Transcript: Fortune Global Forum keynote address: Tony Blair

June 6, 2013: 3:12 PM ET

The former British Prime Minister on his view of China and the world.

130606145948-fortune-global-forum-tony-blair-614xaFortune Global Forum

Keynote Address

Former Prime Minister Tony Blair

Moderator: Geoff Colvin, Senior Editor-at-Large, Fortune

Chengdu, China

June 6, 2013

GEOFF COLVIN:  We are so lucky to have with us our next very special guest.  Tony Blair was Prime Minister of the United Kingdom from 1997 to 2007.  When he came into that job, he did so as the youngest Prime Minister in almost 200 years.  When he left the job, he left as the longest serving Labor Prime Minister ever, and one of the longest serving Prime Ministers of any party ever.

He has been tremendously active since leaving government.  And that's part of why we are lucky enough to have him here with us today.  He's going to speak to us for a bit, and then I'll have a chance to speak to him a little bit on stage.  Please join me in welcoming the Right Honorable Tony Blair.  (Applause.)

FORMER PRIME MINISTER TONY BLAIR:  (Speaking Chinese.)  (via translator.)  Good afternoon.  I'm very glad to be here in Chengdu.

I'm afraid that's all, and my apologies for my accent.  It's a very great pleasure to be here with you in Chengdu at this Fortune 500 conference.  I've got to give you my view of China and the world in 10 minutes.  It's a bit of a challenge, so I'll get right into it.

We meet at a moment in time in China where there is the arrival of a new leadership here, but also the sense of a new era in China's development.  Over the past 30 years, China has opened up to the world with an impact that has not only changed China, but is changing the world around us.  And it was a great act of leadership.

Today we take this opening up for granted.  But at the time it was fiercely contested.  And on Monday I was in Hong Kong.  I reflected on the fact that in 1997, when I was British Prime Minister, and Hong Kong came back to China there was much uncertainty.  But the fact is the Chinese political leadership was intelligent enough to device the idea of one country, two systems, and wise enough by and large to implement it.

So this is a leadership that in recent times has steered the nation successfully.  It has lifted more people out of poverty than any nation in human history.  It has presided over urbanization at a rate never seen before in the world.  When exactly it will be the world's largest economy is unclear.  That it will be is clear and faster than anyone thought at the turn of the millennium.

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So the world now asks, and not just political elites anymore, but ordinary people, if this is, as I believe it to be, the biggest change in my children's lifetime, what does it mean for them and for their children?  Above all, how do we make it work to promote greater global peace and prosperity?  The historic meeting beginning tomorrow between President Obama and President Xi and the historic nature of its informal and friendly setting, shows that the world at large knows exactly how important it is to be able to answer these questions.  For the outside world, for especially the West, we have to understand two things.

First, China is back as a world power, and will expect to be treated as such and will act as such.  I say back, China did not start 60 years ago.  It is an ancient civilization, rich in culture, philosophy, and political footprint, which has now reclaimed its rightful place that's stretched back over centuries.  It didn't originate in the last few decades.  We, from the outside, have to accept this and get comfortable with it.  It will mean that China feels its political and economic weight, and exercises it.  So we all want the disputes in this region to be resolved through diplomacy and without provocation on any side.  And none of this need be, or should be aggressive.  But, China will be assertive today of its own interests, and we should understand that this is inevitable.

Second, the world is going to have to fashion, therefore, a working partnership with China to confront and to overcome the challenges we face together, because without China's active participation and commitment, these challenges will not be easily and certainly not elegantly surmounted.  Global economic imbalances have to be addressed with the full engagement of China's leadership.

The interdependence of our economy, with that of China, the fact that we now watch anxiously for the latest signs of how China is growing, its management of credit, its purchase of commodities, the development of its labor market, and the presence here of many of the largest companies in the world, all of this shows how crucial China has become to the global economy.  And this crux will only get larger over time.

