by violence or have lost family members.

5.10pm GMT

John Kerry also urged Europe to "believe in itself", and remember that European integration was driven by the need to stop European's killing each other.

"It's worked, folks!, said Kerry, adding:

"On the face of the planet, no assembly of countries has grown as significantly and powerfully as Europe.

5.06pm GMT

Away from Davos again, and European markets have closed for the day, with the UK the focus of attention.

A positive reaction to UK prime minister Theresa May's Brexit speech, notably the promise that parliament would be able to vote on any deal with the U, helped push the pound almost 3% higher, its biggest daily rise since 1998.

4.58pm GMT

President Xi's trip to Switzerland is already making headlines:

You know capitalism is in trouble when China's the leading free-trade nation in the world. #Davos pic.twitter.com/abpfGpiMit

4.40pm GMT

John Kerry, the outgoing US secretary of state, has cited the Iran nuclear deal as proof that engaging with other nations to deliver peace can pay off.

On his final trip to Europe before leaving office, Kerry told Davos that the Iran deal was one of the successes of the Obama presidency, and proof that diplomacy works.

There are now no longer 19,000 centrifuges spinning and enriching, there are 5,000, which is the agreement.

There is no longer a 12,000 kg stockpile that could produce 10 to 12 bombs. There's 300kg, measurable every day. And you can't build a bomb with 300kg.

Take Iran. If the United States were to decide suddenly that we're not going to pursue this, I bet you that our friends and allies who negotiated this with us will get together, and Russia, China, Germany, France and Britain will say 'this is a good deal, we're going to keep it.

And we'll have done a great injury to ourselves. And it will hurt for a year, two years, while the administration is there <cue laughter>.

4.05pm GMT

Hollywood Matt Damon is talking to the press about his Water.org charity, and the challenges in raising money.

We've tried humour -- a few years ago I went on a toilet strike for an entire year.

One of the first hurdles we've had to clear in the West is that it's very hard for people to relate to this issue. If you grew up in Europe, if you grew up in America, you've never been thirsty in your entire life and you've never been five metres away from a clean drink water.

You can go into a pub in the UK or America and buy a pint of Stella, and for that one pint of Stella, they will guarantee bringing someone in the developing world clean water for a month.

3.36pm GMT

S&P's Paul Sheard also believes President Xi genuinely wants to avoid a trade war (one of the key points of his pro-gobalisation speech this morning).

Sheard explains that China would come off worse than America if globalisation and free trade falters.

If you did go into a trade ice age, who would be better placed to survive it, economically? I think the answer is the US, because the US is a very large economy, resource rich, with a very large population.

China has got more to lose in terms of making sure that process of economic development continues than the US would. That doesn't make it a good thing to go that way, but just in terms of the relative economic costs, it would be higher.

It's not clear that Trump has the upper hand. You've got the mid-terms in two years. If it's like 'oh my god this guy screwed up', he's on a short fuse.

3.27pm GMT

Paul Sheard, chief global economist at S&P, says Anthony Scaramucci is on a one-man mission to explain Donald Trump's economic policies to Davos this week.

Speaking to me at Davos, Sheard explains:

Scaramucci went a long way at this meeting to clarifying, probably for many people, what the basic intent of the Trump administration is likely to be.

Trump's been talking about free - he's a big supporter of free trade - but he also wants to be fair trade.

Scaramucci gives insight in Davos: Trump committed to globalisation, open trade & NATO. https://t.co/HfzD78e0vV

2.48pm GMT

Away from Davos for a moment, and Wall Street has opened lower after president-elect Donald Trump's comments that the dollar was overvalued knocked the US currency lower.

In turn, a falling greenback plus higher than expected UK inflation and a positive response to prime minister Theresa May's Brexit speech - notably the line that parliament will be able to vote on any deal - has boosted the pound and pushed the FTSE 100 lower. The index is full of dollar earners who have benefited from the weak pound in recent months but are now heading lower as sterling strengthens.

