“With the world as economically integrated as it has become in recent decades, any lurch into economic nationalism would dislocate commercial activity even further and risk turning the global crisis into a depression,” he said.
The ICC Chairman spoke at The Global Think Tank Summit organized by The China Centre for International Economic Exchanges, which was set up by the Chinese government in March to develop strategies to steer China through the current economic crisis. The centre is headed by former Chinese Vice Premier Zeng Peiyan.
ICC, as the voice of world business, has recently held private meetings with world leaders to urge governments to resist protectionism and increase international cooperation as part of a solution to global problems such as the economic recession and climate change. In March, Mr Fung met with British Prime Minister Gordon Brown, ahead of the G20 Summit on 2 April. Last month, an ICC delegation met with Italian Prime Minister Silvio Berlusconi, to provide official business input to the G8 Summit he will host on 8-10 July.
The ICC Chairman told the 1,500 persons attending the three-day summit in Beijing that the economic slump has its roots in a decade of cheap money, high leveraging, easy credit, and the associated real estate bubble. He said key actors in the financial sector of many countries, whether retail banks, investment banks, bank supervisors and credit rating agencies must accept blame for the crisis.
But he added that governments and consumers must also share in the blame for encouraging the illusion that the bubble was creating real wealth.
“ICC has consistently argued that a market economy can only work well within a framework of rules,” Mr Fung said. “The consequences of the financial sector’s mistakes have inflicted great damage on other sectors of business where the market economy was functioning normally to allocate scarce resources productively and to create real wealth.”
Recognizing that what he called “the mistakes and failures” of the world financial sector will almost certainly lead to greater government regulation and supervision, Mr Fung said: “Care should be taken not to allow a mood of regulatory enthusiasm to spill over into other sectors of business where the market, or current light regulation or self-regulation, is working well.”
Mr Fung again urged that the Doha Round of trade negotiations be finally approved. “By concluding Doha, governments would demonstrate unambiguously that they are serious about fighting protectionist pressures and reviving international trade,” he said.
He called on the G8 countries that will meet in Italy next week “to exercise the leadership required and commit themselves to bring about a Doha agreement with a minimum of further delay.”
Mr Fung emphasized that the global recession should not be used as an excuse to either put globalization into reverse or to further delay internationally agreed action in combating climate change. “Indeed, the more rapid and successful attainment of environmental objectives should be a priority in government stimulus plans,” he said.
The conference, which ends tomorrow, will be marked by the signing of “The Beijing Initiative,” which calls for enhanced global cooperation in addressing the recession and rejects trade and investment protectionism.
Mr Fung will chair the closing ceremony tomorrow afternoon.