China's Davos Strategy
China's Davos Strategy
WEF's refocus on tech, a comparative analysis on AI policies, and what China's Davos talking points should be
Tis’ the season of….*drum roll*…. Davos time! This year, the gathering of global elites is set for January 15 to 19th, 2024, and crunch prep time is around now. On December 14, Reuters reported that Chinese Premier Li Qiang is planning to attend the World Economic Forum (WEF) in Davos, and leading a large and senior group of government officials to show Beijing is open for business.
All the world's a stage, and for China's private sector, WEF has been an important performance hall for China’s key players. Huawei’s founder Ren Zhengfei, JD’s Richard Liu, Jianlin Wang of Wanda Group, and many more were regulars at the summit. In 2014, Alibaba's founder Jack Ma became the first Chinese entrepreneur to join the board of the World Economic Forum Foundation. Today, Alibaba, along with Huawei, remains one of the only two Chinese companies that are part of the small list of WEF’s Strategic Partners.
Jack Ma: Love is Important in Business | Davos 2018
Davos in 2024
The world was in a different place when WEF began in 1971. At that time, its founder, Klaus Schwab, initiated the forum by inviting executives from European companies and policymakers to address major global issues. The focus was on sharing best practices in leadership and management. This origin marked the beginning of what would become a prominent annual meeting aimed at fostering dialogue and collaboration on a wide range of global challenges.
Today, the Davos forum has grown in scale and prominence, attracting a distinguished roster of participants including heads of state, finance ministers, central bank governors, and top executives from the private sector. This evolution underscores its significance as a platform for high-level economic and political discourse.
However, in recent years, the forum has faced criticism for becoming an echo chamber for the jet-setting elites. Critics argue that this exclusive gathering is increasingly out of touch with mainstream sentiments and is focused on the consensus that benefits the privileged few while neglecting the concerns of the less affluent and“have-nots.” This perception challenges the forum's relevance and effectiveness in addressing the broader global socioeconomic issues.
WEF’s most recent theme, “Cooperation in a Fragmented World,” acknowledged the shifting dynamics of global geopolitics in the post-pandemic era. This year, the WEF has chosen a theme centered around “exploring the opportunities enabled by new technologies and their implications on decision-making and global partnerships." This tongue-twister aligns with the Forum's long-standing interest in the Fourth Industrial Revolution, a concept introduced by its founder. Additionally, focusing on technology policy presents a less contentious topic compared to discussing a “fragmented world,” suggesting a strategic shift in the Forum's conceptual focus.
Tech, AI, and setting global policy standards
The WEF’s focus on new technologies is timely. After months of intensive negotiations, the European Parliament and Council recently reached a political agreement on the European Union's Artificial Intelligence Act. The European Union is moving fast, and setting a benchmark for global AI governance.
EU AI Act takes a risk-based approach and is intended to ensure the safety of AI systems and provide legal certainty for investments and innovation in AI. The EU's framework stands out for its emphasis on transparency, accountability, and human rights, placing stringent demands on AI developers and users to ensure compliance with its ethical guidelines.
China's progress in AI regulation highlights a strategic balance between fostering innovation and maintaining state control. The latest policy developments in China place a strong emphasis on integrating AI into key sectors such as healthcare, education, and transportation. This approach aims to cultivate an "intelligent economy," where AI is not just an isolated technological domain but a pivotal element in its economic and societal development.
Similar to the EU's perspective, China views AI as a critical tool for national development and economic growth. However, China's approach is a distinct blend of state-led directives and market dynamics. It reflects a comprehensive vision for AI's role in society, and China's ambition to be a global leader in AI while tailoring its use to meet its national and political priorities.
The US's approach, in comparison, is more fragmented, lacking a federal-level, comprehensive AI regulatory framework. This emphasis on market-driven innovation, as highlighted by the OpenAI saga, underscores the risks of leaving ethical standards and industry direction primarily in the hands of private companies.
In summary, the EU adopts a methodical, ethics-focused framework, while China strategically integrates AI into key economic sectors under state guidance. The US is lagging in creating a comprehensive AI policy partly because it’s limited by established legal frameworks, including antitrust laws. It will have to speed up to keep pace with global advancements in AI governance.
It will be interesting to see how the tech leaders from the three regions interact and discuss AI regulation at the summit.
China at WEF: a short history
Back to China’s positioning at Davos and its value for China’s growth narrative. China and Davos began its alliance in 1979, and it’s been a complicated power relationship since the start and traces the story of China’s ascent after Mao. China’s state-owned enterprises, like State Grid and Poly Group, have long sent delegates to Davos.