1.47pm GMT

1.35pm GMT

IHS Markit chief economist Dr Nariman Behravesh agrees that president Xi's speech on globalisation and free trade was "very encouraging"; but the real test is whether he delivers on it.

President Xi gave a very rigorous and articulate defence of globalisation. Essentially, he said that we should not blame all the world's problems on globalisation and that the benefits outweigh the costs.

Very importantly, he made commitments about opening China up to more imports and foreign direct investment and making sure that China's exchange rate policy didn't destabilize the global economy. All this is very encouraging.

12.51pm GMT

Trump transition team member Anthony Scaramucci is speaking again - and insisting that the next US government doesn't want a trade war either.

Scaramucci says the president-elect wants a very strong relationship with China:

Scaramucci on China - "The new administration does not want to have a trade war."

Scaramucci - "President Trump could be one of the last great hopes for globalism."

0_o

And I started going through the crowd, and I thought 'oh my god, these are the people I grew up with'.

Hedge fund manager and Trump advisor Anthony Scaramucci says Donald Trump is more in touch with the working class while the elite are #wef17

I don't know when he sleeps.... We need to outwork him, and it's not possible.

If someone is willing to wait in the rain for eight hours outside an arena, do you think they're not going to show up and vote?

Donald Trump wants to reorganise NATO to better reflect the current global political climate, Trump adviser Anthony Scaramucci tells #wef17

Scaramucci on changing NATO: "Many people have renovated our homes, we've certainly changed our wardrobes since the 1940s."

12.04pm GMT

Environmental campaigners have welcomed President Xi's call for leaders to stick with the Paris Climate Change deal.

Here's Li Shuo, Senior Global Policy Advisor at Greenpeace East Asia:

"Given the current volatility of global politics, President Xi Jinping's address today in Davos helped calm nerves. His reference to climate change highlights a growing sense of China's international responsibility, and the country's evolving calculus towards taking action on the issue.

"As Mr. Trump drops President Obama's climate legacy, Mr. Xi might well establish one of his own. 2017 presents a real opportunity for China to rise to the challenge of responsible climate leadership. Having moved from climate villain to a reluctant leader in five short years over the first half of this decade, it's reasonable to expect China to become a true leader by its end."

11.48am GMT

The global elite who gather at Davos each January have waited more than 40 years for a Chinese president to address them.

And Xi Jinping was worth the wait, delivering a rollicking defence of globalisation that would have been unthinkable from a Chinese leader in the past.

"No one will emerge as a winner in a trade war," China's President Xi Jinping says https://t.co/CWwXmsZyb2 #wef17 pic.twitter.com/s65KuaBdOG

World's most powerful communist, Xi Jinping, argues for free trade at Davos, while president-elect of 'free' world argues for protectionism.

Chinese President #xi is playing Go, while May and Gove are struggling with noughts and crosses. UK needs a better class of politician. https://t.co/frZHpKL8kZ

Chinese Pres Xi relaxed & confident at Davos: making a strong call to the world to commit to globalisation https://t.co/Byo0RNJwhj via @wef

I am very much enjoying watching a bright and thoughtful man speak with consideration https://t.co/ZY0q8Sg6vw

@louisabojesen nice to hear something inspiring as opposed to enraging

Xi's speech is a serious rebuttal of the anti-globalization/Trumponomics/Brexit narrative. Striking contrast

C'mon Twitter, you think Xi JinPing is the new champion of free trade and a liberal trading order? Big show at Davos, I know, now calm down

It's surreal. A Chinese president giving a speech one might have expected from a US president. #Davos

11.32am GMT

China's president Xi may have played to a packed house at Davos, but there was another key player on delegates' minds - and apparently Xi's too - while not even being there. That person of course is Donald Trump. Larry Elliott writes:

Hamlet without the prince. That, bluntly, is how Davos feels this year.

