On March 21, Michael Spence, the laureate of Nobel Memorial Prize in Economic Sciences 2001, Professor and Dean Emeritus of Stanford University Graduate School of Business, shares his insights with PBCSF Global Finance GSFD student, on "The Way of Global Economic Recovery in the Post-pandemic Era". The seminar was hosted by Wei Chenyang, Deputy Chair of the Institute for Fintech Research, Tsinghua University (THUIFR).
Scene of the class
Over the session, professor Spence conducted an in-depth discussion on the characteristics and trends of the global economic recovery. With efforts of emerging economies including China, the COVID-19 pandemic is gradually under control, contributing to a V-shaped recovery in the economy. The recovery progress of each country depends on its pandemic control, and the speed of recovery hinges on the progress of vaccination. Countries should stay confident in overcoming the pandemic. Governments of countries play an important role and should be aware of their limitations while stabilizing their economies. Low-income countries may be heavily in debt as a result of economic recession, thus a wider range of structural adjustment is required. Also, there is a need for international regulations to expand the supply of vaccines.
Michael Spence sharing his views online
Professor Spence said that the current economic recovery is sustainable to some extent, and technological change functions as an important driver of development in the post-pandemic era. There are also uncertainties in the economic recovery, such as unemployment and the possibility of vaccination failure. Facing opportunities and uncertainties, we should embrace technological changes to achieve economic development.
The second topic is “the reform of China's financial industry”. Professor Spence shared that he is impressed by China's pace of reform. Researches show that the combination of the accumulated mass data and machine learning can produce a high permeability, so the e-commerce and mobile payment industries are developing in a good condition, creating new channels for debit and credit. This proves that digital banking is seeing healthy and sustainable development. With the rapid development of the digital platform, the capability of risk pricing needs to be integrated into the financial system. If used properly, it will strengthen inclusive finance and maintain the feasibility of regulation and financial stability.
Regarding the most promising industries, professor Spence said that he is optimistic in three areas: digitization, health and bioscience, and circular economy. For digitization, there is still a long way to go in terms of promoting economy. But there will be many investment opportunities along the way, and it is of high investment potential to realize basic medical care, remote diagnosis, education platform sharing, etc. via digital technology. For health and bioscience, the improvement of computing requirements and the progress of machine learning technology allow us to go farther in exploring genes and diseases, and the field of medical science may achieve explosive growth. For circular economy, the focus of this area is to develop the economy in a controllable manner. With the growing concern of the environment and climate governance, how to provide solutions to the development of ESG (Environment, Social, and Governance) becomes a global issue. This will also present us with opportunities.
The scene of the sharing session
In the followed Q and A session, professor Spence answered questions raised by students. He also shared his views on the development trend of China-U.S. relations. In his opinion, China and the U.S. have always been interdependent and cooperative with each other closely. Different institutional systems and values force us to accept some facts, such as the tense status quo in technological competition. However, we can also cooperate on some issues, such as climate change, the control of the proliferation of nuclear weapons, the transformation of the international financial system, and the development of health care. This is a mature and rational choice. According to professor Spence, China and the U.S. can strengthen bilateral relations based on cooperation, but it takes patience to reach that. Despite a lot of contradictions at present, we should not neglect the good foundation for cooperation between two countries.
