in this holy place, make you get all of this about the problems that concern us all in the world. Pleasure that you will once again visit the United States and the great need for such a visit to reach the way to say once again, I am sure that many of us, millions and millions in the world, have had our faith review of what does sense on women here to help us in those times and I think in this holy land he has once again done that and the need was so very great and we're all grateful just to thank God for it.


From San Jose, in the heart of Silicon Valley, extracting the signal from the noise. It's theCUBE, covering OCP, U.S. Summit 2016, brought to you by OCP. Now your host, Jeff Brick and Stu Miniman. Hey, welcome back everybody. We are coming to the end of day one here in downtown San Jose, the Open Compute Project Summit 2016. It's all about hardware, it's all about cloud, it's all about open standards and really, you know, building the infrastructure that supports this thing called cloud that we talk about all the time. There actually is some hardware back somewhere that we're leveraging. So for this segment, we're really excited that David Floyer on co-founder and CTO of Wikibon, David, welcome. Thanks very much. So you've been walking the floor, going to the sessions, what's your kind of initial impression? My initial impression, well, the cloud is alive and well and expanding hard and the rate of change of the infrastructure, the innovation has accelerated significantly over the last two years of OCP. So I'm impressed, I'm impressed. It's a geekfest here. I'm in general impressed with the level of innovation, the speed of things that are going on, the way they're solving problems, overall very impressive indeed. Innovation just as simple Moore's Law kind of stuff or how much has the open source component in OCP applied at hardware driven speed of innovation? So if you look at Moore's Law, it's coming, it's stopped in terms of gigahertz and they are applying other technologies to fill in that gap. So they're looking at, for example, ways of using much faster interconnect between the computers, much faster networks. They're looking at Flash as just a bunch of Flash, J-Bof, the new term that's come out here. Just a bunch of Flash. They're coming out with J-Bof, they're coming out with in general innovative ways of overcoming what used to be solved by just waiting a couple of years and the process is getting faster and faster. There's a limit on the number of cores you can actually throw at a problem. So they're using GPUs now to speed up things. So the innovation is because the traditional way of solving those problems is no longer there. So David, when I first joined Wikibon, you talked to me a lot about what some of these really big companies, I mean how Apple was using Flash and we talked about how these hyperscale companies got these team of really smart people, the PhDs to build stuff. Now OCP is helping to really drive this to kind of broader adoption. I know you've been at the Joe a number of years. So how do you say the progress of how OCP is going? How does it impact what's going on in the marketplace? If you look at the original specification of OCP, Facebook defined a number of machine types, defined the workloads, and then said okay, this is OCP. That has significantly changed now. You're seeing individual technologies evolving for very specialized problems that large data centers are having. And so it's being applied on a much broader scale than it was before. So OCP is now no longer just Facebook. It's all of the people inside that. It was interesting today that the majority of the speakers were from Microsoft, from Intel. Going around the floor, there's a lot of different players who are playing it. Whereas in the original days, it was just Quanta and Facebook and a few other people on the side. So the depth of the technologies, what they're taking on is very different from what it was. Is it essential? Absolutely. You say that's a good thing, right? With less Facebook means more of everybody else. It means more of everybody else. And what's happening fundamentally, as you said at the beginning, to get SQL working with Facebook was a science project. You needed PhDs. They were squeezing every last drop. They are now putting these systems, they are normalizing, putting in these big systems, normalizing the use of Flash, normalizing the use of GPUs. And it's enabling the software itself to develop at a much faster rate. So one of the things we always look at, David, is it's not only that, there's big ecosystem building around this. As you said, Microsoft's big here. Intel, of course, major platinum sponsor of everything. All these networking and storage companies, but certainly some of the practitioners. So Goldman Sachs quoted in a lot of these environments saying, you know, broad adoption. Bloomberg's got this fancy rack of their environments here. So, you know, the financials are kind of something that you expect. The telcos, there was the panel in the keynote this morning is there adopting. So, you know, starting to see some of those early big customers, the ones that we say, they might not be, you know, one of the big public cloud providers, but they look like a service provider to their own enterprise in there. So, you know, what's your take on the customer side? Well, the most interesting to me is the whole area of networking. I found it was very interesting to see up on the same stage, AT&T, Verizon, Deutsche Telekom and somebody from Sweden as part of a telecom panel who jointly are putting together what they want to have is the white box, the white box solution going away from the proprietary, huge Cisco developed, Broadcom developed proprietary software, proprietary hardware, all bundled in together towards splitting out the planes, providing software capabilities through virtual networks, which is something which you would have expected to have been here by now in volume, but being able to personalize networks. The amount of effort that's going into there to move what is traditional mainframe type networking into the 21st century of white boxes and much faster development and much more ability to provide new services and new ways of doing things, I think that's really a indicator of what the future is going to be. Both within the data center, 100 GB just normal now, looking ahead to much, even higher speeds, looking at the ability of the telecom companies to provide 5G and much greater mobile capability. I think it's exciting. It really is a major change. So David, the interplay between the network and what's going on in storage is pretty interesting and right up your alley. So Facebook made a statement, and I'm hoping you can help unpack it for our audience, because they said with 100 gigabit ethernet, data locality doesn't matter, but there's a clarifier. So I looked at there, flashed with NVMe, really local, versus, talk a little bit about that interplay. You've talked a lot about low latency and data locality. There was a little sentence he quietly said within the data center. A little asterisk on it. He said within the data, he suddenly caught himself and he said within the data center. So yeah, it's really exciting within the data center. It used to be that the disk drive was so slow that everything had to wait for that. That was 25 milliseconds. You can do so much in that time. Now it's down to 350 microseconds. It's going down even more. The cost of the 3D flash going into these devices is going to bring down the cost dramatically over the next couple of years. So you've got oodles of IO. You've got storage at the same, literally the same price at the moment. It's two to one gigabyte per for the flash modules. It's coming down to be very similar to disk. That means that whole speed of access to data is just going to go through the roof. At the same time, the access time between processes is going down with 100 gigabit connection. So you can do RDMA over whatever you want in FiniBand or in FiniBand over Ethernet or Ethernet over in FiniBand. There's so many different versions of going on at the moment. PCIe coming through really strong PCI connections, PCI switching within that. All of these technologies are speeding up the whole of the data center, which means that parallel computers can be so much more able and capable across a big data center. It's exciting. So David, I remember a few years ago you started writing about how kind of the HPC, the computing is bleeding in the enterprise. Absolutely. We've looked at cloud computing, gives us practically limitless number of cores, capacity of storage. Number of GPUs, yeah. And GPUs now as networking becomes shrunk down to huge bandwidths. I have all the bandwidth now. What's that going to mean on the application? Well, there's two things about community networks. One is bandwidth, the other is end-to-end latency. And the speed of light, unfortunately, has not come down. We haven't fixed that one yet. We haven't fixed that one. Got a request in, but hasn't been fixed yet. I'm sure somebody's going to solve it. We had Bell Labs up there, IBM Research, Google. Somebody's going to break that barrier. You think so, right? No, I don't think so. Until they do. Too many semesters of physics under my belt for me to think that they're going to break it. So you still need, in fact, that Flash and this 100 gigabit ethernet actually make it, you want the data center to be smaller and smaller and smaller. So if you think, for example, edge devices, which are capturing all this data, the cost of moving all of that data over that network is so high that you'd never want to do that. So you're actually going to have edge networks with a lot of processing, a lot of capabilities, a lot of big data inside the edges themselves. And then you're going to have your central networks themselves. So it's not going to be the few data centers, the 100 data centers around the world. There are going to be an awful lot of edge data centers doing an awful lot of work, unmanned, out everywhere with warehouses and on wind farms and everywhere else around the world. And they will be doing an awful lot of work and there will be a lot of communication between those edges and the clouds themselves. So that requirement to minimize latency is still there. Yeah, so David, actually a really good point that you bring up there, Intel made a statement that like 70 to 80% of all compute, I think it was compute that they said are going to live in these really large data centers. So that might be thousands of nodes. And there was some conversation through the social channels saying, well, what about edge? You know, so what's your take? What's the breakdown? Because I think about it, you know, the core, the cloud, you know, the amount of nodes that it has, it's going to be massive compared to the edge. You know, there's lots of devices, but how many of them are really devices versus, you know, can I take a thousand devices and aggregate that down to a single node or, you know. Well, if you think about the internet of things, it's really built around sensors, isn't it?  Those are going nanoscale now with the introduction of new types of sensors. Those sensors are on things of one sort or another. It's very difficult to have, you know, two engines in the car and share a sensor between them. You have to have one each. So the sensors are going to be spread out. The sensors, interestingly enough, are all developed for the ARM processor. So the ARM is going to be a significant portion of that bringing together of stuff on a distributed basis. You know, inside the home, inside the car, et cetera, you're going to have an awful lot of sensors, thousands and thousands of sensors. Most of that sensor data is irrelevant to the rest of the world.  Whatever that system is. Whatever that system is, the warehouse. Most of it's going to be very local. Most of it's going to be thrown away. So you're going to have good processing there, pairing it down, cutting it back and only sending up the signals that are really necessary to the center. So to answer your question about the ratio between them, you know, if I was having to guess, I would say it eventually will end up around 50-50.  That's a much cheaper way of doing stuff than moving all of the data from point A to point B. But David, I still feel like we're in that same spot that we used to always be in with the OS in the Intel chip, right? Faster chip's better, big fatter OS. Faster chip, fatter OS.  