The usual caravan of business leaders, academics, clerics, journalists and celebs has trekked up into the high Alps for their annual January get-together but the man everyone is talking about is 3,000 miles away awaiting his inauguration in Washington later this week.

11.14am GMT

President Xi sums up with a call for world leaders to stick with globalisation.

When encountering trouble we should not blame others, or run away, he declares, adding:

History is created by the brave - let us boost confidence, take action, and work together for a bright future.

11.08am GMT

In conclusion, Xi says that China's economy is now entering a 'new normal' (after many years of double-digit growth).

We have 1.3 billion people, and their living standards are not yet high.

China will keep its door wide open, and not close it.

10.57am GMT

Xi urges leaders in Davos not to abandon the historic climate change agreed in Paris in December 2015:

Chinese Pres says everybody should stick to the Paris Climate deal

"All roads lead to Rome" - Xi Jinping justifying the political agenda of the Communist Party of China at #WEF17 pic.twitter.com/L9iVs8zOKb

10.48am GMT

A ripple of applause rings out across the conference hall as president Xi declares that "no-one will emerge as a winner in a trade war".

In remarks that could well be aimed at president-elect Trump, Xi he tells WEF that global leaders must push for open and willing cooperation", rather than nipping back to the harbour every time there is a storm.

Pursuing protectionism is like locking oneself in a dark room. Wind and rain may be kept outside, but so is light and air.

Xi: "we should meet challenges of climate change and aging population. We should say no to protectionism. No one wins in a trade war" #davos

10.44am GMT

Xi now turns to "worrying" levels of economic inequality.

One percent of the population control as much wealth as the remaining 99%, he says;

10.41am GMT

Xi now turns to the problems in the global economy,.

The path to sustainable solid growth remains elusive, he says, and then singles out "inadequate" governance in the financial markets. Trade and investment rules has not kept pace with other developments, he warns:

Very big speech from Xi Jinping. Lauds globalisation but warns governance must evolve in line with "profound" changes to global econ. #Davos

10.34am GMT

Whether you like it or not, the global economy is the big ocean that you can't escape from, Xi continues.

Any attempt to cut off the glow of capital, goods, and people between economies and channel the waters into the ocean back into isolated lakes and creeks is simply not possible.

10.32am GMT

Ina speech ripe with analogies, Xi declares that China's move towards open markets has been choppy -- with plenty of whirlpools and choking along the way.

But we have learned to survive, and we must have the courage to keep swimming in the global market.

Xi: To grow its econ, China must have courage to swim in the vast ocean of the global market, adds China has had its "fair share of choking"

10.31am GMT

10.30am GMT

The financial crisis was caused by "chasing profits" and failed regulation, not globalisation, says Xi.

Xi Jinping says the international financial crisis was the result of excessive pursuit of profits, not globalization @CNBC #Davos

10.28am GMT

The voices attacking globalisation have laid bare the pitfalls facing globalisation, and we need to take this seriously, the Chinese president continues.

Xi quotes a Chinese proverb that "Honey melons hang from bitter vines".

10.26am GMT

President Xi he insists that there is "no point" blaming globalisation for all the problems facing the world.

He cites the flow of refugees from the Middle East and Africa - a global concern, but not one caused by opening up markets.

10.24am GMT

President Xi begins his speech by quoting Charles Dickens -- and his famous line that "It was the best of time, it was the worst of times".

We live in a time of incredible change, Xi tells Davos. We face global challenges like terrorism and refugees.

Many people are wondering - what has gone wrong with our world?

10.21am GMT

And we're off! Here's a live feed of president Xi's speech:

10.19am GMT

WEF founder Klaus Schwab is giving president Xi Jinping a typically effusive welcome, congratulating the Chinese leader for his country's growth record and hailing his leadership on issues such as climate change.

No mention of human rights issues or internet censorship, mind you...

10.06am GMT

There's a massive buzz across the World Economic Forum right now, as we wait to hear from president Xi Jinping.

