When Klaus Schwab was planning the European Management Forum in 1971, Deng Xiaoping was ‘re-educating’ himself at a tractor factory in Jiangxi. But when Schwab heard that a rehabilitated Deng was launching economic reforms in early 1979, the German economist went to Beijing and invited Deng to come to Davos to speak at a gathering that would come to be known as the World Economic Forum.
Deng declined but sent a team of economists to explain what he was planning to do next.
Since then China and Davos have become “one of the oddest power couples,” as the New York Times put it last month. In 2017 in particular, Davos provided a stage for Chinese leader Xi Jinping to extol the virtues of free trade and multilateralism. And a year later, as China celebrated the 40th anniversary of the launch of its reform era, Klaus Schwab was one of 10 international recipients of the China Reform Friendship Medal.
In recent years Davos has inspired what Chinese dub their own “conference economy” – in which the claims of a particular city or sector are propelled via high-level summits and gatherings.
China’s leading cities rarely go a month without holding a major conference or exhibition – that is, until the coronavirus outbreak last December, which has brought much of the country’s economic activity to a standstill.
Indeed, the conference sector now looks like being one of the worst-hit industries by the virus crisis, after a flurry of cancellations and delays. Increasingly these are not just in China, but worldwide.
Not meeting this year…
The latest iteration of the World Economic Forum could have been called off had it been held a week or two later than scheduled. The four-day gathering started on January 21, just two days before the Chinese government decided to lock down Wuhan, where the Covid-19 outbreak started, as well as a number of nearby cities in Hubei province.
The Chinese delegation in Davos was headed by Vice Premier Han Zheng this year. Although Han did not mention the outbreak in his address to the forum, representatives from other countries admitted to some sleepless nights.
Take Jamie Dimon, the JPMorgan chief executive. “I had this nightmare in Davos – all of us went there and got it and then we just spread it. The only good news from that is that it might just kill the elite,” he mused darkly at the bank’s investor day this week.
Dimon was reluctant to make predictions on the impact of the epidemic, which has already claimed more than 2,700 lives in China. But while he was meeting shareholders, the Dow Jones Industrial Average was taking a dive that saw the key index shed nearly 2,000 points at the start of this week (a sell off that continued through the week culminating in an almost 1,200 plunge yesterday).
The meltdown was triggered by the spread of confirmed cases outside China as the infection rate picked up sharply in countries including South Korea, Italy and Iran.
Which conferences have already been cancelled in China?
According to Chongqing Commercial News, 121 firms listed on the Shanghai and Shenzhen stock exchanges have cancelled or delayed their annual shareholder meetings since the beginning of February (when the number of new cases of the Covid-19 virus in China was spiking at the highest rate).
Total confirmed cases in China had surpassed 78,600 yesterday, although on a brighter note the number of new cases outside Hubei has dropped to single digits in recent days.
That more encouraging trend wasn’t enough to save the Boao Forum, one of the numerous attempts in China to replicate the gathering in Davos.
Named after its host town on the tropical island of Hainan, the annual meeting was expected to take place a month from now. The yearly appearance of business and political elites – including Xi Jinping himself last year – has turned Boao, once a largely unknown town, into a popular resort. But organisers have already postponed the four-day conference, and it may well be cancelled altogether.
The Canton Fair, which has a much longer pedigree of bringing together cross-border traders in Guangzhou, will also close its doors, cancelling the spring season in April. Another flagship event going into deep-freeze is the China Development Forum. It made more headlines last year in the midst of the Sino-US trade row, when heavyweight executives like Apple CEO Tim Cook turned up to speak. Arranged by the Development Research Centre, a senior policy thinktank under the State Council, it is now seen as an important networking event. Not this year, however.
Other less elite pow-wows are falling by the wayside as well. According to 21CN Business Herald, a host of local governments have called a halt to public gatherings and discouraged conferences of the traditional type. As a consequence an estimated 210 events or exhibitions scheduled for February have been postponed. More than 100 more due in March have also been affected.