So yes, we're going to have all these, you know, continued advances on the compute, the network and the storage. But on the other side of the equation, like you just said, the amount of data that's being thrown off that we care about, and you said that a number of times, you don't want to care about all of it, but the amount that we do want to care about is going up crazy. So we're still, you know, it's kind of this arms race between capacity and stuff to fill it. How's that going to shake out? Will it ever shake out? Is this, you know, as soon as you open up capacity, someone's going to find something that they couldn't do before. Now I can do it. I'm going to fill that thing up. Well, you know, there's at least 10 or 15 years to go before we ever reach any limits on capacity or the number of bits that we can store, et cetera. Even just with flash technologies, I mean, maybe some technologies beyond that. There's still an awful long way that we can take these technologies as they are and get more and more stuff out of them. I think the exciting thing is that we have so much compute and number and information that it's going to make the programming capabilities, the artificial intelligence, the systems of intelligence. Those are to me the really exciting next breakthroughs that are happening. You will see a glimpse of it with things like Watson, but there's so much going on. Facebook themselves are using these GPUs to just improve recognition of faces. They said they've done that by 60%. If they do that for the next 10 years, they'll be very, very good at recognizing faces. So there's all of this artificial intelligence that's going on, the ability to drive a car, you know, the fact that we can go from point A to point B and much less aggravation and much less risk. It's exciting to me, but I think the emphasis will move towards algorithms, towards automating stuff, towards reducing the number of people required to do an awful lot of stuff in the businesses themselves. So I think that's where the most exciting use of these technologies will be and the biggest challenges ahead. Yeah. Yeah, I mean, David, do you know what I remember when OCP first started, you know, one of the things that really jumped out to a lot of us was if you look at the enterprise and you say, how many machines can a typical administrator manage? It was, you know, you do good, you manage a few hundred. And in the hyperscale space, you know, Facebook, when they started, it was like 10,000. So I mean, we're talking like two orders of magnitude, not 30% cheaper. It's that operational change that's there.  Sure, there's going to be edge, but the amount that needs to be managed, it's going to be consolidated down to a fewer number of players, service providers, cloud providers and the like. And that operational model, I think that's something we've highlighted. It's the operational shift, now that's going to be significant and the vendors and the platforms need to be able to. There's two trillion being spent on enterprise operations. We see that going down to one trillion over the next 10 years. It has the ability to go down much, much further than that. Well, the capacity expands. Yeah, well, the capacity is going to go astronomically. So, and the vendors have to take on responsibility for doing all of that work automatically. They should, the amount of non-differentiated work that goes on in data centers is far too high. So, public clouds, private clouds, run by people who know how to run these things, that's where the emphasis is and then set the programmers free to really come up with the algorithms of the future. I think it's very exciting. Well, good times. Well, David, thanks for sharing your perspective. Always good to go. To go deep with Dave, as we like to say at the office, we have a lot of Dave's. David Floyer, David Vellante, got a lot of smart guys. So, thanks for sharing your insight. You're very welcome. Appreciate it. So, David Floyer, Stu Miniman from Wikibon. I'm Jeff Frick from theCUBE. We are live in San Jose, California at the Open Compute Project. This is the end of day one. We'll be back tomorrow for another day of coverage. So, be sure to tune in SiliconANGLE.tv and look for the Open Compute Project Banner. Also, again, want to thank our sponsors, Pika8, Melanox, and Micron. Again, without our sponsors, we couldn't go out to all these shows. We did about 80 shows in 2015. So, thank you very much for enabling us to go out, find the smartest people we can find, ask them the questions you want to answer, separate the signal from the noise, and share it back with you. So, we'll be back tomorrow. Thanks for watching. Jeff Frick signing out from OCP 2016.


We're missing one of our speakers. Yeah, yeah. Without Uri, we are moving right along. We're a little bit late. We're trying to catch up. I'm Richard Cooper from Harvard University. And we're going to talk about the world economy in this session. 10 days ago, there was the annual meeting of the World Bank and the IMF. And on such an occasion, the IMF comes out with its world economic outlet. Over the past 10 years, the IMF has typically been too optimistic in assessing the near term next two years' outlook. And regularly, they've had to revise downward their estimates. So this past 10 days was noteworthy for one of the very few times they revised upward their forecasts. And there's a general sense of buoyancy about the world economy at the present time. And at the same time, however, the IMF comes out with the second less publicized report called Global Stability. And there, they said, things look fine in the short run, but all of the risk, not all, most of the risks in the medium to long run are on the downside. That particular report got less attention, but they point out a number of indicators, particularly rising debt around the world. So we have here a marvelous panel, well-experienced. I'm not going to go through them. You have their names and bios in your book. And I'm just going to follow the order on our program. I've asked each speaker to talk just for eight minutes. And I hope that leaves some time for questions. And before we have to yield our time. So I'll just turn it over right away. We'll go right down the order. Start with Uri Dadoosh. Thank you very much, Richard. Pleasure to be here. So as Richard intimated already, the world economy is in the midst of a broad-based expansion. According to consensus forecasts or the IMF forecast, which is actually very close to the consensus, we're seeing 3% real growth in 2017 using market exchange rates as weights. And this implies a half a percent acceleration, which is really quite notable for the world economy compared to 2016. And it also marks, for the first time since the financial crisis, a return to the 20-year trend of world economic growth. So I agree I've been doing this for a long time, looking at the world economy in various contexts. I agree that 2017, 2018 will be good years. And I also agree that there are big risks when you look further out, although my focus is going to be on the real economy rather than the financial issues raised by the stability report. I'm sure others will cover financial issues. So 2017, 2018, good years. Why? Four elements, just very quickly. These are well known. Steady growth across all the large economies. Accelerations of economies that have been in trouble, Russia, Brazil, Japan, and Italy. Less trouble in the past, but very sluggish growth. You're actually seeing decent growth in these large economies. The second element is policies are helpful. Monetary policies remain very stimulatory. Fiscal policy plays a large and neutral role. The tax package announced in the US suggests that there will be some fiscal stimulus coming in the United States, so it could be even from the short term point of view a good thing. The third element is we've had very slow growth. We've had 10 years, terrible time really in the world economy. There's a lot of pent up demand. And there's also a lot of underutilized capacity. So in half of the 60 largest economies in the world, unemployment is still over 5% at the moment. That's a good indication of underutilized capacities. And finally, inflation is very subdued. Oil and commodity prices are still very moderate. And so inflation is under the 2% benchmark. That's at the headline level. If you look at the underlying inflation, it's even lower than that. So these are the elements, essentially, of the optimism for the short term. If you look at imbalances, there's actually relatively few imbalances in the advanced countries. People will challenge me on that. The big exception that I see is Germany's gigantic current accounts surplus. But it seems like the other countries, particularly European countries, have learned to live with that. So actually, when I look at risks, I'm not being politically correct. I actually see relatively little by way of short term downside risk in the course of the next year, year and a half. When I was running the forecast at the World Bank, I would have been more cautious. I don't see much downside risk. In fact, I see some upside risk. In 2018, it could be closer to 3 and 1 half percent than 3%. Essentially, because from my experience when the world economy gathers momentum like that, there is a self-feeding mechanism. And that's also one of the reasons why when I go into 2019, I think people might be surprised by the there will be some pick-up in inflation and markets may be underestimating the rising interest rate that will be needed, not necessarily in 2018, but going into 2019. And that could cause some issues. But as I look at the long-term, then I want to talk about the long-term, because for me it's the most important at the moment. The, there are, so if you look at the long-term, we've had a slowdown, big slowdown in the labor force across the world. We also have had relatively low investment in recent years. And productivity growth has been relatively slow. So it would be imprudent to assume that you're going to get more than about 3% growth over the next 20 years, as we did over the last 20 years. But I want to make two qualifications on the optimistic side. One is that we don't really understand what drives productivity. Total factor productivity is measured by economists as a residual from a regression, which essentially means we don't know what is driving it. And there could be a lot of innovations coming down the pike. There's a lot of indications that there will be. So we may be seeing accelerated productivity. But the other factor, which is perhaps just as important, is that regardless of what's happening at the technology frontier, developing countries are so far behind the technology frontier. And they now account for about 40% of world GDP at market exchange rate. And they're growing about 2 and 1 half times faster than advanced countries. Developing countries can do even better than what they have been doing in recent years. And that, together with the possibility of a productivity acceleration, could make us quite optimistic about the medium term. A lot depends. And in fact, it is very important what the policies that are pursued in developing countries will be with regard to whether they're going to fulfill that potential. And that is where I go now in the long term and tell you about my pessimism, why I'm very worried about the policy picture. And I could mention two or three things, but I'm going to focus on one since we have very short time. And the issue I focus on is protectionism. I don't mean to pick on the United States. I live in the United States. I admire the United States. The United States is the most open, large economy. And protectionism today is a much more prevalent feature outside the United States than in the United States. However, the fact that the United States is turning inward is profoundly significant. Furthermore, I see US protectionism as not just a temporary Trumpian aberration, but the result of the US economy's failure to adjust to stagnant wages and rising inequality caused by technology and globalization. And Kemal, to my left here, and I wrote about this risk long before Mr. Trump came on the scene like several years before. And unfortunately, current US policies I'm finishing, current US policies such as tax cuts and reductions in health coverage are not only failing to deal with the underlying problem, but they're making it worse. Protectionism in the United States is bound to be profoundly destabilizing both at home and abroad. And it's going to give a very bad example to the developing countries that we hope would be the future of our long-term prosperity. And if it persists, if we don't have some unexpected event, and of course there could be, given what's happening in the US at the moment, if it persists, then we may soon be looking at the 3% global growth rate of 2017 with some nostalgia. Thank you very much. I think we will come back to the question of protectionism later, but now I'd like to call on Kemal Dervis to make his presentation. Thank you, Richard, and I will not repeat things that have been said because the IMFs, WEO, most of us have read it. And it is indeed the long time, the first time that the IMF has become more optimistic than it was in the past editions. I want to focus on really two points. One is this issue of debt and interest rates and whether that is a major risk. Clearly, the amount of total debt, private and public jointly, and of course, in terms of gross debt, I mean, there is a netting out process, but gross debt to GDP has increased, is higher today, significantly higher, depending on