The main hall is absolutely packed --- they're turning people away at the door --such is the interest in the first Chinese president to address WEF.

Room fully packed in Davos 4 Xi Jinping's address: despite trade tensions w US&EU he will label China as champion of globalisation #WEF2017 pic.twitter.com/IngsBDL83F

10.00am GMT

Anthony Scaramucci has told ITV News that Britain will be at the 'front of the line' for a trade deal, reversing president Obama's 'back of the queue' warning before June's vote.

We want the UK to be at the front rather than the back of the line for US trade deal,Trump advisor Scaramucci tells me. #davos2017 @itvnews

9.41am GMT

Anthony Scaramucci, one of Donald Trump's top advisors, is making some fascinating comments about monetary policy here in Davos.

Scaramucci is arguing that only 3% of the world population benefitted from unorthodox monetary policy such as quantitative easing, leaving the other 97% behind:

"A global crisis forced a massive monetary intervention. It was a success but a by-product was asset reflation. 97% of global citizens did not get an uplift."

"I don't feel that anymore. The top 3% are back where they were in 2007. The other 97% are struggling. We've got to listen to the people."

Anthony @scaramucci: 97% of global citizens didn't experience uplift [from QE]. Common person has really struggled"

Scaramucci: "when I go to Donald Trump rallies, there's a real sense of despair"

Anthony @scaramucci: People are struggling. Go out to the prairie lands. Listen to the people. We have to come up with the right policies...

Trump appointment Scaramucci says if we don't fix inequality now in four years time US will get a "left leaning" leader that is 'worse'

9.40am GMT

Tom Stevenson, investment director for Personal Investing at Fidelity International, said:

Inflation is back with a vengeance. The weakening pound continues to drive prices higher and today's CPI reading of 1.6% on the back of rising fuel, food and air fares is significantly higher than expected.

With more hints from the UK Government that a hard Brexit is on the cards, we could see sterling fall even further in the lead up to the Prime Minister pulling the trigger on Article 50. This will translate into further inflation in the short term. Indeed, some of Britain's biggest retailers have already warned that they may have to raise prices as they are forced to pass on higher costs of importing goods from abroad to customers.

9.38am GMT

A rise in UK interest rates is in prospect as inflation rises, says Paul Sirani, chief market analyst at Xtrade:

Although inflation hitting a two-year high is a sign of a strong economy, and those on the other side of The Channel would hope for some of the same, today's CPI data could sound alarm bells for the Bank of England.

The pound is shaking amid the uncertainty surrounding Brexit and consumer spending, which has proved vital in helping the economy recover from June's referendum, is likely to dry up.

9.36am GMT

The inflation figure is the highest level since mid-2014, with higher air fares and the fall in the value of the pound since the Brexit vote fuelling the price rises.

Food prices were higher after the sterling slump (remember Marmitegate?) and there was also a smaller fall in petrol prices than in December 2015, following the recovery in the crude price since then.

9.32am GMT

Breaking news: UK inflation came in higher than expected in December, with the Bank of England's preferred CPI measurement up 1.6% compared to 1.2% in the previous month and expectations of 1.4%.

9.23am GMT

The chairman of HSBC has criticised those who argue that Britain's Brexit vote was a vote for free trade.

Speaking in Davos this morning, Douglas Flint was asked whether voters in the North of England were voting for free trade when they ticked the "No" box in last June's referendum, as some Brexiteers have argued.

No, I think they were voting to leave the EU. I think the interpretation of the vote is extraordinary, just as it is in the US as well.

People can have theories, but at the end of the day certainly in relation to Brexit there was a single question on the voting slip and that's what people voted for. They voted to leave Europe, whatever was in their minds that caused them to vote that way is up to them.

Lot of people can have theories, usually backing up their own perception....but we've had a vote, and we're now in the implementation phase, of what does that mean and how to you execute it in a way that does the least harm to the EU 27 and the UK and can be completed as efficiently and quickly as possible.

