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ドイツG20首脳会議のかけ引き欧州が他国に頼れる時代は終わったか？

Fujitsu Research Institute

Dr. Martin Schulz 2017.06.23

1

G20 Hamburg Summit – Significance

Global Governance has been called into question (Middle East War, Global Terrorism, Ukraine War, Brexit, America First, Inequality)

US President Trump blocked policy negotiations at G7, Nato, Finance Minister meetings

G20 governments try to find mutual strategies at Hamburg Summit, mostly in bilateral meetings

Copyright 2017 FUJITSU RESEARCH INSTITUTE

Source: Ameco Database (2016), Saez (2016), Rosengard (2017).

US - Trump:

“Make America

Great Again!”

UK - UKIP: “Controlling our own borders, making our own laws, running our own country!”

Source: Bloomberg

Source: www.donaldtrump.com

US unemployment rate 4.7%, but 7.9% for below high school educated workers

US unemployment rate of involuntary part-time and marginally attached 9.3%, and 24.2% long-term

US 2009-2015: bottom 99% real income growth +7.6%, top 1% +37.4%

2

G20 Challenge: Has Globalization become Disruptive?


Note: 2000 =100, based on compensation in euros.

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20152013201120092007200520032001

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20152013201120092007200520032001

Services

Manufacturing

Japan -> Regulation

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20152013201120092007200520032001

Services

Manufacturing

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20152013201120092007200520032001

Services

Manufacturing

Services

Manufacturing

Germany -> Globalization UK

US

Labor Compensation by Sector (2000=100)

3 Copyright 2017 FUJITSU RESEARCH INSTITUTE

Markets, Work & Incomes Disrupted

4

G20 Hamburg Summit Feels the Pressure


http://cdn4.spiegel.de/images/image-1128187-860_galleryfree-deoq-1128187.jpg

https://niklasheiden.files.wordpress.com/2017/05/nh_4967.jpg?w=840&h=560

https://www.welt.de/img/regionales/hamburg/mobile157792967/5572504437-ci102l-w1024/HABF120022-Bertold-Fabricius-Messe-PK3.jpg

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTGcwTyU_Bh6IP4juuBaYeIFevCqiXb6wBmeU8cy_OXbYrRJIDA

http://www.ndr.de/nachrichten/hamburg/gipfeldemo100_v-contentgross.jpg

Strong “Anti-US” sentiment Poll: 22% say US can be trusted

80% say cooperation necessary

“Anti-establishment”

demonstrations expected (Violent Demos: 8000 people?)

https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTkFjVmx6Tbyuh61vLuj8IdU1o7nCzLfy8zTEyJ578vElX_0Ntv

Radical Demonstrations

Anti-Establishment Sentiment

Saudi Arabia Hotel

EU (In)Stability Governance:

Leadership vs “Real-Politik”

Messe

Peaceful Demonstrations

5

G20 2017 – Official Priorities


German Focus

New G20 Focus

Africa Compact

Securing Alliances

US Leadership

Japan FTA

Implementation

US Strategy?

Hangzhou Summit

6

G20 – Aligning Interests, Summit Agenda Secondary


https://www.g20.org/Content/DE/StatischeSeiten/G20/Bilder/g20_weltkarte_-deutsch-

neu.jpg;jsessionid=B63D292F40AD19CD4DD62D41CC4B7B5A.s1t2?__blob=bpaTopmeldung&v=1

UK:

Looking for

Partners

France:

Shaping

Two-Speed EU

Germany:

Balancing

Interests

Russia:

Containment,

Energy

China:

Asia Leadership,

Trade/Investment

Australia:

G20 Support,

Pacific Stability

US:

Middle East (Saudi),

Eastern Europe,

China

Turkey:

Stabilizing ME

with Russia

India:

G20 Support,

Investment/Growth

Japan:

EU FTA,

Aligning US Mexico:

G20 Support,

Aligning US

Canada:

G20 Support,

Aligning US

Brazil:

G20 Support,

Investment/Growth

7

G20 Governance Evolution


G20

Governance

Crisis

(2008)

Post Crisis

(2017)

New

Normal

Financial US bail out, QE

EU crisis, bank regulation

BRICs growth

US recovery

EU stagnation

BRICs decline

US leadership

EU recovery

Global investment

Economic G8 crisis

Public debt

Disparities, Crisis Costs

Fairness

International Institutions (IMF,

WTO, …)

Security Terrorism

ME War, Energy

Intelligence, Cyber security

Military Coop., Nato

Shifting alliances

Environment -general commitment- CO2, energy change

National strategies

New energy markets

(Renewable, China, India,…)

Globalization -not questioned- National strategies Regional integration

Digitalization -not questioned- Cyber security, trade Connectivity, Skills

Platforms (info, trade)