Healthcare experts have expressed hopes that the spread of the outbreak in China might have reached a peak this month, with the number of cases dipping further as the weather turns warmer. Executives at Alibaba will also have their fingers crossed: the internet giant is planning a huge fintech trade show in Shanghai at the end of April. It promised last month that the inaugural INCLUSION Fintech Conference would attract more than 30,000 industry insiders from around the world. One of the rumours is that it’s a curtain-raiser for Ant Financial’s much anticipated IPO. Ant postponed its listing plan last year, but with a potential valuation of as much as $200 billion, the world’s most valuable unicorn won’t want another delay.
Which other industries are being affected?
One of the major international casualties of the coronavirus is the telecom world’s showcase event in Barcelona. The Mobile World Congress is normally a hotspot for product launches. It’s also the occasion where Huawei unveils new contracts with international partners, but it too was cancelled this month after many of the participants pulled out on health fears.
Another victim of the virus is the Beijing International Automotive Exhibition (more commonly known as Auto China). Being the biggest automotive industry exhibition in the world’s largest auto market, the high profile show is often used by carmakers to launch new models.
This year it was supposed to start on April 21 but the Chinese capital is still on top-level alert against Covid-19. Visitors to the city have been required to go into 14-day quarantine since February 15. So it was no surprise when it was announced this week that it has also been rescheduled to an unspecified later date.
That’s another blow to China’s slowing auto market. After shrinking for two consecutive years, sales are expected to take a more severe plunge in the first quarter. With many of the traditional sales channels blocked, carmakers and distributors have been trying to move more of their business online. But the results have been negligible: car sales nationwide in the first week of February slumped 96% to a daily average of just 811 vehicles, reports Reuters.
How about political gatherings?
Probably the most notable cancellation so far is the postponement of the so-called Two Sessions, the annual meeting of China’s two parliamentary bodies, the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC).
The NPC’s standing committee said on Monday that the parliamentary session this year would be reconvened at a more “appropriate” time. The Two Sessions is arguably the world’s biggest political meeting of its kind, with more than 5,000 delegates coming together from all over the country in early March (see WiC483). But Xinhua explained that it was impossible to hold this year’s session as a third of the attendees are local officials that need to “focus on fighting the outbreak”.
For many international observers the NPC has a reputation as a rubber stamp (nearly all of its votes are approved nearly unamimously by delegates). Yet China’s politicians have showcased some rather innovative cyberpolitics in the manner of the Two Sessions delay.
The decision to hold back the parliamentary sessions came after a meeting of the senior members this week to which a number of delegates dialled in from around the country.
Later they all voted (hands in the air) to approve the delay, with footage of each person transmitted back to a big screen in Beijing.
Xi has also just staged what could be classed as the world’s largest online political meeting. On Sunday, the Chinese president held a teleconference to which at least 170,000 Party cadre and military personnel were invited. During this ‘contactless’ gathering, Xi again rallied efforts to fight the virus on two fronts: containing its spread, and stopping it from derailing the economy. Hu Xijin, editor-in-chief of the Global Times and a resolute cheerleader for the decisions taken by China’s political elite, said the meeting was a rare chance for junior officials to hear directly from the very top of the Party. “I really hope that such conferences can be held more regularly… because it can help to reduce the omissions and variations of some key information in the communication process,” he wrote on Twitter.
And what about Xi’s trip to Japan?
The next major decision for China’s president is whether to go ahead with his state visit to Japan. The foreign ministers of the two nations agreed on Wednesday to continue their planning for the visit, which is scheduled for April.
When the outbreak first began the Japanese blocked arrivals of Chinese passport-holders from Hubei province, but not from the other parts of the country. Critics are accusing Abe Shinzo, Japan’s prime minister, of taking too long to widen the travel restrictions because he didn’t want to upset his counterpart on the eve of his visit.
The Japanese are now struggling to stem the spread of Covid-19 on their own soil, with confirmed cases approaching 200, and four deaths. That means that both nations may prefer to postpone Xi’s visit to a later date. After all, the bigger nightmare for the Japanese is that the virus prevents the nation staging the Tokyo Olympics, which are due to start at the end of July. Government officials in Tokyo have been insisting that this isn’t under consideration.
Sporting events that have already been postponed include the Hong Kong Sevens rugby tournament – which has been delayed from April to September. Football matches in Italy have also been disrupted this month, with an Inter Milan match called off.
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