The following is Liu ShijinTranscript of the speech:

Liu Shijin:How can we transform the pressure to address climate change into a driving force for global innovation and growth?At the beginning, Dean Zhang Xiaohui expressed a view that there is too much currency and too low interest rates globally, but growth momentum is still insufficient, and many countries are still sluggish.   

Ray Dalio's speech just now gave us a very important insight: to view short-term issues from a long-term perspective and within a long-term framework. This is the most important lesson we learned from his speech.   

Today, when we discuss economic policy, we often focus more on the short term and less on the long term, especially neglecting to consider short-term issues within a long-term context. Sometimes, when discussing economic policy, we talk a lot about monetary and fiscal policies. However, I sometimes feel that many monetary and fiscal policies may not be able to fulfill their stimulus role. Short-term fiscal and monetary policies are very important; what should be done needs to be studied, and at the same time, it's crucial to understand what cannot be done. In fact, short-term monetary and fiscal policies are for maintaining short-term economic balance and addressing problems. Long-term growth momentum depends on other factors, not short-term fiscal and monetary policies. This point is often overlooked.

I urge everyone to pay more attention to long-term issues and the structural potential that truly drives long-term economic growth.Today I want to talk about this from a global perspective: how to transform climate change into a driver of innovation and growth, because addressing climate change is one of the few areas where global consensus has been reached. Currently, major countries around the world have proposed carbon neutrality goals, and China proposed a dual-carbon target at the UN General Assembly two years ago, which has had a significant positive impact both domestically and internationally.   

How should we respond to climate change? Based on China's experience, there are three ways to respond.   

The first type is the defensive reaction.The main pressure comes from traditional energy or high-carbon industries, which are considering future transformation, restructuring, or even exiting the market. However, in the short term, they are seeing rising oil and steel prices. When supply security is compromised, they feel they still have significant influence. The question of whether or not to exit is already a problem. Exiting is a last resort, which is why I call it a defensive response. 

The second type is the adaptive response.A typical example is energy conservation and emission reduction. Energy conservation is always the right thing to do because it reduces the use of energy and carbon emissions. However, if the technology remains unchanged, carbon emissions will still occur. This includes the carbon market, which addresses the so-called carbon productivity problem. In summary, carbon is essential. 

The third type is the aggressive response.Actively promoting innovation and developing green industries, especially green innovation, and replacing traditional high-carbon energy sources, high-carbon industries, and production methods with low-carbon and zero-carbon new energy sources and technologies, is of paramount importance. 

Of the three responses, the most important is to adopt an aggressive approach. This should be the focus or primary attention not only in China but globally.   

The so-called green transition fundamentally requires a change in technology, that is, replacing existing high-carbon technologies with low-carbon or zero-carbon technologies. The first and second approaches only address specific environments and have limited impact.   

The second point, in particular, emphasizes addressing climate change.Initially, there was a lot of pressure.Initially, we tried to avoid it, but eventually found we couldn't, forcing us to innovate, or rather, providing a crucial incentive for innovation. Historically, crises and major shocks have often spurred change. The relationship between addressing climate change and innovation is similar. Once innovation emerges and gains momentum, we find that these green innovations, besides achieving carbon reduction, generate additional benefits and welfare, creating more consumer surplus from an economic perspective.   

The growth momentum of new energy vehicles is rapid. Last year, new energy vehicles accounted for 13% of the total car market in China, and the growth rate in the first quarter of this year reached 1.4 times. In the first quarter, new energy vehicles accounted for nearly 20% of all car sales, which is our target for several years from now. This growth rate far exceeds people's expectations. BYD announced that it will no longer produce gasoline-powered cars, and will only produce new energy vehicles.   

Let's look at consumer reactions. When consumers buy new energy vehicles, do they pay attention to carbon emission reduction? I can't say that no one does; some people do and understand this principle. However, most consumers focus on cost-effectiveness and performance. First, they feel that the operating cost of electricity is lower than that of gasoline, and secondly, the initial purchase price is lower. Moreover, the in-car system is particularly user-friendly and offers a high level of comfort. The handling of the car after being powered by electricity feels different from before.   

A couple of years ago, I said I'd buy an electric car or a new energy vehicle as a temporary solution, so I could eventually get a license plate and buy a gasoline car. A while later, I said that since I started driving a new energy vehicle, I'm determined not to change. I wouldn't drive a gasoline car; I'd only drive a new energy vehicle—the feeling is completely different. Furthermore, autonomous driving has progressed very rapidly recently. So now we talk about the three key aspects of new energy vehicles: electrification, intelligence, and sharing. The initial motivation for this was carbon reduction, but the actual benefits it has brought to consumers have far exceeded our expectations.   