the measurements, the exact figure, but it's about a third higher than it was at the beginning of the 2008 crisis. This debt is carried and is feasible and doesn't create too much of a problem because of extremely low interest rates. So if there was a chance for interest rates, if there was a probability of interest rates rising, the overall debt situation in the world would be a problem. However, I don't foresee these interest rates to rise for various reasons, both supply side and demand side reasons. Urey has mentioned the low inflation. And so at least in the next few years, I don't see that that is a real risk, despite the fact that debt is so high. If this hypothesis about interest rates is wrong, then we could enter a major crisis situation because debt really is very high. The second point I want to make, and I think that is about the productivity paradox. Most of us must have been here for the last session about digital communication, news, and we've entered a world, artificial intelligence, a booming technology world. And if you look at these technology stories at the micro level, you would think as a macro economist that productivity growth would be rising very rapidly. But in fact, the opposite is the case. Both labor productivity and total factor productivity are rising much more slowly than they have in a long time. And that is pretty much a global phenomenon. It's true in the US, it's true in Europe, it's true in the major emerging market. So this is a very strange situation. On the one hand, you have this booming technology, innovation, and on the other hand, you have measured productivity in terms of GDP statistics that is actually slowing down and it is slower than it has been in the last, you know, for a very, for decade, the decade trend has been much, much faster. Now, quickly, two points in our time is very limited. Is this a measurement problem? Some people will immediately say, this is a measurement problem. There are some measurement issues, but there are important papers that have been written that actually show that measurement only explains a very small part of the problem. And of course, we have to remember one thing. Productivity measured by GDP does not try to measure consumer surplus. I mean, I don't want to get too technical. Consumer surplus is a different concept from GDP. And it may well be that consumer surplus is rising, but there's also been research on that. And even if you adjust for consumer surplus, again, you don't find that technology is rising total factor productivity or labor productivity is rising rapidly. So this is a paradox. This is a strange situation, which is a real puzzle. And we've done some research, which is not finished, but the story that comes out is very interesting and has to do with something that we wrote together also some years ago, income distribution. What's happening is that the firms, the best firms on the frontier are actually increasing their productivity quite well. So there is rapid total factor productivity growth and labor productivity growth among frontier firms, among the best firms, but they are a small minority and their weight in the overall economy is small. The other firms, the median firm or the low median firms is showing, in most cases, negative total factor productivity growth. So it's not that innovation is not happening and is not translating itself into the productive sphere. It is, but only by a minority of high-performing firms. And this has, of course, one that has many implications. One can be hopeful because the diffusion might occur and that would solve the problem, although there's data that shows that the diffusion is actually slowing down, but it has one very important consequence also. It is making the income distribution even more unequal. It is one more factor of why the income distribution is becoming more unequal and I think I ran out of time. Thank you. Mr. Young, thank you very much for inviting me. To this very excellent conference and it's a very big earner for me to be with these excellent speakers and professor. And today, I'd like to talk about two parts of my presentation. In the first part, I will review the current economic developments in major countries for our discussion. And in the second part, I will talk about some cross-cutting downside risk factors for the global economy. So as you know, and as IMF forecasted, the global economy is obviously recovery these days. But I think the world economy is yet to make a complete recovery from the 2008 global economic crisis. It is still suffering from a long period of a weak economic activity. But from the beginning of this year, the world economy started to show some different landscapes. Let's see the U.S. economy. The U.S. economy I think entered a cyclically very new phase. You know, the U.S. Fed is expected to raise its policy rate once again within this year. And it has already announced the balance sheet normalization program. It started from October this year. And so we project the U.S. economy to grow at 2.1% in 2018. It is a little bit higher level than this year's growth rate. The driving force of the U.S. economy is I think the strong pickup in private consumption and investment and based on the improving labor market and the weak dollar. Thanks to the weak dollar, the U.S. export to the other countries has recovered these days. However, I think there are two main downside risks for the United States. The first one is the policy uncertainty under the Trump administration. For example, yesterday the Trump administration announced the new tax cut program. If the tax cut program actually be implemented, then that action will have some big impact on the long-term interest rate and the U.S. dollar exchange rates. So there are still a lot of uncertainty surrounding the Trump administration's economic policy. This is the first downside risk factor. And the second one is, as you know, the normalization of the monetary policy. Yesterday, President Trump nominated Jerome Powell for the next Fed chair and maybe he will still maintain the monetary policy stance in the coming years, but there remains still a lot of uncertainty surrounding the monetary policy in the United States. And the second is the Eurozone. The Eurozone is also picking up this year and the inflation rate of Eurozone has moved to around one and a half percent, which is very closer to the 2% target. But the unemployment rate is still very high. It remains at 9.1% in recent months. Record low, still for the last eight years, though. The increase in growth in 2017 reflects an acceleration in exports and continued the strength in domestic demand. But there are still downside risks. We are very concerned by the two major downside risks. The first is the Brexit negotiation and the second is the weak growth in real wage. The real wage growth is very, very weak in the European economies and that is, I think, the main barrier to the active recovery of the United and the European economies. For Japan, we see a very similar economy recovery process, but Japan's economy has the same problem, very weak growth in real wage. This is a very big problem and I think this is the main reason why we cannot anticipate the longer term economic recovery in Japan. And for China, we expect still very high level of economy growth next year, 6.7%, a little bit lower than this year's expected growth rate, 6.8%. But I think the Chinese economies, the biggest problem is it is kind of that few old economy, that few old economy. So I think the issue should be addressed if the sustainable economic growth is to be maintained for a longer term in the future. And we expect further economic recovery in some large emerging economies, especially in Russia and Brazil. You know, these economies have suffered from recession for the last three years due to the drastic fall in oil, gas, and other commodity prices. These economies are, however, showing an upturn recently and this trend is expected to continue in the next year. But the problem in these economies is that they are too dependent on oil, gas, and other commodities. So they need to diversify the economy much stronger. I will briefly mention the cross-cutting potential negative factors for the global economy. The first risk factor is, which is already mentioned, inward-looking protectionism in the advanced economies. This is very big problem for many countries. For example, the South Korea is facing very big problem with the US because the US government asks the renegotiation of the Korea-US FTA, big issue in South Korea. So I think we have to be careful of the proliferation of the inward-looking protectionism in advanced economies. And the second risk factor is, as I mentioned, the very weak real wage growth rate in advanced economies, especially in the European countries and in Japan. That's a big problem for those two big economies. And lower inflation rate is also a very big problem. Lower inflation rate tends to lead weaker consumer confidence, weaker business confidence. So the world economy has not succeeded yet in completely ending the deflation mindset, which is very, very prevalent in many advanced economies. And finally, I'd like to mention the changes in international financial conditions. The US Fed has already begun to raise its policy rate and there is a mood of tapering in the European central banks. There are many emerging economies propelled by capital inflow from the advanced economies. That fueled emerging economies, I think, should normalize their balance sheet. Before, accommodative financial conditions are ended. This is a very big, powerless task for the emerging economies. Thank you. Thank you very much. Professor Ito. Thank you. I echo many points just made by previous speakers, so I tried to be selective. But it is obvious just the world economy is in expansionary process. If you look at stock prices, or employment number, or growth rate, or even just rising long-term interest rate, it all shows just world economies expanding. But probably this is not the place where just speaking only optimistic picture. So let me just raise three maybe concerns or problems. Some have already said by other people. One is just very low growth rate. Not just growth rates, very low potential growth rate. So this may be very much related to what people call the secular stagnation. And behind is the very low productivity. I don't know how technology is related. It may be too early to speaking about just the influence of AI or IoT to the productivity. Because if you look at the previous innovation, there's some long time lag between the introduction of technology and growth. But I think maybe I agree to you that there's some substantial structure problem in the economy which just makes the growth rate is very low. So in Japan, we have a lot of discussion about just increasing importance of reform to just accelerate the reallocation of resources, especially reforming labor market is very important. We are just reallocation of labor. It is very difficult to just raise the growth rate. And also in the case of Japan, perhaps maybe many other countries, just investment in human resources is very weak in the past. And so that may just provide another reason why productivity is growth. And trade is very important. There are many discussions about the increasing protectionism. And yes, that is the concern. But at the same time, still we can have some perspective about the increasing the free trade regime. In the case of Japan, for example, the economic partnership with Europe, I hope will be concluded by the end of this year. And also even TPP, although United States is out, but we still try to just finish the TPP-11, I mean excluding United States by the end of this year. But this kind of, I think, just in the stepping forward is very important in order to just get more profit by suppressing the allocation. The second concern, which is also talked by some other people, very low inflation rate and wage rate. And usually low inflation rate is very good. But we have to remember just major countries just implemented very, very expansion in monetary policy and very stimulative economic policy and very low interest rate. But still the inflation rate and wage rate is very low, especially in the case of Japan. If you look at Japanese case, as you know, we just introduced very expansionary monetary policy and unemployment rate is the lowest in the last 20 years and the stock price is the highest in the last 20 years. Still inflation rate is just around 0.5%. And wage is increasing very slowly because nominal GDP is increasing. That means very dramatic drop of the wage share in GDP. So there must be some kind of structure problem here again. I don't know technology, maybe measurement, but we have to think more seriously about this low inflation rate. And third, I think Kim had just mentioned the importance of the risk of debt, like I agree. But I want to just emphasize the other side, risk of the asset. You have to look at just the price of the stocks and real estate because of the maybe