Transcripts For BLOOMBERG Best Of Bloomberg Markets Middle E

BLOOMBERG Best Of Bloomberg Markets Middle East December 23, 2017

Regime in pyongyang. Going forward. And Christine Lagarde looks forward to the year to come. This region, asia, is going to continue to be a Global Growth engine. It is all straight ahead on this special edition of bloomberg best. Hello and welcome, im Rishaad Salamat on this special edition of bloomberg best. We look back at 2017 in asia, i revisiting the years most interesting interviews with newsmakers, policy interviews, n business. Rs i lets start with jack ma. Rare accessted to him in his headquarters in china as the companys celebrated its 18th birthday. It enjoyed massive growth in 2017 and a rapidly evolving ecosystem of Chinese Technology companies. Jack ma spoke with Stephen Engle about competition and regulation in this new environment. The speed of the internet era oftentimes blurs the line of regulation, and you push the boundary, push the boundary, and then regulators overreact or whatever. How do you stay ahead of that and also not overstep your boundary . We always step ahead of the regulators. We have to. Otherwise, we go nowhere. They say, hey, wait a minute, my job is to regulate, my job is not about innovation. My job is not to improve other peoples life, that is your job. It is the painful process that alibaba is learning. How do you stay close to the fire without being burned . We are very careful. When we are young, its ok. Now we are big. We probably regulate ourselves much more strictly, much more, than the regulators. Today, we have more than half a billion people using us. Such huge transactions. Ourselfto discipline much more. But we also have to let the regulators the policy is important. Heavy face resistance in china for what you are doing . I recently interviewed we all know about his comments about the internet economy destroying manufacturing and a drive 20. Do you think there is an old god in china that does not quite understand the new economy . For having this kind of resistance in the past 18 years everyday, we see people like him a lot. But, you know, this is the evolution of the technology. In the old economy, in the early days, they destroyed a lot of lowerlevel companies. We are helping manufacturing. We sold more than 500 billion usd last year, and 70 of them were helping selling the manufacturing. Because we dont produce. Theout us, these 70 of 500 billion manufacture products never be able to reach the consumers. Will you facilitate reform at the staterun enterprises from the outside . Because the vested interests to keep the status quo. We are pushing that. This is why a lot of banks dont like us and china. Were not necessarily interested in buying the banks to change it, but because of us changing them around, they reform the china banks, which really react quickly. These banks change their services so fast, they puts so much resources on the technology, on serving the people better. You dont have to buy a bank and change one bank, when a tiger is following you, you can run much faster. In 2017ma left no doubt that alibabas ambitions are grand and global. Hear more from his exclusive interview on the topic of globalization. Years,ink the next 80 the globalization will be much better, because of the internet. This is our revolution. Electronic world trade platform. We are making sure that a Small Business can benefit from the, and i think 80 years is enough globalizationove instead of killing globalization. I believe when trade stops, war starts. What is your u. S. Strategy right now . We have not changed our u. S. Strategy. We want to help small and Mediumsized Companies move to china. We dont want to go through u. S. And be the local ecommerce company, which i think amazon, ebay, so many nice, Interesting Companies all over. You dont want to take on amazon. No, no. You talked about the coming winter, and sure enough, the winter came pretty quickly. We saw the collapse of Lehman Brothers and the collateral damage. I was also watching your progress through the tech bubble. You have had these challenges that wiped familiar names off the board. Are we facing a similar kind of tech bubble right now, with these billiondollar unicorns and inflated tech scene . Are there any similarities . No, off that much. Not that much. I think the challenge at that time, a lot of people did not understand how powerful the internet is. How to do internet the right way. People just jump in and start doing it, and a lot of people have crazy ideas, they dont know how to operate, and they do not know how to make it. But today, Everybody Knows the internet is very powerful, it will change human history. I think the infrastructure of the internet, the infrastructure technology, is much better than 10, 15 years ago. So if you are not that greedy, if you are not that stupid and crazy, its easy to survive today. That was alibaba founder jack ma, speaking exclusively with Stephen Engle. One of the most fascinating interviews of 2017. Still ahead on the year in conversation, a discussion with jamie dimon about the future of reform in china. You can predict the future. Was another year of unconventional Monetary Policy in japan. Up next, Haruhiko Kuroda gives some reasons he is Still Standing fast on stimulus. Good, but i dont think the growth can be maintained. This is bloomberg. This is bloomberg best, i am Rishaad Salamat. With shinzo cementing his parliamentary majority in the snap election, 2017 includes a hopeful note