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The challenge of the environment, the changing climate, pollution here in China and abroad requires China's determination and willingness to invest in energy efficiency, new energy, and new technology.  And here surely we have a common interest in developing and sharing this technology since without a reduction in China's emissions there is no possibility of a practical solution to the degradation of our environment.

And of course there is a range of security questions, not least North Korea and cyberspace, where we will depend on China being prepared to work with the world and where necessary to act with the world.  So our relationship with China is going to reach a new level of texture, and intensity, that will require us to be imaginative enough to make it work, and strong enough to make it work on just and fair terms.

But, China also will have to come to terms with two things.  The next stage of its development will be much harder than the last.  The five-year plan of the new leadership is extraordinarily bold and ambitious.  It promises further big reform and opening up in the financial service sector, in industry, in the encouragement of quality education and healthcare for the broad mass of the people, in the development of the rule of law and all of these changes will be big, and the obstacles to doing them often formidable.  Now, as ever, I think the good news here is that the leadership keenly appreciates the scale of the challenge.  But, we should not underestimate the toughness of doing it in a country the size of China, with the array of interests and the expectations of its people on a constant rise.

Secondly, China as a power will be analyzed differently, questioned differently, and engaged with with much greater scrutiny, even anxiety, that in the days when it was simply and only a developing nation.  This scrutiny is the fate of a power.  It will mean, for example, that as the world opens up economically to China, as it should do, China is expected to reciprocate.  And where China invests heavily in a country overseas, it will feel the pressure also to assist the development of that country.

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So as the outside world and China, both of us adjust to the new reality, there will inevitably be some discord, and even dispute, and this is natural, by the way.  And it calls for wisdom in dealing with it, not panic.  However, for all of that in summary I am optimistic.  The truth is that both the West and China have a massive shared interest and common purpose in stability.  Stability internally in China where not only China, but the world, needs steady political and social evolution and not upheaval.  And stability externally, so that the progress the world has made in the last 50 years is confirmed and advanced.

And above all, we should look upon China as a huge opportunity for the rest of the world, to benefit not only from China's markets, but its culture, and its civilization.  China and the Chinese people have much to give the world.  Deep within Chinese history and tradition is a Confucian belief in a responsible and orderly, but also kind and compassionate society.  And this should give us a lot of confidence in the future, both theirs and ours.

So as China rises many questions are bound to be asked and some as of yet cannot be answered.  But, I believe that hope and not fear should be our emotional company as the 21st Century sees China rise and share responsibility for shaping the world around us.

Thank you.  (Applause.)

GEOFF COLVIN:  Have a seat.  I think they want you in this one here.

Thank you so much, Mr. Blair.  This is a great overview of many of the largest issues that we're here to talk about.  Now you mentioned the interdependence of economies.  The Chinese economy as the future world's largest, and getting close to it already, with the developed economies of, frankly, all the others.  Everyone here understands that, I think.  As a political matter, many people in the developed economies see China as a threat to their livelihoods, and see the relationship as adversarial.  What's the way forward there?  What does a wise leader do in one of those economies to move past that?

FORMER PRIME MINISTER TONY BLAIR:  Well, a wise leader right now in the developed world is quite a short list.  I think the biggest danger is that people play a sort of short-term politics.  I mean look as China develops there are going to be certain issues that are perfectly legitimately asked.  But, we only have to think if the global financial crisis had happened, but China's economy had not been growing, how much worse would it have been, how much more difficult, how much more fragile would the world economy be?  So I think, look, there's a lot of things written at the moment by people who say, well, there's never been a case of a rising power meeting an existing sole super power without conflict.  But, I think if we are smart enough then we will find a way of having a partnership where we raise the issues that matter and where we will challenge each other.  But, at the same time never lose sight of the big picture, which is China and the world cooperating.

GEOFF COLVIN:  Right.  Now one of those issues at this moment is protectionism.  You mentioned it.  It's been in the news in the past couple of days, even, with regard to European duties on solar panels and so forth.  More broadly, there does seem to be a danger of rising protectionism, after it fell for many years.  What's the best way to avoid a return to protectionism?