low, very, very low interest rate. In most countries probably the stock price and the real estate price is among the highest in the past. And it's very difficult to say whether this is bubble or not because of the low interest rate. But however, in the process of the increasing interest rate from now on, I hope, it is very possible that there's some drop of the asset price after the interest adjustment. And increasing interest rate is very important process for normalization of the global economy. However, increasing interest rate is very difficult process if we just expect some kind of reaction of the asset price. So we have to watch very carefully about the response to the asset price to the interest rate. Thank you. Thank you very much. Now, last, Mr. Zhao. Yi. Yeah. I'm the last presenter for this panel. Obviously, I guess I have some disadvantage because so many issues have been covered by previous panelists. Now I'm going to try to turn this disadvantage into advantage. So I decided to do as the following. I based on what panelists say, based on my understanding, I tried to summarize four issues currently international community are much concerned. There is some question on these important issues we are facing. First issue regarding the recovery of world economy. It's obviously everybody recognize now world economy under the recovery. The question people raise is, these recovery can be sustainable or not? Also, so-called secure stagnation claimed by Larry Summers still exist or not? Furthermore, we see the sign, the monetary policy in advanced country has already started to change. People summarize maybe different speed in same direction. That means the QE will gradually exist. These QE exist. What's the impact on the global liquidity, particularly on developing countries? That's kind of question people raised on the first issue. Second issue is how to deal with possible negative part of globalization. Even people support globalization, recognize some possible negative outcome from globalization. Particularly, although globally the income equality has been reduced, I mean, among the different countries, the equity will be reduced. But in each of countries, no matter advanced or developing countries, income equality, the gap wide, how to solve the issue. Some people propose to take a day called UBI, universal base income. That means every citizen can get a minimum income from government. Of course, people argue whether these can be affordable to do that. So some people propose to maybe take another measure, tax credit, encourage people hardworking, but at least give some minimum income. That's the second issue. Third issue, what's the impact of new technology, particularly artificial intelligence, FinTech? The second panelist described maybe not necessarily, obviously, have some positive impact or benefit in terms of labor productivity or total productivity. Furthermore, even people argue maybe AI itself will threaten the human being existence, whether it's the exaggerate or not. Some people are very much concerned of these positive or negative impact of new technology. The last issue I guess, how to prevent in the future against financial crisis, people mentioned almost 10 years past since the auto break global financial crisis. People argue, what's the next time for Minsky time come? So some sign people worry about. For example, people mention still we have a very high leverage level. Also, in fluctuation of cross-border capital, yes, you can see immediate before and after global financial crisis, the fluctuation of cross-border capital is very dramatically. Later on, after the auto break of global financial crisis, yes, the fluctuation will come down. But among the developing countries, the fluctuation is still very high. So people still worry about that. The next part of my presentation, I wonder because I'm Chinese, I want to talk about some Chinese economy, although some panel have already touched upon. I guess one or two years, so many people, international community worry about the possibility of hard landing for Chinese economy. But now nobody talk about that because so far, Chinese economy perform relatively well. Last year, the GDP growth was 6.9%. In the first third quarter this year, also GDP growth reached same 6.9%. The IMF raised their forecast four times this year. Now they forecast maybe at the end of this year, GDP growth of China can reach 6.8%. But don't forget the target for Chinese government set at the beginning of this, only 6.5%. So I don't see any problem for growth rate. That means generally the Chinese economy have already stabilized even next year, I guess, is the same situation. Obviously, another issue people raised many times about debt ratio in China. Even SP downgrade of Chinese sovereign rating. Generally speaking, the debt ratio in China generally is OK, particularly government debt and household debt relative to other countries is low. The issue people worry about is the debt ratio of non-financial sector. Probably now they reached 160% of GDP, which is very high. The issue, yes, we should be taking care of that issue. At the same time, I don't think we should exaggerate the issue. Because in China, there is some difference with other countries. First of all, these business or corporate debt high, one of the reason is the SOE, stay on enterprise, has a very high debt issue. But among them actually is the local government use these SOE as a platform to raise, to get money. That we have to understand that the local government in China, they have a lot of resources. They have an asset. So they can cover these debt. That's the first reason. Second reason is that some people calculate in terms of size of financing for these corporations. Almost same with the United States, with the EU. Because China, we use more indirect financing, rather than direct financing. So it's hard for Chinese corporations to get funding from the store market, rather than just bottoming it from the bank. So the example, it's a very interesting example, I guess last week, I guess one week ago, Chinese governments in many years issued a US dollar sold in Hong Kong for $2 billion US dollars. Actually, at the end, the year is very low. Only a little bit higher than US schedule, I guess, by 0.1 to 5. That means the market still treats solving debt of China is high. So I guess that's the general description on Chinese current situation. Of course, tomorrow we have another workshop. I'm going to talk about long-term, what's the outcome of the National Congress of Communist Party from economic interpretation. That's tomorrow. I stop here. Thank you very much. So you've heard wide-ranging presentations. The world economy is a big topic. We haven't covered all of them issues, but you have an excellent panel here who's capable of covering almost all issues. And so let me open it for questions. We have about 25 minutes, I'm told, and I need some lights out there so I can see hands someplace. Okay, so let's start here. Please say who you are briefly, and if you have a question to direct to a particular person, do so, or to the panel as a whole. Thank you. I'm Meyo Shitrit from Israel. I would like to raise the question of debt which Mr. Dervis spoke about it, the fact that the situation today of the interest is so low, sometimes even negative, pushes the people to invest their money or even to take loans in order to buy stock market because they're going up. What is your expectation on the future of the stock markets? Because I'm afraid that if it falls, it's not only falling of the stocks, but it will be full of the big debt and create a big crisis even bigger than 2008. I'd like to know what you think about it. Okay, let me collect several questions and then we'll turn to the panel. Mr. Johnson. Thank you very much. I've got two quick questions. First to come out, Dervis, his comments reminded me, I think back to the solo paradox of the late 1980s when it was argued that there are computers everywhere, but it's not being reflected in productivity. And I'm wondering if there's an analogy to be drawn there and also you, Professor Cooper, because I remember reading and using a lot of the work you did on stagnant wages, which also started during that same period. So I'm just wondering if there's not an analogy to be drawn from the what we experienced and what we're experiencing now. I don't know, so I'm just asking a question. The second one is the question of these trade deficits and protectionism in the United States. President Trump and his team, including Ross and Lighthauser, seemed to focus almost exclusively on currency manipulation and so on. Now, is this fair? I mean, you've got a $356 billion deficit, I think it is, with China. These numbers, I think there are about four major ones that jump out of Germany, China, Japan, I think Mexico, but South Korea thereafter and Canada who were actually lower. But I'm wondering, is this correct? Should they not be focusing more on American consumption habits, on investment? Because it seems exclusively at that level to be focused on currency manipulation and on fair trade practices. Let's collect a couple more, yes, there. I'm Salim Demesh, a researcher from Central Bank of Morocco. If I would like to thank you for the quality of your presentations. I have a remark from the fiscal monitor of the IMF, which is inequality. We learned from this last edition that if inequality declined between countries, it was waiting within countries. And here, I want to ask you, do you share the recommendation to enhance the tax progressivity? And also, if you can recommend this proposition of enhancing investment in education and health, because it's an ex-anti-treatment and there is also taxation, which is an exposed treatment. Thank you. Any further, yes, right here. Thank you very much. Tatsuo Masa from NECB Business School in Japan. I have a question to probably, former minister Kemal Derbis. Hearing all these great stories and together with the current fashionable talk about industry for industrial revolution, I fear social divide or economic divide. Companies and individuals who can write on all these quick changes can take advantage of those. But companies and individuals who are left behind could have no chance of taking fruit of this. The result could be social or economic divide within community, within the country, within the region. How do you foresee the risks of this divide expanding or shrinking? Thank you. Okay, let me turn to the panel and ask for solicit responses and then I'll go back to the audience. Kemal, a few were addressed to you. Why don't we start with you? Totally agree, and in fact, that was one of the key points, I think of my quick presentation that inequality is a major, major issue. And the past trends, which have made intra societies very unequal, although between countries, because of the growth of developing countries, global inequality may not have increased as maybe even decreased, but inequality inside the countries is increasing everywhere. And one of the reasons that I tried to, it's not the only reason, but one of the reasons is that those who are doing well are doing better. And those who are not doing so well are doing less well even than before. So today it matters a lot in which firm you work. Education also matters, of course, and your health systems and so on. But there is a concentration of power and wealth and productivity growth in a small number of firms, many of them global firms, whereas a lot of other firms are being left behind in the dust. And this will create social problems, I think of a major magnitude which we are seeing happening all over the world. So I think that the inequalities side of the equation in looking at the world economy has to be underlined very strongly. Now the question on asset prices, because of the low wage growth, low inflation, I don't see any major push towards any rapid normalization of monetary policy. So I think asset prices may perhaps have overshot, but I don't see a major collapse of asset prices in the global economy. I think income distribution and the social consequences of income distribution is a much more serious problem than the asset price problem. And I do congratulate the IMF for having taken on this problem. In the old days it was just a footnote maybe in an IMF report. But today the IMF is actually addressing this issue as a major overall microeconomic issue, microeconomic issue, which gives me some hope that policies will be addressed. One final thing, I think it is in line with President Macron's policy also. You have to attack the problem before transfers and taxes. Transfers and taxes can correct things, but if the primary distribution is very unequal, it's very difficult to make it more equal with transfers and taxes. So the real issues are competition, entry, small enterprise access to credit, education, health coverage and things of that sort. Taxes and transfers are important, but if you don't solve these problems, you will not be successful in reducing inequality. Thank you. Others