Third, this innovation can significantly reduce the cost for human society to address climate change.Green products were initially priced high, and Bill Gates wrote a book about this.     Climate Economy and the Future of HumanityHe raised a very important concept called "green premium." What does this mean? When green products first come out, they are relatively expensive and have a premium. However, if we look at the reality, with the intensification of innovation and competition, prices are falling, and the green premium for some products has already become negative. A typical example is photovoltaic power generation. About ten years ago, everyone thought it was unbelievable, but in the past decade, the cost of photovoltaic power generation has dropped by 80-90%. Now it is equal to or lower than the cost of coal-fired power generation, making it competitive. Moreover, industry insiders say there is still potential for further price reductions.   

Therefore, when addressing climate change, we should pay attention to the research findings of Ludhaus and Stromb, among others. One core issue is comparing costs and benefits. Innovation has significantly reduced the cost of addressing climate change. So, after addressing climate change, do we have the capability and confidence? As we innovate, the answer becomes increasingly affirmative.   

Fourth, new technologies brought about by climate changeAs you can see, these are all closely related to digital technology or the digital economy. Since we won't discuss that today, my personal understanding is that the global economy has actually entered a stage of digital transformation. The traditional physical economy and the digital economy are running in parallel. Digital twin interfaces have already emerged, which will bring about truly revolutionary changes. What has climate change driven? It has driven technological innovation, mainly in the energy and traditional industrial sectors. Originally, this digitalization process might have been slow, but now it has been accelerated and will play a leading role.   

Therefore, I believe that addressing climate change is a global issue with a lot to do, but the focus should shift to promoting green technology innovation.Actually, I just asked Mr. Dalio a question. He believes the world is entering a new cycle, so what are the technologies for this new cycle? I think green technology is a very important aspect, and this isn't something proactive; it's something that's forced upon us, and the results will exceed expectations. So, facing pressure and challenges, if we do things correctly and adopt the right goals and methods, we can not only achieve our goals in addressing climate change, but also introduce a major technological revolution globally, thus providing momentum for global economic growth. Here, everyone should note that developed economies have relatively mature economies, but greening, especially greening driven by the digital economy, presents them with new opportunities for transformation and will generate substantial demand. Developing countries, on the other hand, may forge a different path from the past—where growth was accompanied by pollution, but now there is little to no pollution, little to no emissions, or even zero emissions—achieving green development.   

Let me add something else. Regarding the discussion about the impact of the Russia-Ukraine conflict, specifically concerning environmental issues...Recently, some professionals have been discussing the impact of the Russia-Ukraine conflict on the global response to climate change. This is a complex issue, with energy prices rising sharply. How should we view this?While it certainly puts pressure on the real economy, it objectively reduces the green premium of clean energy, thus lowering the relative price level and actually stimulating green innovation. I remember that OPEC used to control global oil prices, and they would sometimes raise them, but they were very cautious because they understood that if oil prices rose, then alternative energy development would have an opportunity. This same principle is still at play now. The Russia-Ukraine conflict has had too many impacts, and we can't generalize about them. At least what impact has it had on green innovation? This is something to think about along these lines.   

Addressing climate change requires international cooperation. The process of globalization is fraught with uncertainty. Can green innovation add some discussion, opportunities, and possibilities? In this regard, as Mr. Ray Dalio just mentioned regarding the US-China relationship, I think the focus of attention regarding new energy vehicles is Tesla. Its Shanghai factory is doing very well, and it's currently in its second phase. Musk has highly praised Chinese workers, saying that their overall quality is excellent, perhaps even surpassing that of other countries. This is a very important advantage for China.   

There are differing opinions in China regarding Tesla's factory location in Shanghai. Some argue that its entry will encroach on our market share, and that some domestic companies will lack competitiveness. However, looking at the industrial chain it has formed, we can see that our domestic new energy vehicle industry can share resources, and some domestic new energy vehicle manufacturers are no less capable than Tesla. Even with a strong competitor entering the market, as long as domestic competition is open and allowed, Chinese companies are in no way inferior. The competitive momentum in the domestic new energy vehicle market provides a very real example among new companies, and we should have confidence.   

Green new energy technologies should be opened up. Once opened up, international trade, investment, and technology transfer will become more active. At the same time, developed countries have more financial and technological support in the field of green innovation than developing countries, which will have a more positive impact on global development.   

Liu Shijin