FORMER PRIME MINISTER TONY BLAIR:  The best thing is to remember that some of the lessons of the last global financial crisis of this seriousness back in the '30s, some of those lessons are not clear.  One lesson that is clear is that protectionism is a bad thing.  So we could, for example, and I hope under the new leadership the WTO process will move forward again, that's one way of doing it.  We should also remember, because there's been the issues to do with solar energy and I think French wine is now being caught up in this, in the last ‑‑

GEOFF COLVIN:  So it's getting serious?

FORMER PRIME MINISTER TONY BLAIR:  Quite, in the last days, I mean by the way these types of disputes are not unknown even between friendly nations.  I mean for a time I had a huge issue as British Prime Minister with the American government over cashmere sweaters from Scotland.  These things happen.  We just have to get over them and resolve them.  But, in general terms the more we are opening up the better.  And there's a big lesson from China.  We talk about this Chinese economic transformation.  It happened when the leadership opened up.  It didn't happen when China was closed.  It happened when it opened up.  And the same is true for the world.

GEOFF COLVIN:  Right.  Since the latest news happens to concern Europe it begs us to address that issue, the economic future of Europe.  Specifically, real progress would seem to require structural reforms, which are the most difficult thing for any country to agree to.  Is it a question of things simply getting so bad that it becomes inevitable, or is there another way to get through that?

FORMER PRIME MINISTER TONY BLAIR:  Europe has got to reform its systems, basically its social system.  I mean I didn't ‑‑ because I wanted to remain optimistic today I didn't talk about Europe or the Middle East.

GEOFF COLVIN:  I'm sorry to bring them up.

FORMER PRIME MINISTER TONY BLAIR:  You see the thing is that I think today actually all countries face the challenge of making deep-rooted change.  And China has got a big challenge now.  As I was saying, China to get to its next stage of development is going to have to make some really difficult reform.  Europe, for reasons of the aging population, technology, globalization, we're going to have to reform our basic social systems, welfare, pensions, labor market, public services.  Now in my view if we do that we can rescue Europe and put it back on a trajectory of growth.  But, if we don't and if we fail to take those decisions necessary, then we'll find the fragility in our system continues.

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So I mean look, the single currency right now is still in a pretty delicate state, let's say.  But, there are real changes being made in Europe right now.  I think they've probably got to go deeper and wider.  They would be infinitely easier to do if there was also growth and some prospect of rising employment.  And the toughest thing for the European leaders right now is to deliver change with an economy that isn't growing and unemployment so high.

GEOFF COLVIN:  Right.  Sounds just fundamentally really difficult.  There isn't a simple way through here.

FORMER PRIME MINISTER TONY BLAIR:  Yes, that's right.  By the way, one thing I've learned in politics since I left office is that it's a lot easier to give the advice than take the decisions.  So I say this with a great deal of humility, we live in a world, though, in which certainly for us and Europe, the choices are all difficult.  So to reform is difficult, but not to reform is going to condemn us to a long, long period of stagnation.

GEOFF COLVIN:  Right, you mentioned one of the preeminent lessons that came out of the great depression about the evil of protectionism.  What about this most recent episode?  As a policymaker, when you look at the financial crisis, and the economic struggles of the developed economies for some years now, since the crisis, what are the lessons policy makers should take out of that experience?

FORMER PRIME MINISTER TONY BLAIR:  I think opening up markets is one lesson for sure.  Other than that, I think one of the toughest things about political leadership today is that when I was British Prime Minister, mostly there was big economic consensus, right.  So in the 10 years I was Prime Minister, even around the Asian crisis in 1998, there was a certain degree of consensus as to how you dealt with the problem.  The thing today is there isn't that consensus, but my own view is that the West has certainly got to do two things.  One which I've spoken about, which is reform, and I think that reform needs to go deep as I say in our entitlement systems and so on.