want to comment, Marie? Just follow up obviously, Kamala and I agree on these issues. Particularly on the inequality question. Just a couple of kind of elaborations. One is the wage stagnation is very important when coupled with inequality, but there's a big difference between advanced and developing countries. The developing countries that are growing fast are seeing wages rise even as inequality gets worse. So at least people feel, even the people who are losing out, so to speak, in relative terms, are gaining in absolute terms. And that's very, very important for social cohesion. The problem in the United States, particularly in the United States, but it's also true in other countries, is that you have a combination of wage stagnation and wage declines for some parts of the population like white males at the same time as you have rising inequality. So that's very important. The second is on education, yes, of course I believe in the importance of education. Education as a cure for inequality, we have to be very careful because it depends where the money for the education goes. In the United States, there's a superb educational system, but in many respects, it's also been a desequalizing educational system with huge differences in quality between the very top and what is available at the base, which has to do with the way a lot of high school and elementary education is financed at the local level in the United States. So education, yes, but it has to be targeted. One point also quickly on asset prices, Mr. Shatreet's point. Historically, a big adjustment in the stock market by itself has not actually induced, typically has not resulted, we've had many examples of very large adjustments in the stock price, which have had relatively minimal effects on the real economy. And I agree with Kemal that the adjustment to date has been gradual. If you see inflation pick up in the course of about a year from now or so, then I think we should be worrying more. Final point is insofar as a lot of the stock market purchasing is by private institutions, people who can take risks, even individuals who can take risks. There's only so much that they'll allow you to borrow margin. For example, I can tell you from personal experience. Then I think the effect is less. It's when you have very highly leveraged institutions like the banks that are taking all sorts of risks, which could include the stock market, but typically doesn't, that you can get a major financial cataclysm. Professor Ito. I have a comment about the relation between technological development and economic growth. Someone just mentioned Solos Paradox, where we can't see any of the result of the technological advantage to the macroeconomic growth. But if you just read, for example, this study by Robert Gordon, he just showed there's some kind of increase of the productivity, say, between, say, 1990 to 2000. So there was some kind of effect on productivity. Maybe technological development is not strong enough to just have a continued technological development. And another very important area, as I already mentioned, there's a very serious big timeline between the timing of the technological introduction and the result on the economic activity, because industrial structure have to respond to absorb the result of technological progress. Now just remember, major technological development we often discuss today, like a deep learning of AI, or just expansion of international things, just happened in the last maybe five years. So we have to be very patient to just wait for just result of the technology to be just reflected in the macroeconomy. And also I just thought of a very brief comment on the bilateral trade deficit surplus with the United States and exchange rate. I have to just only comment. This is not the first time. Japan just suffered a lot of this discussion in the 1980s and 1990s. So when the trade issue becomes very serious, the United States is always just mentioned trade deficit and exchange rate. And of course this is very dangerous, but at the same time we have to be very patient to negotiate and discuss the issue. So I think the trade issue is very important, but I'm just very pessimistic at this moment. I might comment on the last point. I'll make a strong statement, which may not be true. It needs to be tested. I do not think our new president, Donald Trump, is a protectionist. For reasons that I find obscure, he has a particular animus against countries that have big surpluses with the US. China, Germany, Canada, has even been added to the list, Mexico, and so forth. But I don't think he's intrinsically protectionist. There are two ways to eliminate a bilateral surplus, which is the wrong policy to focus on, but it seems to be in his mind. One is to restrict imports, and the other is to raise exports. And I think he'd be happy with either, probably maybe preferably raise exports. He has appointed some people who are protectionists, but I consider that a major question mark in the Trump administration, whether he's protectionist or not. He's talked around it, and he's so far taken no actions, apart from abandoning TPP. And even in the renegotiation of NAFTA, the guidelines which were published, remember this is a 25 year old agreement, were perfectly reasonable in terms of bringing it up to date. They were drawn ironically from much of the TPP negotiation. Now, I've been around long enough to know that with trade negotiations, they're not done until they're done. And so we have to wait to see what's gonna come out of these negotiations, but just to comment on that, it's certainly a source of uncertainty and the tone is very different from previous American administrations. So that's concerning. But I would not write him off yet as a protectionist and is leading the world down the road of protection. But let me ask you the question regarding the low interest rate, which I remind me and think that one very important, very interesting speech made by Stanley Fish in July. The speech is specifically targeting the low interest rate. He described the negative of low interest rate. Also identified the reason behind the low interest rate. I recall he mentioned a couple of things. First of all is the aging population. Population become older and older, which will create demand very soft. That's the first. Second is technology advance also creates some income equality. I can record one figure. When Facebook got IPO, the market value equivalent to GM. But Facebook only had 7,000 employees. While GM had 250,000 workers. You can see the asset concentrate on small people. That's also created some low demand. Here I want to add one factor. Not many people mentioned because I recall before the global financial crisis, one term be used frequently. So-called great modulation. That means that time growth rate very fine. It's good in advanced country. Also low inflation rate. The one of reason behind that is at the end of 70 of last century, China started to take open door policy. 10 years in India take that. Also that time Soviet Union collapse. Almost two billion people get more or less get into global integration. Which great demand for advanced countries. Now these dividends have been dramatically reduced or disappear. I guess that's the very important factor. Then I answer the question regarding the trade deficit. I guess the trade deficit of US, the reason is very complicated. But one factor we don't forget. US had a trade deficit with 100 countries. Not only with China with German. Yes, China and the German occupy large share. But US have trade deficit with more than 100 countries. So yes, I don't deny there's some room for US negotiate some deal with some country. Which can be reduce the deficit. But another factor is we understand saving and the investment. The difference between saving and the investment equal the difference between export and the import. That mean the saving rate in US relative to investment is very low. That mean the investment need in US in some way create trade deficit. That's something I guess we should locate little bit comprehensively. Not only focus trade deficit. That's my thinking. I'd like, sorry, Mr. Young. Okay, I'd like to add one more comment about the trade deficit with South Korea. So the keyword is aging population. So we conducted a empirical study about reasons. Why many economists enjoy the trade surpluses. And we examine the relationship between the surplus and the population aging. So the two variables have very strong positive relations. So the Korean society is experienced in very, very rapid aging problems these days. And so I think in 10 or 20 years maybe Korean economy will suffer from kind of trade deficit because of the aging issues. Okay, thank you. I'd like to make one further comment about the trade issue. It's another identity. Zhao drew our attention to the identity between a trade surplus or deficit and excess savings over investment. Another identity is that for every trade deficit, I'm using trade in a comprehensive way, including services, there's a capital account surplus. And you think about that for a minute. If we want to reduce the US trade deficit significantly, which Trump says he does, it means also reducing the US capital account surplus by an equivalent amount apart from measurement errors. And that means less foreign investment in the United States. The US has an enormous amount of foreign investment in the US net. Summit goes into US corporate bonds and US government bonds. A lot of it goes into equities, including the very companies we've been talking about, Facebook, Google, and so forth. And one way of putting it, which economists have not absorbed yet in my judgment, is that the US has a comparative advantage in producing new firms. And the new firms are, if they succeed, of course many of them don't, but if they succeed, they're attractive around the world, not just in the United States. And as long as this process continues, there's gonna be a net capital inflow into the United States and with a floating exchange rate, air go, trade deficit. Now I don't know if any of Trump's advisors have pointed out to him that eliminating the trade deficit means eliminating the net capital inflow into the United States. We have enough time for one question. I see from the clock up there. Anyone? Way back there. For Yuri and Kamal, I'm a little puzzled by your... Identify yourselves, please, Jeff. Yes, Dick. Jeff Frieden from Harvard. For Yuri and Kamal, I'm a little puzzled by your view on the debt issue. It seems to me that the question is not whether nominal interest rates are low. It's what the relationship is between the growth in debt and asset prices. The fact that interest rates are low is irrelevant to the asset liability mix. The fact that interest rates are low in fact means that the central banks may have lost a lot of the bullets in their arsenal. So can you say a little bit more about why you think this is not a problem? And then a second question for Kamal. I'm a little confused about your notion that we should focus as a policy variable on pre-tax, pre-transfer income distribution. That's a 40-year process. Reversing it is probably a 20-year process. It seems to me that if the problem is income distribution, saying that what we should focus on is pre-tax, pre-transfer is a formula for not being able to do anything in the short and medium run. I'll give it to Tank. I do believe it is very important to focus on the pre-tax and transfer distribution issues and what creates it. For example, monopolies are an issue here. Pre-tax, pre-transfer. If you put all the burden of correcting the maldistribution of income or the very unequal income distribution on taxes and transfers, you run tremendous political problems and also inefficiencies in the whole system of tax taxes and transfers. So I do believe that real wage growth, competition, productivity growth that is much wider, more widely shared, these are things that will create a healthier income distribution. I'm not saying one shouldn't work on taxes and transfers, but I don't think one should put the whole burden of it on taxes and transfers. And I think this is really a very crucial point because in Europe, for example, you already have 50, 55% of GDP worth of expenditures by the government. I mean, how can you reach 70% without creating major inefficiencies? On the other hand, if you democratize the production process and allow small firms to do well, allow easier entry, put barrier to monopoly profits and monopolies, you can do all these things with much more and efficiency characteristic to it than via just taxes and transfers. The other question, I don't know, Uri, do you wanna answer the... I'm not sure I understood it, honestly. Can you repeat the question, Jeff? No, no. Oh, sorry, sorry. I'm gonna, we're gonna have a discussion over dinner in which Jeff can clarify his question. I'm gonna bring this session to a close and it just remains me, I hope, on behalf of all of you to thank our panelists very much for a very interesting conversation.