for the program abenomics, and Haruhiko Kuroda has confirmed his commitment to accommodate Monetary Policy. But with geopolitical risk rising in the yen strengthening, the course wasnt so certain. Concernsdressed those in an exclusive interview with francine lacqua. A very difficult issue, certainly in the past whenever we had some geopolitical risks rising, yen policyated, making our even more difficult. But at this stage, i dont know. Can move depending on many factors, not just geopolitical risk, but other developments. I cant say anything about the Exchange Rate, the movement, if geopolitical risks further escalate. Helped me understand, if yen goes higher from here, does it hurt your inflation forecast . As you know, our inflation forecast is based on the assumption that the Exchange Rates will not move much upward or downward. So if the yen depreciates, then of course inflation rates could rise, and if yen appreciates, inflation rates could decline. Thats true. Our forecast is based on Continuous Improvement in the labor market, continuous cap,vement in output which is quite certain. 1. 5 growth, the economy is doing well. The labor market will continue to tighten, and prices will rise. So i agree that if you could unpack the inflation rate in the but basically we see that inflation rates will restricting. Up, you have done more than any other Central Bank Governor to try to get inflation. When we spoke six months ago, he went outside the toolbox. Are you still confident that you can achieve 2 . Theres no doubt . Even if yen goes higher . Inas i said, our forecast the sense that we would reach 2 is basedound fy 2018 on assumption that the Exchange Rate would not move. So that Exchange Rate appreciates, of course timing could be slightly delayed, and if Exchange Rates depreciate, the timing could be earlier than otherwise. Basic trend is toward 2 in a gradual amount. So would it be fair, governor, to say that at the moment you could either ease or lighten . I think of this stage we would maintain the current regulatory Monetary Policy. Worlds central bankers came to jackson hole in august, the Federal Reserve in the European Central bank were both looking at tightening. The fed planned to reduced its balance sheet, and the ecb devising a qe exit strategy. Governor kuroda sat down with Kathleen Hays and explained why his nation still needed stimulus to reach its goals for growth. We like it so far, but in the u. S. And in europe, inflation rate is actually close to the target, close to 2 . 0. 5 , japan, its still far away from our 2 target. So there is some difference japan. U. S. , europe, and rates are not rising so fast, that is true. But prices are not rising. Ofe, there is some kind differentiation in mindset. Leaders,ong Business Global leaders. Be cautious in raising prices. What companies are doing is they are heavily investing, they are saving in equipment and so forth, and also they are changing a model so as to reduce. Increase,g, this wage it has not been rising. Theyre not required to raise prices. But they are doing well. Gdp growth six quarters in a row. That hasnt happened in japan in years. You are succeeding on growth, and debut something has changed to the degree that does inflation matter so much . Things. Two one, forecasting growth is good, but i dont think 2 growth can be sustained. Around 2 growth, we can attain this fiscal year, and even in the next fiscal year, grow to 2 , may be possible to attain. Is somewhath unusual. Thism quite sure that what. 5 to 2 growth can be attained in the coming year. That is one point. Second point, yes prices are not rising so fast, but as you can satisfy withe lower than 2 inflation, we may be faced with the recession. Of course, its almost impossible to address the situation with traditional because if wey, take the inflation rate as low as 0. 5 , the Interest Rate continues to hold. To haves a necessity, for thet of policy room monetary authority. What do you mean by policy room . After the crisis, the Federal Reserve, the European Central bank could reduce shortterm Interest Rates by about 4 . But at this time, japanese Interest Rates were near zero. So there is no way to address the situation by way of traditional Monetary Policy. To choose to resort quantitative easing. Think we need to attain 2 inflation target. If its the global standard now. Im asking you, maybe global Central Banks have everything. Everything is hitting inflation targets, and the world has changed, maybe. Theres that argument, yes. But still, i think for the aterve and the ecb, aiming possible 2 as soon as i think that is quite reasonable. So the bank of japan, too, aims at achieving 2 . Ahead as we revisit the top interviews from bloombergs asia coverage in 2017. Up next, John Mickelthwait talks with when gender and in davos. And later in, more conversations with ceos. The last couple years, i did feel it on the system. This is bloomberg. You are watching a special edition of bloomberg best, highlighting conversations from the year 2017 on asian business and finance. Im Rishaad Salamat. Lets flashback to january, at the World Economic forum in davos. President xi jingping defended globalization in the opening session, while in washington, u. S. President elect was promising to implement protectionist trade measures. It was a unique background that John Mickelthwait spoke on stage with one of chinas most influential business leaders, wang jianlin. Congress is looking at the issue of Chinese Investment in hollywood. How do you