Fighting global warming (CO2) only recent (2014) addition to G20 agenda, can become separated again (UN, focus on cities)

Globalization, Digitalization, perhaps Energy (security) become key issues

US regains financial leadership, China digital opportunity, Institutions recovery

8

G20 – Security (Middle East, Energy)

US returning from „Obama“ intervention/balancing strategy to „Bush“ support of Saudi Arabia and Eastern Europe

EU struggling to provide Middle East and Eastern Europe vision

G20 meeting focus on Africa investment, development, trade …

G20 member focus on bilateral talks (US, China, Germany, Japan, …)


https://www.g20.org/Content/DE/StatischeSeiten/G20/Bilder/g20_weltkarte_-deutsch-

neu.jpg;jsessionid=B63D292F40AD19CD4DD62D41CC4B7B5A.s1t2?__blob=bpaTopmeldung&v=1

Africa

Compact

9

Middle East Crisis – Positioning

ISIS

Map: http://lecourrierdumaghrebetdelorient.info/arab-world-maps/arab-world-maps-a-proxy-war-in-the-middle-

east/#prettyPhoto

Shi’a Muslims Sunni Muslims

Engaging

Iran

Arabia

Assurance


10

G20 – Energy Security – Russian Gas


https://cdn3.img.sputniknews.com/images/105461/67/1054616774.jpg

http://southfront.org/wp-content/uploads/2015/08/A-gas-pipeline-network-of-the-European-continent.jpg

US senate sanctions

Nord Stream 2

Germany builds energy security on Russian gas

Strong Eastern Europe, China, Japan interest

Turkey builds Russian pipeline for military support

11

G20 – Trade & Investment

US unilateralism enveloped by strong G20 bilateral and group interests

Canada & Mexico support North America trade

Brazil & Mexico support South America trade

China, India, Japan have strong interest in EU trade, Middle East stability

China, India & TPP11 support Asia trade integration

UK looks for (new) partners

Russia needs stability in energy markets

G20 support for WTO might increase

Japan & EU set signal with EU-Japan FTA

Germany & EU promote Africa trade and investment (Africa Compact)


12

Governance Challenge: Balancing Trade Opposition


Sources: http://ichef.bbci.co.uk/news/660/media/images/79755000/jpg/_79755138_5489a5d7-c4a8-4f59-bb09-8420fec1eeb7.jpg;

https://files.opencanada.org/images/RTX2OYD0.6969629d.fill-940x627.jpga; http://www.bilaterals.org/IMG/rubon205.jpg;

http://www.globaalmarshallplan.org/en/stop-ttip-eci-campaign-explained

Canada-EU FTA (CETA) followed by Japan-EU FTA

? X

http://ichef.bbci.co.uk/news/660/media/images/79755000/jpg/_79755138_5489a5d7-c4a8-4f59-bb09-8420fec1eeb7.jpg









http://www.bilaterals.org/IMG/rubon205.jpg

13

EU-Japan FTA

EU-Japan Leaders Summit (planned in Brussels, 6 July 2017)


Source: EU Commission (2016) - Trade Sustainability Impact Assessment of the Free Trade Agreement between the European Union and Japan.

GDP impact +0.2% for Japan and +0.1% for EU

Strong positive impact on competition, cooperation and investment

Asia Market Integration: New Institutions beyond FTA’s

Source: Map: Wikipedia.; Picture: Shutterstock.com.

New Silk Road driven by China demand & investment

14

AEC 2015

ASEAN Economic Community (AEC) driven by trade

AIIIB 2015

Asian Infrastructure Investment Bank (AIIB) driven by China connectivity shortfalls Single Market

EPAs

Africa Compact

TPP creating a dynamic market for goods, services, investment

“Next generation agreement” that covers 40% of world trade and promotes innovation and growth through far reaching deregulation

TTIP US- EU FTA

14

X

X


Chinese M&A: Investing in Technology & Trade Barriers

Copyright 2010 FUJITSU RESEARCH INSTITUTE 15 Copyright 2017 FUJITSU RESEARCH INSTITUTE Source: Data from Bloomberg (2017).

Note: All initiated cross border cases, including canceled deals.

China’s EMEA and US M&A by Sector (Cases; EMEA %)

US EMEA UK Germany Holland

Total Cases 1000 905 16.13% 17.20% 7.18%

Industrial 10.60% 21.44% 8.25% 27.84% 6.19%

Consumer, Cyclical 11.40% 17.35% 19.11% 21.66% 7.64%

Consumer, Non-cyclical 23.50% 15.14% 16.79% 10.95% 10.22%

Financial 7.80% 10.39% 28.72% 11.70% 7.45%

Energy 4.30% 9.17% 15.66% 12.05% 6.02%

Technology 20.40% 8.29% 14.67% 6.67% 12.00%

Basic Materials 2.30% 7.18% 12.31% 12.31% 4.62%

Communications 14.30% 5.08% 30.43% 15.22% 2.17%

Utilities 0.60% 1.99% 16.67% 5.56% 0.00%

Diversified 0.70% 1.66% 6.67% 53.33% 13.33%

Trade Barriers?

