Transcripts For BLOOMBERG Best Of Bloomberg Technology 20171

Going forward, we see better days ahead. Rishaad the Imfs Christine Lagarde looks forward to the year to come. This region, asia, is going to continue to be a Global Growth engine. Rishaad it is all straight ahead on this special edition of bloomberg best. Rishaad hello and welcome, im Rishaad Salamat on this special edition of bloomberg best. We look back at 2017 in asia, revisiting the years most interesting interviews with newsmakers, policymakers, and leading figures in business. Lets start with Stephen Engles indepth conversation with alibabas jack ma. We were granted rare access to him in his headquarters in china as the companys celebrated its 18th birthday. Alibaba has 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 have you stayed 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 stricter much more, than the regulators. Today, we have more than half a billion people using us. We have such huge transactions. Anything wrong. So we have to discipline ourself much more. But we also have to let the regulators the policy is important. Have you faced 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 to zero. Do you think there is an old god in china that does not quite understand the new economy . We are having this kind of resistance in the past 18 years almost every day. We see people like him a lot. But, you know, this is the evolution, the revolution of the technology. People like these old tycoons 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 u. S. Dollars products last year, and 70 of them were helping selling the manufacturing. Because we dont produce. Without us, these 70 of the 500 billion manufactured products never be able to reach the consumers. Will you facilitate reform at the staterun enterprises from the outside . Because the vested interests want to keep the status quo. We are pushing that. This is why a lot of banks dont like us in china. Were not necessarily interested in buying the banks to change it, because of us chasing them around, they reformed the china banks, which really react quickly. These banks change their services so fast. They put so much resources on the technology, on serving the people better. You dont have to buy a bank and change one bank when you are pushing them and chasing them around. When a tiger is following you, you can run much faster. Rishaad jack ma left no doubt in 2017 that alibabas ambitions are grand and global. Hear more from his exclusive interview with Stephen Engle on the topic of globalization. I think the next 80 years, the globalization will be much better, because of the internet. Because this is our revolution. , we are making sure that a Small Business can benefit from the, and i think 80 years is enough for us to improve globalization instead of killing globalization. I believe when trade stops, war starts. What is your u. S. Strategy right now . We never changed changed our u. S. Strategy. We want to help small and Mediumsized Companies sell to china and asia. We dont want to go through u. S. And be the local ecommerce company, which i think amazon, ebay, so many nice, interesting Ecommerce Companies all over the usa. You dont want to take on amazon doing what they are doing . No, no. You talked about the coming winter when you listed alibaba. Com, 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 and that bursting. 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, 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. And whether internet can sustain, so people just jump in and start doing it, and a lot of people have crazy ideas, they dont know how to operate, and does not know how to make their dream come true. But today, Everybody Knows the internet is very powerful, it will change human history. Also 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. Rishaad 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. 20 years ago much easier than you can predict the next 12 months. Rishaad and 2017 was another year of unconventional Monetary Policy in japan. Up next, the bank of japan governor Haruhiko Kuroda gives some reasons he is Still Standing fast on stimulus. Good, but i do not think 4 growth can be maintained. Rishaad this is bloomberg. Rishaad this is bloomberg best, i am Rishaad Salamat. With Prime Minister shinzo abe cementing his parliamentary majority in the snap election, 27 concludes on a hopeful note for the program known as abenomics, and Haruhiko Kuroda has confirmed his commitment to accommodate Monetary Policy. Earlier this year with , geopolitical risk rising and the yen strengthening, the course wasnt so certain. Kuroda addressed those concerns in an exclusive interview with francine lacqua. This is, again, a difficult issue. Certainly in the past whenever we had some geopolitical risks rising, yen appreciated, making our policy even more difficult. But at this stage, i dont know. Because Exchange Rates can move depending on many factors, not just geopolitical risk, but some other kind of development. I cant say anything about the Exchange Rate movement, if geopolitical risks further escalate. I dont know. Francine help me understand, if yen goes higher from here, does it hurt your inflation forecast . As you may 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. But as i can say, our information forecast is based on Continuous Improvement in the labor market, Continuous Improvement in output gap which , is quite certain. 1. 5 growth, the economy is doing well. The labor market will continue to tighten and wages would rise and prices will rise. So i agree that inflation could affect the rate in the shortterm but basically we see , that inflation rates will reflectingoing up, improved capital. Francine you have done more than any other Central Bank Governor to try to get inflation up. When we spoke six months ago, you went outside the toolbox. Are you still confident that you can achieve 2 . Theres no doubt . Even if yen goes higher . As i said, our forecast in the sense that we would reach 2 target around fiscal 2018 is based on the exemption that the Exchange Rates would not move, and so on and so forth. So that Exchange Rate appreciates, of course timing , could be slightly delayed, and if Exchange Rates depreciate, the timing could be earlier than otherwise. But the basic trend is toward 2 in a gradual amount. A gradual manner, reflecting the improving environment. Francine so would it be fair, governor, to say that at the moment you could either ease or lighten . I think at this stage we would maintain the current regulatory Monetary Policy stance. Rishaad when the worlds central bankers came to jackson hole in august, the Federal Reserve in the European Central bank were both looking ahead to tightening. Itsfed planning to reduce 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. In the u. S. And europe, inflation rate is actually close to the target, close to 2 . But in japan, the inflation rate is still 0. 