Welcome to the latest in the series of videos with our ambassadors around the world. Today we're speaking to Mr Paul Tai, who's Australia's Consul General to Hong Kong and Macau. Welcome Paul. Thanks John, good to see you again and be with you today. Paul, to start with, Hong Kong has a relatively small population, but it features quite large in Australia's international relations. Why is that? I think it's because we've got very long established and really close links. There's a lot of contact at people-to-people level between Hong Kong and Australia has been for many years in particular since the mid-1990s. So there's a very strong Hong Kong community in Australia, a very strong Australian community in Hong Kong. Trade relationship, as you mentioned, is significant. It's around about eight billion dollars in bilateral trade each year and for a market of only seven million people, that's pretty substantial. But what's even more important between Australia and Hong Kong is the investment relationship, which in two-way terms is up around about 70 billion dollars. It's quite large. Paul, can you tell us more about the large Australian presence in Hong Kong? Yeah, reflecting the size of the investment relationship, there is a very strong Australian presence up there. A lot of people in professional services, all of the big four Australian banks are represented in Hong Kong. A lot of people in professions like architecture, engineering, accountancy, legal firms, very, very strong presence. You find Australians in all walks of life in Hong Kong, quite interesting actually. My favourite example is the horse racing industry. And if anybody's been to Hong Kong, you'll know how iconic the Happy Valley racetrack is. When you go out there, you'll find that there are Australian horses, Australian jockeys, Australian trainers, Australian stewards, a lot of Australian technology. So it's a really nice sort of symbiotic relationship. And it reflects, I think, the fact too that Australia has a reputation in Hong Kong of providing very high quality products, high-end food and wine, beverages, all those sorts of things. It's a relationship that I think reflects very well on Australia and its capacity for meeting the demands of Asian countries. Paul, is it correct that the Consul General in Hong Kong is Australia's second largest overseas polling station for federal elections? Yeah, that's right. It's a bit hard to get an exact figure on the size of the Australian community, but the one thing we do know, or two things we do know, one is that we're the second largest passport issuing office anywhere in the world. The only place that issues more passports than we do at the Consulate in Hong Kong is the High Commission in London. Similarly, when there's a federal election, of course, Australians overseas can vote through our Consulates, our embassies, our High Commissions. And we know that the number of votes received through the Australian Consulate in Hong Kong is the second largest of any individual polling booth anywhere in the Australian electoral system, including in Sydney, Melbourne, Canberra, anywhere else. The only place that gets more votes than Hong Kong is the High Commission in London. So we know there's a very big community there, again, reflecting the depth and the strength of our trade and investment relationship with Hong Kong. And what about Hong Kong's involvement in Australia? Again, very significant. I mentioned before the substantial investment relationship. Hong Kong's about the fifth, sixth, seventh, depending on when you're measuring it, a source of foreign investment coming into Australia, investments throughout a number of sectors, but particularly strong in areas like utilities, infrastructure, again, some iconic things like the railway system part of it in Melbourne, electricity distribution in South Australia and Victoria, some of the port facilities in Sydney. So, again, a very positive relationship. And I think it's growing. One of the great things about Hong Kong, of course, is it has a very sophisticated and very credible international financial market. Australia uses that as a source of capital for investment into Australia, but it's also increasingly used by Chinese companies seeking access into the international markets. We estimate there's something like about 3,000 Chinese corporates represented in Hong Kong now, including listed on the Hong Kong Stock Exchange. They do that because they get a great deal of comfort out of operating through the credible and sophisticated Hong Kong markets, which of course are backed up by having the rule of law, and in Hong Kong's case, it's common law, which is something which is familiar to most Australian investors and indeed other Western investors. So it really cements Hong Kong's role as an important international financial centre. And again, that's important for Australia's relationship with not only Hong Kong, but also with the other North Asian economies and China in particular. Paul, we've spoken about the strong personal and business connections between Australia and Hong Kong. What about ties at official level? At the official level, there's very strong relationship again. There are lots of bilateral visits between ministers in the Hong Kong administration and either ministers or senior officials in Australia. For example, the Deputy Prime Minister and Treasurer of Australia has been to Hong Kong twice in the last six months or so. He was there most recently in January for the Asian Financial Forum, which Hong Kong hosts every year. One of the important outcomes of his visit was the launching of a bilateral dialogue between Hong Kong and Australia on trade denominated in the Chinese currency, the renminbi. And in fact, just recently, we've had the visit of the Prime Minister to China, at which it was announced that there would now be direct convertibility, direct trade between the Australian dollar and the Chinese renminbi. So the relationship we've got with Hong Kong and in particular its financial centres, which has been developed by those strong government-to-government visits, including by the Deputy Prime Minister, will take that relationship further. And again, Australian companies are already heavily involved in renminbi denominated trade. Now, Paul, a consulate general in Hong Kong, I understand, is also accredited to Macau. What can you tell us about Australia's interest in Macau and our relations with Macau? Macau is, of course, a smaller economy than Hong Kong, but very significant for Australia, particularly in the gaming sector, where there's some substantial Australian investments through the Crown Group. But also Australia's got a good presence up there, again, in high-end quality sorts of products and services. For example, providing technology to support poker machines that are used extensively in the Macau gaming industry, but also very importantly in areas like food and beverages. As I mentioned before, Australia's trade with Hong Kong and its mirrored in Macau is very heavily focused in things like premium seafood, premium beef, premium wines. So we've got a great reputation up there of providing quality, safe products, which I think stands us in good stead in both those markets. Paul, in relation to Hong Kong specifically, what three words would you use to encapsulate the relationship between Australia and Hong Kong? Look, I think the first word I choose would be symbiotic. It's a relationship which is naturally reinforcing of itself and occurs quite naturally in many ways. It's a long-standing relationship and it's a very warm and positive relationship. It has been for a long time and I see that continuing for quite a while into the future. Thanks very much, Paul. Thanks, John. And that was Paul Tai, Australia's Consul General to Hong Kong and Macau.


He jumped off and as he was falling, he said to himself, I made a mistake. I'm supposed to be alive to help the world. And he hit the water in a way that he didn't totally die. And the Coast Guard thinks that dolphins came and lifted him up. It's a cool story if you read about it. And he felt like my life changed. He had health problems after that, but he's dedicated his life to a new vision. It's almost like the guy was born again, like they say in religion. And to me, he just skipped into another universe. When he was on the top of the bridge and he was jumping, he was in the worst version of his own universe, the press one. And when he was in the water coming up, it was like he was born into a new universe.


