Security guards conduct a drill in front of the Tianjin Meijiang Convention Center, venue of the Summer Davos Forum. Photo: CFP

Editor's Note:

The World Economic Forum's eighth Annual Meeting of the New Champions, or the 2014 Tianjin Summer Davos Forum, will be held Wednesday through Friday, with the focus on the Chinese economy. This year's forum is expected to draw a record number of attendees who will share valuable comments and insights on the country's reform-bound economy. 

Macroeconomic outlook

Beyond any doubt, discussions centering on the outlook for the Chinese economy will be among the hottest themes during this year's forum.

After a shaky start to the year, the economy showed signs of steadying in the second quarter as a flurry of government measures kicked in. But a slew of economic indicators for July that point to further economic softening had the market wondering about the durability of the economic recovery.

The data fluctuations amid uncertainties about the global economic recovery and challenges for domestic economic reforms, however, cannot be seen as a recession-style downward spiral for Chinese economy.

During a meeting on Tuesday with entrepreneurs attending the 2014 Tianjin Summer Davos Forum, Chinese Premier Li Keqiang said that the fluctuations are still within expectations.

The nation will maintain the stability and continuity of macroeconomic policies, according to the premier, who said the Chinese economy is capable of achieving its major targets set for the year.

Among the major official economic targets for 2014, there has been little worry over realization of an annualized inflation rate of 3.5 percent and the broad M2 money supply growth of 13 percent, while the achievement of the 7.5 percent GDP growth has occasionally been doubted - whenever there were signs that China's economic recovery might be faltering.   

"The market shouldn't be perturbed even if there are slight fluctuations above or below the 7.5 percent growth target," Wang Jun, an economist at the China Center for International Economic Exchanges, a Beijing-based government think tank, told the Global Times on Tuesday.

At a panel discussion devoted to China outlook scheduled to be held on Wednesday afternoon, panelists such as Ma Jun, chief economist of the Research Bureau of the People's Bank of China, and Lord J. Adair Turner, senior fellow of the UK-based Institute for New Economic Thinking, will analyze the economy's growth trajectory. 

Shifts in financial sector

Changes underway in finance, the lifeblood of the economy, are also a thematic topic at the forum.

Over the past year, the nation's financial sector has seen tremendous changes, driven by the China (Shanghai) Free Trade Zone inaugurated on September 29, 2013 which is seen as a testing ground for financial reforms.

On top of that, the booming Internet finance has transformed the financial industry at large, with a rising number of online investment vehicles being accessible for even the most average investors in the country. Smaller businesses that are in dire need of financial support also find their way to credit through various Internet-based lending platforms.

But instead of a mere euphoria, the emerging Internet finance, which largely remains outside of official oversight, is still seen as a ticking bomb, as there have already been reports of certain peer-to-peer platform operators closing or fleeing with clients' money.

As for the local government debt, another key problem in the financial system, a set of amendments to the budget law was approved by the nation's legislature at the end of August, establishing a legal framework for local governments to issue bonds. It is believed that the issue of local government debt is at least partially addressed. 

"Better regulated municipal bonds could help reduce risks and costs of local government debt, as local governments begin to rely less on shadow banking channels for funding," Bank of America Merrill Lynch economists in Hong Kong led by Lu Ting said in a research note.

A session focusing on discussions about the rebooting of Chinese finance planned for Thursday afternoon will tackle the aforementioned key issues.

Panelists including Nicolas Aguzin, JPMorgan Chase's chairman and chief executive for the Asia-Pacific region, Liu Lian'ge, vice president of Export-Import Bank of China, and Shi Wenchao, president of China UnionPay, will share their visions of the nation's fast-evolving financial industry during the session.

Product safety concerns

There is a broadly shared view that domestic consumption will be a pivotal growth engine of the Chinese economy as the nation deepens reforms.

While the growing buying power of the Chinese consumers is barely in doubt with sustained growth of the economy, mounting safety concerns have dented consumer confidence.

Among the rising number of cases that have exposed various product safety problems, those related to food safety are of the greatest concern. A recent case that has drawn widespread attention and media coverage is a food scandal in July in which workers at OSI Group Inc's Shanghai Husi plant were found to have used expired meat and doctored production dates.

Companies including McDonald's and KFC parent Yum, among others, were dragged in the scandal, shaking Chinese consumers' trust in these foreign brand names.

A session that sets the focus on product safety will be held Wednesday morning, with panelists such as Katty Lam, chairman of PepsiCo's Greater China Region, and Nandu Nandkishore, who heads Nestlé's Asia business, participating in discussions on the importance of enhancing product traceability and strengthening compliance systems to create a truly trustworthy consumer brand.  

Energy transformation

While a variety of sectors are of great significance for the Chinese economy, the energy sector might play a particularly critical role as measured strategically, therefore it appears to be natural that strategic shifts in the energy sector are likely to be among the most keenly watched issues at the forum.

A session on Wednesday afternoon will be especially devoted to trends, business models and emerging technologies that are transforming the energy arena at large.

Guests joining the session include Khalid A. Al Falih, president and chief executive of Saudi Aramco, and Gao Jifan, chairman and CEO of Trina Solar, a US-listed company based in Changzhou, East China's Jiangsu Province. Zhang Yuqing, deputy director of the National Energy Administration, will speak at the session as well.