5 , far away from our 2 target. So there is some difference between u. S. , europe, and japan. Rates are not rising so fast, that is true. Mostly in japan. But prices are not rising. Here, there is some kind of differentiation in mindset. Strong among business leaders, as well as global leaders. They tend to be cautious in raising prices. What companies are doing is they are heavily investing, they are saving in equipment and so on and so forth, and also they are changing a previous model so as to reduce labor content. By so doing, this wage increase, the labor cost has not been rising. Theyre not required to raise prices. Kathleen 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 maybe something has changed to the degree that does inflation matter so much . Japanese like low inflation if you have got the growth. But two things. Good, but i dois not think 4 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. But 4 growth is somewhat unusual. But im quite sure that this 1. 5 to 2 growth can be attained in the coming year. Now, that is one point. Second point, yes, prices are not rising so fast, but as you can imagine, if we satisfy with lower than 2 inflation, we may be faced with a recession. Of course, its almost impossible to address the situation with traditional Monetary Policy of reducing shortterm because if we take the inflation rate as low as 0. 5 , the Interest Rate continues to hold. So thats a necessity, to have some sort of policy room for the monetary authority. Kathleen what do you mean by policy room . Crisis, the lehman Federal Reserve as well as the European Central bank could reduce shortterm Interest Rates by about 4 . But at that time, japanese Interest Rates were already zero, so there is no way to address the situation by way of traditional Monetary Policy. Huge had to resort to quantitative easing. So i think we need to attain 2 inflation target. If it is kind of the global standard now. Kathleen im asking you, maybe global Central Banks have to rethink this. Everything is hitting inflation targets, and the world has changed, maybe. Theres that argument, yes. Among economists. But still, i think the Federal Reserve and ecb, aiming at to 2 ing 2 or as close inflation target as soon as possible, and that, i think is quite reasonable. So the bank of japan, too, aims at achieving a 2 price target. Rishaad much more ahead as we revisit the top interviews from bloombergs asia coverage in 2017. Up next, bloomberg editor in chief John Mickelthwait talks with wang jianlin in davos. And later in, more conversations with ceos. Years, i feel 3 financial risk is risky at this time. Rishaad this is bloomberg. Rishaad you are watching a special edition of bloomberg best, highlighting conversations from the year 2017 on asian business and finance. Im Rishaad Salamat. Lets flash back to january, at the World Economic forum in davos. Chinas president xi jingping defending globalization in the opening session, while in washington, u. S. President elect then donald trump was promising to implement protectionist trade measures. It is against this unique background that John Mickelthwait spoke on stage with one of chinas most influential business leaders, wang jianlin. John 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 there is 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 censorship or control of the entertainment. 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 into entertainment. It will be set back, but it will be about protectionism emerging in the u. S. President xi said yesterday that it would be bad for both parties, no winners. The investment into u. S. Is a good thing. The main marketing of english language films out of the u. S. Is actually china, not anywhere else. A major source of income, the growth part, the new growth part will have to come from china. In india, there is a large market, but there is hardly any growth, nor in any countries. 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 wish to see that scenario materializing. John we have asked the chairman of the Film Association of the u. S. To pass a message to mr. Trump. Lets leave the Entertainment Industry alone. No more, please. John 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] well, in china, although we say there is control, theres also different categories of production, purchase of rights. There are different channels into china. Some Chinese Investment in there will be no backtalk in the u. S. More and more companies are doing coproduction. For example, they will allocate a few films to be coproductions. That is a way of bypassing control. But i would like to say that the u. S. Government, if it were to control investment, that would be a bad thing. John very quickly, if i was a republican congressman, what would you say to encourage me to trust you to be able to run a big part of hollywood . [speaking mandarin] it is still a company ran by americans. We do not interfere with the content. I just want profit. [laughter] rishaad that interview took place just 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 Prime Minister Malcolm Turnbull, next. The relationship between the United States and australia is as strong as any relationship could be. Rishaad this is bloomberg. Rishaad im Rishaad Salamat, and this is a special edition of bloomberg best, wrapping up 2017 in asia by playing back the years top interviews. Lets turn now to australia. Bloombergs haidi lun sat down with an exclusive conversation with Prime Minister Malcolm Turnbull at an extremely sensitive geopolitical moment in early june, with tensions mounting in asia over north Koreas Nuclear conduct, and questions arising about australias relationship with the United States and president donald trump. P. M. Turnbull 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 pyongyang, to bring it to its senses so that is ceases threatening the peace of the region with its reckless conduct. Haidi the recent events seem to portend of a Seismic Shift when it comes to global alliances, Angela Merkel suggesting that german cannot continue to rely on the u. S. And u. K. , that europeans