Technology

Technology

Globalization: A Shift to Services – Digitalization is Key

Source: Unctad Stat (2017). 16 Copyright 2017 FUJITSU RESEARCH INSTITUTE

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6World

World Merchandise Trade

Developing

Countries

Developed

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%

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2010 2011 2012 2013 2014 2015 2016

1000%

Service Trade

Professional Services %

Professional

Note: “Professional” Services are Unctad “Other” Services.

Travel

Goods

Service

Transport

Developed

Professional

Developing

Goods Service

Developing

Professional Developed: Goods Service

17

G20 – Finance & Digitalization

G20 central bank expamsion, restrictive regulation of banks, ignorance of e-commerce and fintech create new bubbles

US recovers financial leadership: Treasury review of financial regulation

China opportunity for G20 digital finance leadership


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1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

World Trend 1980-2000 = China 1980-2015)

World Trend 1960-2015

Copyright 2017 FUJITSU RESEARCH INSTITUTE 18

The next „Bubbles“ Emerging in Asia

Core Financial Risks Imbalance between strict financial regulation and (fintech) innovation

Too high expectations for credit trend growth

Japan

Thailand

USA

China

Spain

Financial Deepening World Credit Trend

Domestic Credit to the Private Sector (% GDP)

UK

Source: Data from Bloomberg 2017.

Thailand

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2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2017

Central Bank Assets have become Significant

Source: Bloomberg 2017.

G4 (US, ECB, JP, CH) Central Bank Balance Sheets (% World GDP)

& MSCI ACWI Stock Index


%GDP

Central Bank Assets (left scale)

MSCI Stocks

MSCI

Index

-100

0

100

200

300

400

500

600

700

800

US CorpHigh Yield

GlobalCorp High

Yield

EU CorpHigh Yield

S&P500 USDisposable

Income

DJ RealEstateIndex

US FamilyHousePrice

SP Troughto Peak

2009-16

2003-08

1996-02


Sky-High Valuations Driven by Central Banks

CAGR: 10.36%

CAGR: 8.36%

Percent

Points

Financial market stability builds on central bank intervention and deficits

Asset Performance since 1996

4%

Low Rate

impact

Source: Data from Bloomberg 2017.

21

Post-Crisis Financial Regulation Blocks Innovation


Financial Market Regulation

Capital & Liquidity • Basel III

• EU CRD, BRRD, SRF, ESM

• Bank levy

... Equity up (3%->6%->10%?)

Banking Structure • Dodd-Frank / Volcker Rule

• ESM, SSM, ...

• G20, ...

Complexity up / Opaque Regulator…

Taxation • FATCA

• CRS, IFRS, ...

• Pensions

... Taxation up (bank levy etc.)

Market Structure • Dodd-Frank VII

• EMIR, MIFID, UCITS V, ...

• Shadow Banks, ...

Capital Market / E-Commerce Restrictions...

G20 Financial Regulation: Make Banks Boring Again!

US 2017 post-crisis Treasury review of financial regulation: (Dodd-Frank, Financial Choice Act reform)

Increase capital requirements together with investment flexibility…

„Shadow Banks“ grow with e-commerce, and diversify into investment finance and asset management

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Source: Bloomberg (2017).

China’s Regulation of E-Commerce/FinTech still Flexible


FSI

China Bank Loans (% Growth) &

Shadow Bank Share (% Loans)

Non-performing loans

Note: Bloomberg FSI sums ten components. Bank loans include household and corporate loans. Shadow bank loans are the

sum of entrusted loans, trust loans, and undiscounted bank acceptances.

Trust Plans

Wealth

Management

Security

Funds

Bloomberg Financial Stability Index (FSI)

(higher Index = higher Stability)

Housing price M2/GDP

GDP Growth

Shadow

Banks

Shadow

Banks Private

Bank Loans (left scale)

%

Growth

%

Loans Index

221% GDP

Agricultural Market No wallet living A Beggar on the Street

!

Source: eMarketer; FRI – Jin, Jianmin (2017).

!

https://i0.wp.com/www.aseantoday.com/wp-content/uploads/2017/02/图片1-1.png?w=1145

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2013 2014 2015 2016

Alipay vs. WeChat (monthly Users; Mill.)

WeChat

WeChat Pay

AliPay

Digital Banking Transformation: Fintech in Asia


24

G20 Hamburg Summit – Bottom Line

Alignment of globalization interests and strategies

Security (including finance, digital, energy) spotlight

Digitalization becomes new focus


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