The Davos forum has become one of the few events where leaders from China's SOEs and senior members of the Communist Party interact with global business leaders and officials. Chinese leaders have also repeatedly chosen WEF for important policy speeches. In early 2017, it was at Davos Xi Jinping made his plea to the world to steer away from trade protectionism and populism.
China’s message to the world through WEF has remained steadfast. Liu He, the recently retired former Vice Premier, reassured the audience at the last WEF that China was still a good place to do business.
“China’s national reality dictates that opening up to the world is a must, not an expediency,” Mr. Liu said then. “We must open up wider and make it work better. We oppose unilateralism and protectionism.”
Under the backdrop of increasing protectionism, and global economic uncertainties, this year, the stakes for Chinand and the companies in attendance are higher, the messages from the public and closed-door discussions will be scrutinized closely.
So what should the messages be?
I had a chat with a Calling the Shots subscriber, Andres Luther, who also works in comms strategy, and served as an advisor to boards and worked extensively with Chinese companies. I distilled our “brainstorming session” into the following general talking points for Chinese companies attending Davos.
The China Davos Talking Points
(Channeling the voice of a Chinese 商业大佬 on stage at Davos and in one-on-one meetings)
On why Davos: Engagement is the foundation for understanding, and that’s the basis for trust and collaboration. Davos has been a stage for businesses around the world to present their vision for the future and broadcast it to the world. There tends to be a lot of noise on the Magic Mountain. Yet it is also an important place to listen, to filter the noise from valuable signals.
On the global realities: 2024 is a crucial year. The world, shaped by strong trends and headwinds, sees public institutions, governments, and the private sector searching for new directions to tackle domestic issues and seeking innovative ways to collaborate globally. It's vital to listen, debate, synthesize, make our voice heard, and shape the discourse. This holds true worldwide, for companies in China, Korea, the US, and beyond.
Ivy's note: It’s key to acknowledge that Davos has been criticized in recent years as the echo chamber for the elites, but also reassert the importance of having a gathering place to listen and observe trends. Chinese companies’ participation is a way to engage with the global community and allow for people-to-people level exchanges.
On China’s place in the world: The industrial and digital revolutions have historically been shaped by Western economies, with China and most countries outside Europe and North America following their steps in the past. In the highly developed economies, the knowledge economy accounts for a significant share of activity. Here, a large part of the value is intangible, such as workforce knowledge or intellectual property. Presently, China is transitioning towards a knowledge-based approach to innovation across various industries, moving beyond its earlier role and increasingly contributing to global innovation.
Ivy's note: In 2023, incumbents in the US and EU faced worthy opponents across industry sectors—from Chinese EV companies to cross-border e-commerce companies. 2024 will present many opportunities and challenges for Chinese companies to build trust in international markets. This long-term opportunity contrasts with the concerns about the strength of the Chinese economy, which investors consider China uninvestable at the moment. But whether this is a trend or a fad is determined by the time horizon of the current sentiment.
The Knowledge-based Economy Thesis
The global economy and societies are being transformed into a knowledge-based economy. The knowledge economy is a system of consumption and production based on intellectual capital. In particular, it refers to the ability to capitalize on scientific discoveries and applied research. In the knowledge economy value comes from collaboration. Competition will not crush us, but make us stronger. China will play a decisive role in the global transformation to a knowledge-based innovation model.
The creation of new tools provides access to new knowledge, products, and services that can improve our lives and drive economic growth while preserving our commitment to the environment.
The key to development and value creation in the knowledge economy is collaboration. Technology enables the creation and management of more complex networks, which in turn enable the management of greater complexity and diversity in research, development, manufacturing, and professional services.
Cue the company’s specific case studies.
Ivy's note: Acknowledge the global sentiments on China’s current state of the economy, but offer a new perspective to look at China’s potential opportunities and direction. The concept of the "knowledge economy" provides a constructive way to view China's advantages in diverse industries, talent, and technological innovation. This thesis is applicable across various sectors, from electric vehicle industries, fintech, venture capital, and cross-border e-commerce by adding specific examples and progress.
The 2024 Davos vintage can be an exceptional one. As frigid as it gets, enjoy the stage.
Ivy Yang is the founder of Wavelet Strategy, a New York-based strategic communications and reputation management company (www.waveletnyc.com). She writes a Financial Times Chinese column called 话语权时代, and an English substack— Calling the Shots: Bridging the U.S.-China Communication Gap, stories of wins and fails. Learn more about why she writes and what she writes, click here.