And the other is, I think there is a real risk in the West of a kind of anti-business rhetoric and feeling that is easy politics, but actually is the wrong long-term policy for our countries.  And I really think it's important that we mobilize business as a partner in this recovery, rather than say, look, and I'd say this even about the financial sector, rather than say right we're going to go after you guys.  And sometimes what I say is that in Europe right now there's a difference between the politics of the anger and the politics of the answer.  And we need less anger and more answer.

GEOFF COLVIN:  And that will be difficult, because I've seen the polling and I'm sure you have, too, that in Europe and even in the U.K. especially trust in financial institutions is perhaps the lowest of any industry, or even any institution.

FORMER PRIME MINISTER TONY BLAIR:  Yes, and that's a big problem for us.  But, the fact is that we're not going to get out of this crisis without a thriving financial sector.  So we should be very careful that we don't actually blunt our own economic recovery by not realizing that that recovery has got to encompass the financial sector.  Now, of course, there are changes in regulation and supervision, and there's cleaning up the balance sheets of the banks, which in Europe is still a task that has to be achieved.  But, nonetheless, the basic point I think remains, which is if you want an economic recovery you've got to have the financial sector that's also on its way up.

GEOFF COLVIN:  Right.  I mentioned in introducing you that you are up to a lot of things in your post-government life.  You have many ‑‑ you have some institutions you have created.  You have projects that you're working on.  What are you doing now that you're most excited about?

FORMER PRIME MINISTER TONY BLAIR:  Well, I'm excited about a lot of things.  I'm most challenged by the work in the Middle East, if I'm absolutely honest about it, which is tough.  But, I'm hugely excited at the work we do in developing countries, particularly with my projects in Africa where you work with the governments of those countries in order to affect and promote change.  Africa has had a very difficult 20th Century.  I actually feel much more optimistic about it in the 21st Century and that gives me ‑‑ that's a very exciting bit of work to do.

GEOFF COLVIN:  I bet it is.  Can you elaborate just a little on that, where you are seeing particular reasons for hope, or where you're most active?

FORMER PRIME MINISTER TONY BLAIR:  Six out of the ten fastest economies in the last 10 yeas have been in sub-Saharan Africa.  The middle class in Africa will double in the next four to five years.  There's been now huge reductions in deaths from preventable disease.  If you look at the development not just of commodities in Africa, but there's the beginnings of a private sector that's both being mobilized and making progress.

Africa is a continent, by the way, not a country.  So there are some places that you probably wouldn't invest in still, but there is increasing numbers you would.  And it's important to realize that a quarter of a century ago there were three functioning democracies in sub-Saharan Africa, there are now 23.  So there's a lot of change, and working with these governments, as I do in about seven different countries in Africa, it's actually very exciting to see a country and a people get on its feet and start to feel what they can do, and how they can develop.

GEOFF COLVIN:  Last question.  We have a room full of CEOs here.  You talked about the potential of unfortunate demonization of CEOs, and so forth, and companies.  Do CEOs have a role beyond doing their best for the people and institutions that have entrusted them with capital?

FORMER PRIME MINISTER TONY BLAIR:  I think so.  The life of a CEO is tough.  But CEOs are like Prime Ministers, no one feels much sympathy for the general toughness.  You should be pleased you're there, in any event it's voluntary.

Yes, I think, of course, I think the wise CEOs, particularly if they're investing in developing countries, realize that it's just not clever to be indifferent to the society and community in which you're investing, to be responsible, to take care of what you're doing.  So if you were a big company and you're going into ‑‑ I work in about 15 or 20 different countries around the world.  In any of those countries they will welcome the investment, but I would always say to someone, if you're going in and investing in that country, have an eye to the fact that your investment is likely to be more secure and less risky if you are also assisting in the development of the country.

GEOFF COLVIN:  Makes sense.

I hate to wrap up, but we have to.  You have given us an incredibly valuable and wide ranging set of insights into what's going on in the world.  So all of us would like to say thank you so very, very much.  (Applause.)

END

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