The first 2021 meeting of the Montpelier designer review committee. I will let members and staff introduce themselves by speaking their names. Martha Smirsky, member. Eric Gilbertson, member. Liz Pritchard, member. Hannah Smith, member. And Steve Everett, member. And Meredith Crandall, staff. Tammy Furry, recording secretary. Thank you. And Meredith, would you like to review the staff remote meeting procedures? Yes. Let me just share my screen. Oh, and here's Ben. Awesome. Ben's connecting. So I'll start on the remote meeting procedures and then he can say hi after we do that. Okay. Thank you. All right. All right. So this is going to be largely for anybody watching from home over Orca. But also I don't know as Mike has been on for an application since we went to remote meeting. Okay. So for those of you viewing this meeting via Orca media, you can participate in the design review committee meeting via the Zoom platform. You can access it through this link here. You can also call in using this phone number. For both of those, the meeting ID is right here. If you have problems accessing the meeting, then you can email me and I will try and help you get in. And in a little bit I will zoom down to a link to tonight's meeting materials, but it's on our agenda and meeting materials page on the city website. If you're having issues accessing this video features while you're in Zoom, you can also use the chat function. Please limit any chats to technical issues. If it does veer off, I'll be bringing it into the if it goes into substance, I'll bring it back in, but try and keep chat to technical issues. So this meeting is being recorded. Turning your video on is optional. All public testimony will be taken verbally. And please keep your microphone on mute when you are not speaking to reduce background noise. For those if anybody sends in via phone, star six will allow you to mute or unmute in a way that we can actually see it in Zoom. And if you're interested in speaking on a particular matter, let's see if we don't have any actual public tonight. But if somebody does log in partway through and they're interested in speaking on an application or some other matter, then please raise your hand once you get in. You can use there's a hand button on your toolbar. If you're not using the video feature, if you're on the phone, you can press star nine.  And zip through other stuff because we don't actually have anybody on right now. In the event that I get emails and people aren't able to access the meeting, then I will continue it to time and you will continue it to a time and place certain committee well. Also, if you're having connectivity issues, try turning off your video or closing other applications on your phone or computer. And then here is the link for anybody at home that wants to pull up all of the meeting materials. You can look for the design review committee link and then go to the current and upcoming events file and download in the files column for tonight's meeting. Please note that all votes taken during this meeting that are not unanimous will be done by roll call vote. And now hand the meeting back over to chair. Thank you. Does anyone from the committee have any comments at this point? If not, do I hear a motion to approve the agenda? I'll move to approve the agenda. This is Martha. Second, Eric. All in favor of the agenda, please speak your names. And Steve. So we'll go to the first application for 453 Stonecutters Way, owner Steve Rolini and applicant Mike Russ for sign here.  Well, it's for a couple of signs. Two are wall mounted on one end of the building. And the other one is a freestanding sign with two wooden posts. And then there are also the three numbers that are wall mounted on this about in the center of the building. I didn't show the whole building on the picture, but it's about in the center of the building. So it's a total of three signs and three numbers. Let me know if you want me to pull up the application. That would be nice. Mike, which of the three buildings is this? No, it's one building is 453 Stonecutters Way. Yes. Two signs are going on one end of the building. And on the other end, there's another entrance. The Edward Jones sign is going on one end of the building. And on the very far end, the two signs are being mounted on the wall. I guess my question was actually, there are three buildings that are very much alike along Stonecutters Way. Which one of them is this one? This is, if you're coming from, sorry, Ducis, obviously One Way Street, it's the first one on the right. Okay, thank you. It's the one with the rusty roof. It's an old railroad building. I think it's the last building left of the railroad yards in Montpelier. Thank you. Let me know if there's a particular slide that anybody wants to look at. I can adjust as needed. I'm more interested in the chiropractic signs. I feel like I understand the Edward Jones. Those two signs are... Okay, thank you. The letters will be quarter inch black plastic with a brushed aluminum face that are mounted directly to the wood. And the wood is mounted to the building with just four They're standoffs. So it's only four screws that are mounted to the building. The sign actually isn't going to be on the building. If you can see the view of it, you'll see that it's off of the building slightly. So it's only four screws for each one. A total of eight screws that will hold the two signs onto the building. That's it. And are there any signs there now, Mike? No. Okay. Where are the numbers going? In the center of the building, I should have taken a picture from farther back, but it's a very long building. So the chiropractic signs are on the left of the 453. And the Edward Jones is on the far right. You can't see either one because the building is that long. If anybody needs me to, I can probably pull up a Google Maps street view if that would be helpful. But I don't know if that would really do much right now. Are there currently numbers on the ends of the building? We put some white vinyl numbers just on the glass. So people know it's 453. That's it. No, there are no numbers on the building. There wasn't any numbers on the building. See, the reason they wanted to do that 453, because it's very similar to the next building down, they have very large numbers on their building. I don't even know what building it is. If you continue down Stonecutter's way, it's going to be very similar to that next building. It's the one that has the metal siding, I think. Maple capital management is in there. I'm not quite sure who's in there. I didn't take a picture of her or anything, but I mean, they saw that and they wanted something similar. So that's what we came up with. Give me one second. Let me change what I'm sharing. And there's what's just on Stonecutter's way. There you go. Those actually might be a little larger than what we're putting on the side of the building. They might be. It's just, and just so you know, it does, I think technically it is that those numbers will be a third wall sign. You have the ability to do that. And I think Audra flagged it a little differently. If they were, if the total area was two square feet, then it wouldn't be a sign for two square feet or less. But with the size it is, it will be a third wall sign. Yeah, I think the numbers, the 453 is actually 16 square feet. Mike, is there an entrance to this building at the center of the length? No, only on both ends. There is no entrance in the middle. Yeah, there's only on that left side and right side. There's nothing in the middle. I don't think this BFS sign is actually here anymore. No, that sign's not there. No, it is old. Yeah, there's no entrance on this side at all. I'm going to try to figure out what the 453 in the middle of the building is going to do. Nobody's going to see it. They'll be looking at the ends. I would rather see the numbers on the ends for people can see it. I mean, like sets of numbers? Yeah, they could be smaller if they're on the ends. I agree with Eric. Being in the middle of the building, you're not going to see it until you've passed the entrance. But if you put it on either end, it might give a people a clue that obviously you can enter from either end to the 453. I think that'd be alright, but with them, I'm sure. And you'd only, I guess, have to put it on one end because that's the only way you can drive up to it anyway. Is the parking lot before you get to the building, correct? The parking lot is actually when you go past the building. You have to drive past the building to enter their parking lot. There's some parking spaces on the left, but their parking lot is after the building, not before it. When you go into the building, is there a center hallway that goes the length of the building? No. No, you cannot access Edward Jones from that far end. You have to walk all the way down the sidewalk and walk into his entrance. There is no, no, you cannot. They're separated. At least that's what I was told. Okay. As you're driving down Stonecutter's Way and you're looking at the end of the building that you first approach, it looks like there's some shrubbery there. Would that obscure a sign on the side of the building there? I'm not sure. Give me a second and I'll share that again. If you're looking at the picture on page five of six of the application, you're, you see the Edward Jones sign and to the left of it, there's some shrubbery to the left of the entry. I would think that the number should be put at least over the doorway, maybe larger up top so they'd be visible, in my opinion, but I would think, I would think to the right would be very visible, right in here. How tall are the letters of the address? The ones that I put on the side of the building were 20 inches. I think you really don't need anything that big. The only reason they were that big is because they tried to match the building that was after it. That's all. It might make more sense and we could use it as an option to put 12-inch letters over each entry on the ends of the building because a 12-inch letter, according to sign designs, a 12-inch letter can be read from 120 feet and I would think it would be, that would be plenty large as you're approaching to see the number over the entryway, certainly on the west side because that shrubbery is tall enough. And if you put it any lower, unless you put it to the right of the doorway, the shrubbery is going to hide it, if not now, soon. One more thing, Mike, were you anticipating that these letters would be black? Yes, the framing around the doors, we just thought it would look better like that. It's certainly compatible with the other colors. The address of the east end of the building is also the same? Both are the same. You mean 453. It's for the entire building, yes. That's actually kind of odd given there are two unconnected entrances. I'd be curious to know what 12-inch letters would look like on that building in proportion to the size of the building. Just as a comparison, the letters aren't any larger than that for Sarduchies and you can read that clearly from the entrance at the Shaw supermarket 200 feet away. That would be a good comparison. So I think a 12-inch letter, again, readable from 120 feet black against the gray of the building, I think would be readable pretty easily. Readable as you're driving down stone cutters away from the west side. I totally understand that, but if you look at the next building down, they wanted it to look similar to that because it's on the same street. And those letters are probably, I could go measure them, but I think they're probably 28 to 30 inches in height. So just a reminder, ultimately, we've got a, I think it was worked out to be, was it 43 square feet? I think is the max wall signage allowed on the building. So that's just our outer limit. If we're talking about numbers on both ends, that's going to restrict the size of the letters that can be allowed or numbers. How many square feet are there now without the letters? Two signs. I would need to read the application has it in height and width and inches. So everything together, new signage is 32 square feet total. I don't have, what did you say the square footage, Mike, was of the numbers right now? Six square feet on the numbers. Okay. Yeah. So