David Daokui Li: Reform far from enough for burgeoning economies

Upon invitation, David Daokui Li, Director of the Center for China in the World Economy and Dean of the Schwarzman Scholars at Tsinghua University, delivered a keynote speech at the annual Lujiazui Forum in Shanghai on June 26th, 2015. In addressing the topic of "financial reform and opening up in the New Normal," Li pointed out that reform in financial mechanisms for burgeoning economies is far from enough and the Asian Investment Bank, initiated by China, will challenge the current form of global governance in three aspects.

Drawing from the Global Financial Council and European Stability Mechanism as examples, Li explained that developed nations have made “significant” progress in micro-economic supervision after 2008. In contrast, developing countries have a great deal of room to improve in this regard. One typical case of this was the huge fluctuations in exchange rates and capital market prices in developing nations after the US announced that it might cease its QE policy in 2013. A lack of judgment, confidence, and information was the reason behind this.

Speaking on China, Li said that the country must be aware of its potential role in global governance, and the recent establishment of the Asian Infrastructure Investment Bank and BRICS Development Bank will soon pose a challenge to the current form of global governance when it comes to talent, opinions, and managerial mechanisms.