#Davos There is a huge desire & momentum to avoid fragmentation, maintain improvements aggregated since crisis - Douglas Flint #HSBC Chair pic.twitter.com/OSSvFoAOXZ

One of the dangers is that the aggregate supply of financial capacity to the economy of Europe drops in two years time, which would not be consistent with trying to grow the economy.

9.17am GMT

One of the attendees at Davos is the head of the world's biggest fund manager Blackrock, which has been making headlines in the financial world by attacking executive pay and becoming the largest shareholder in Lloyds Banking Group. Jill Treanor has the background:

Among the 3,000 politicians, business leaders, economists and celebrities attending this year's World Economic Forum in Davos will be a 64-year-old with receding hair and rimless glasses.

The academic demeanour of Larry Fink belies his role running BlackRock, an outfit he founded 30 years ago and which has become the biggest fund manager on the planet, overseeing $5.1tn (4.2tn) of investments for pensioners and savers.

8.48am GMT

Perhaps Davos 2018 should have more hairdressers and fewer politicians, based on this research:

Hairdressers are more trusted than lawyers, pollsters, economists, bankers, journalists and politicians. #Davos #wef17 pic.twitter.com/tpSFzsetFJ

65% of children currently entering primary school will have jobs that do not yet exist. But have fun at school! #Davos #wef17

2025: Risk of replacement, in as non-threatening a format as possible. #davos #wef17 pic.twitter.com/jgFx33qotL

The question isn't just whether there will be jobs in the future" it's whether they'll be quality jobs! #Davos #wef17

Entire populations won't stand by idly as automation destroys their occupations. Expect unrest. #Davos #wef17

8.22am GMT

We just caught up with John Nelson, chairman of Lloyd's of London, about Britain's exit from the European Union.

Nelson was a "remainer" but says:

"We've had all the arguments about the various options. We are leaving. We've got to get used to it. Let's get cracking. The sooner we get negotiations going the better. We need decisions at the top."

"It doesn't make sense to discriminate against the UK as a punishment.

It is in everyone's interests to have as much free trade as possible. But I don't expect a special deal."

"Climate change is a long-term problem. Our concern is that Trump will reverse the slow progress that has been make. It will put humanity at risk if we continue to blow carbon into the air."

8.20am GMT

Harvard professor Ken Rogoff has been predicting tense times in the world's government bond markets, once Donald Trump gets his hands on the keys to the White House:

Rogoff: 'if Donald Trump brings nothing else, it will be risk for the bond markets'

Rogoff: 'it's likely we will start to have central bank digital currencies in the next 20 years if not the next 5'

8.13am GMT

Theresa May's upcoming speech on Britain's exit strategy is the talk of Davos this morning.

Yesterday's reports that the UK PM will announce the UK will leave the single market has disappointed those hoping for a 'soft Brexit'.

8.03am GMT

It's a chilly minus 13 degrees Celsius in Davos this morning, and some of the pavements are a little treacherous, but at least it's not snowing.

Here's Facebook's WEF HQ - which the Daily Mail says was built specially for the occasion.

7.29am GMT

Good morning from Davos, where the World Economic Forum is getting underway.

Once again world leaders, top business people, economists, academics and the media have descended on this small ski resort to discuss the state of the world and hammer out deals.

#WEF2017 : rise of populism. Not just Brexit & Trump. Also authoritarian populists in Russia, Turkey, Hungary, Poland, Philippines, etcm

"Sometimes it seems that the world is overwhelmed by pessimism and cynicism. But we have to look in a confident way into the future."

Xi will defend trade and make a pitch for China to step into the leadership void left by a more-protectionist US under president Trump. It's worth keeping an eye on @realDonaldTrump, to see if the US president-elect tries to steal the Chinese president's thunder with a trademark early-morning tweetstorm.

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