right now we're at 26 square feet without the numbers. So there's room to play with. The two wall signs are about 32 by 72. Right. That's 32 square feet and six, that's a 38 square feet total. Okay. I had Audrey double check this calculation. So wait a minute, we've got 32 inches by 72 inches. Times six feet, six, 12, 72. So 32 inches times six feet times two is 32 square feet. Oh, so you didn't write, you didn't include the numbers in here as your, for your total sign area calculation. That was added after, but it is, but it is six square feet. So it's still 38 square feet total. My real problem with the numbers on the side of the building there's just no point to it. I mean, it's nobody's going to see him. It's not near any of the entrances. And it's just sort of clutter on the side of the building. How many square feet? Go ahead. I'm sorry. Go ahead. How many square, how many square feet were in the, the letters, 20 inches by six square feet, 48, 20 by 48, those were six square feet. If we put them on two ends of the building, we'd have to, what did you say was 40 square feet? 43 is your max. So you'd have to reduce the size by a little bit. About a 16 inch letter on the side on both ends. 16 inches is readable from 160 feet. That's quite a distance from the building even driving. I think that would be fine. Reduce the width a little bit too. I don't know what it would be, but even if you were to use them, let's see. Yeah, that'd be 5.3 square feet. So what we could do, what we could do is be to give you the option of using anything between 12 and 16 inch high letters. And then what you could do would be to make a mock-up and stick it up there, you know, a paper mock-up or whatever you like, and then come back to as if you were driving down and you can look to see which one looks most appropriate for the size and scale. Okay, that sounds fair. How does that sound, Eric? That's fine with me. Martha's idea too of having it to the right of the door rather than above the door. Okay. You know. Mike, does that sound possible to put it to the right of the door? Well, definitely. We can give you the option of trying the letter sizes and putting it to the right of the door at a height that's most readable as you're driving down. Does that sound like that might work? I think so. That should work. It's good with me. I mean, that letter, that building can stand pretty good size letters. So whatever works. Again, whatever, like Eric said, whatever works, which is most, what is the most readable as you're driving down to recognize the number of the building? My guess is most of the people that go to that building know where they're going to begin with. Yes. Probably. The other thing is, is that your signs might be more aligned, the Edward John sign might be more aligned with the number on the side of the building. As you're driving down stone cutters, you're going to see the Edward John sign and the letter sign with the number, the number sign will be to the right of the door, maybe slightly higher than the ground sign. I think in any case, it's going to be confusing to people to have the same address on both ends of the building because they're entirely different uses. I can see why they do that, but I still think it's going to be hard not to be confusing, particularly with the parking for Lynch down at the far end. They might have to put a sign inside the door that says, Clance of Edward Jones used the other end of the building. Good luck trying to change the 911 addresses. Audra's job, not mine. So is everybody okay with the application, with the existing wall signs and then having two number signs between 12 and 16 inches, again at the option of the applicant to the right side of the entry doors on both ends? I would like to discuss the placement of the sign a little bit more. Okay, go ahead. It just looks as if it could be more centered on that blocked out window versus it seems like it's kind of half on half off. Would you like it closer to the window than the edge of the building? I think if like the center of the sign was the center of the blocked out window. That would feel better to me. For any indication on the gable end, what the businesses are inside, is on the glass and stuff. Just, there's just a sticker on the glass, that's it, small decal on the glass right now. Other than that, no, there's nothing on the ends of the buildings. So Mike, as long as anything that goes on the end of the building, as long as it's unlit and is the name, address, and is two feet square or smaller than it's exempt from the sign permits. So they could add something small, much smaller, but that has these names listed on the end that's in keeping with the same kind of design and not need to get a permit for that. That's what they both did. They put a little vinyl letters on the window and I don't even think they're 16 inches or 20, they're very small. You have to walk up to the glass to see them. You can't, you know, that's on the doors when you enter both ends. That's what they have. Great. Well, and that's in the window, again, that's a separate exemption. Stuff inside the window is exempt from permits as well, but you could even have something outside as long as it was small, but so there's a couple of options. Does anyone on the committee have any other comments, questions, or suggestions? No. Okay. So again, the recommendation is that the wall signs be centered under the blocked out window and then the option, the applicant has the option of signs between 12 and 16 inches on either end of the building to the right of the doorways. Again, the same colors and font. Does anyone want to add anything else? If not, I can read through the criteria. We have a couple criteria sheets that apply to the application. One is exterior design and materials of new construction or alterations. Additions to existing buildings shall respect and be compatible with the size, scale, materials detailing and overall character of the primary building and its environs. Additions shall not obscure or undermine the essential form and character of the original building and should reflect the additions period and style is appropriate, acceptable. There's a comment about architectural features, architectural features, including but not limited to cornices, windows, shutters, fan lights, and tablet or trim and other forms of molding on character defining detailing. Revealing on the existing building shall be considered in the any alterations and for the signs that's acceptable. Then there's some specific criteria criteria regarding the signs. One, the size, location, design, color, texture, lighting, and material of all exterior design, all exterior signs within the district shall be compatible with the building and structures of the site and surrounding properties that's acceptable. Where appropriate, signing shall respect the original sign placement and sign bands on historic structures. This location is acceptable. If the building has multiple tenants, there shall be consistency in placement and size among the signs acceptable. It is recommended the sign placement be centered over building entries or in this case to the right of the entries for readability for traffic acceptable. Sign installation shall minimize damage to character defining materials acceptable. Sign design color and typography shall respect historic precedents where appropriate and shall be the appropriate scale for existing and new buildings acceptable. Sign support structures for the ground sign shall be compatible with the building architecture and must not be overly complex or dominant in and of themselves acceptable. I hear a vote for approval of the application again with the option for the applicant to place number signs between 12 and 16 inches to the right of the entries on either end of the building and again the wall signs, the recommendation that wall signs will be centered under the locked out window. Dwight, would you like to vote? Paul in favor, speak your names. Derek. Martha. Liz. Anna. Ann. And Steve. So the application is approved. Did you have any other questions, Mike? So, Mike, Steve will have filled out those recommendation forms and he'll get those to us with his signature on them and then I will be, either Audrey or I will send you an email with a scan of that because there are both recommendations and options in there we'll need to sign off from you that you agree with those recommendations and options before we can issue a permit but with that can all be a BVA email either you can sign it and scan it back or you can just send an email that says yes, I agree. Once you see it. Yeah, I'm just going to send this information to the customer tomorrow. Oh yeah. They're okay with it all. Okay. Of course. And yeah, once they decide on exactly how they want to deal with the numbers, you can also just shoot me like an email and we can add it to the file so that we know what was actually done in the total square footage. It'll just help for future record keeping in case they want to make changes later. Okay, sounds good. Awesome. Thank you very much, Mike. Good luck with your project. Thank you. Have a good night. Goodbye. Bye. Thank you. Has everyone had a chance to look at the minutes and do I hear a motion to approve the minutes? So moved. Second. I'll second. All in favor of the minutes, speak your names. Martha. Eric. Hannah. Ben. And Steve. So the minutes are approved. Does anyone else have any business or comments to make? Meredith, have you, have we talked about the grant award we got for doing the workbooks? Not lately because we haven't had a DRC meeting. I don't think I'm a bit of a blur these days. So we have been awarded a grant to develop the design review guidelines, which will be take the place of the cityscape workbooks. We don't have the actual contract for that yet. Once we do, we'll be sending out RFP to get project, get bids on that. And so we're hoping to start work on that pretty soon. Right now we're just waiting. We've got to get the actual contract language so that we know exactly what needs to go in the terms of the RFP. But we will be looking for input from you all because these guidelines are going to need to make sense to you as to how to implement the design review regulations, especially for big projects, things that haven't come up since we got these new design review regs. And I know that there are prospective applicants for some big projects in Montpellier where things are bubbling away in the background where we don't actually have any applications. But I've had people contact me to be like, hey, what can we do on such and such parcel? So we will be seeing some big stuff, I'm sure. So we want to make sure that the guidelines are in place and work for you all. Since you guys will be implementing them. So I'll keep you posted. But think about what would be really helpful for you when looking at those design review regulations. You go back through them, take a look and see what images would work for you, especially for anyone who has the practical experience of being an applicant too and having buildings that they need to know how to apply things to. That would be really, really helpful. Didn't we get $21,000? And that has to be matched by donated time and city staff time. It's like a 60-40 match. And I think we, from looking at the historic preservation, from that view of the historic preservation commission, we really want a lot of input from the design review people. It's really your book. Yep. And the other thing to keep in mind is that if you do spend time on that, please make sure to keep track of that time and shoot it to me, because your time on that might also be able to count as volunteered time that counts as part of the city match. Especially anybody who's using their professional capacity to help review and guide those in a 10 meetings. But just something to keep in mind and look at. We'll keep you posted. Thanks, Meredith. Thanks for reminding me, Eric. I'm a little off my game today. Does anyone else have anything to add? If not, do I hear a motion to adjourn? So moved. I hear a second. I'll second that, Liz. All in favor of adjourn, let's speak your name. Marcia. Liz. Hannah. Ben. And Steve. So the meeting is adjourned. Thank you all.