look at that . To you think this is just protectionism, or do you think do you understand something about what the americans are saying . [speaking mandarin] this is certainly part of protectionism. So far the u. S. Economy has not launched any control. We have only done it to manufacturing and defense industries. But there are congressman writing letters saying there will be more examination and control of investment entertainment. It will be set back, but it will be about protectionism. President xi said yesterday that it would be bad for both parties. To u. S. Is ant in good thing. The main marketing of english language films out of the u. S. Is china. A major source of income, the new growth, will have to come from china. India, there is a large market, but there is hardly any growth. The main market is the english language films in china. So if china were to retaliate, it would be a battle of both parties. I do not wash to see that scenario materialize. Ofwe have asked the chairman the Film Association of the u. S. To pass a message to mr. Trump. Lets leave the Entertainment Industry alone. No more, please. Do you think there is some way in which entertainment is different . You talked earlier that the chinese have limits on the number of American Films that come in. Is the answer for both sides to have no limit, or do you think there is something about entertainment where people should be able to limit what comes in, what goes out . [speaking mandarin] china, although we say there is control, theres also different categories of production. There are different channels into china. Observed some Chinese Investment in there will be no backtalk in the u. S. More and more companies are doing coproduction. Example, they will allocate a few films to coproductions. That is a way of bypassing control. But i would like to say, within the government, if it were to control investment, that would be a bad thing. Very quickly, if i was a republican congressman, what would you say to encourage me to aust you to be able to run big swath of hollywood . [speaking mandarin] not in china sales. We dont deal with content, i just want profit. [laughter] that interview took place just a a few days into 2017. Later in this program, Christine Lagarde explains her outlook for asia in 2018. And coming up, it has been a complex year for australia, politically and economically. We have a conversation with malcolm turnbull, next. The relationship between the United States and australia is as strong as any relationship could be. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Im Rishaad Salamat, and this is a special edition of bloomberg best, rafting of 2017 in asia by playing back the years top interviews. Lets turn now to australia. Haidi lun sat down with an exclusive conversation with ancolm turnbull at extremely sensitive geopolitical moment in early june, with tensions mounting over north korea and questions arising about australias relationship with the United States and president donald trump. North koreas conduct is reckless, dangerous, and becoming more so. China has the greatest leverage over north korea, and with the greatest leverage comes the greatest responsibility, so we will do our part with sanctions, of course, but we look to beijing to bring the pressure to bear on the regime in don young, to in pyongyang to bring it to its senses so that is ceases threatening the piece of the region with this reckless conduct. The recent events seem to portend of a Seismic Shift when it comes to global alliances, Angela Merkel suggesting that germany cannot rely on the u. S. And u. K. Alliance, steeped in tradition and deep friendship, can be looking so fractured at the moment, what does that mean for australia . You say the u. S. And australia have shared values and the special relationship, but do you really . Well, of course we do, and our alliances stronger than ever. The australiau. S. Alliance is more important than ever. As President Trump and i edmonstrated and works together on the uss intrepid a little while ago, the commitment to our two nations based on our history, based on our shared values, based on our mutual interests, is stronger than ever. Is there a concern, though, that President Trump has proven himself to be irrational at times, erratic, when it comes to policy decisions, and at other times transactional . Is that something that can still be relied on . The relationship is in the very best of health. The relationship between the United States and australia is as strong as any relationship could be. Is based on history, shared thees, common interest, closest possible engagement at every level. Defense, political, economic, business, people to people, family. It is the closest possible relationship, and it gets stronger all the time. Scotland yard is forced to temporarily suspend intelligence sharing with the u. S. After these reports following manchester, that information had been leaked. This follows from the u. S. President reportedly sharing confidential information with senior russian officials. Has australia sought reassurances that any intelligence shared would remain confidential . Well, the intelligence relationship is also intensely close. It is part of the arrangement. We have every confidence in the confidentiality of the intelligence we share with our france and the United States, just as they have the confidence in what they share with us. But i want to share with you that intelligence is more

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