The failure of climate change mitigation and adaptation is the highest impact risk facing the planet for years to come,  according to a report released at a seminar co-hosted by the Center for China and Globalization and Marsh on March 4.

The seminar on the Risks and Opportunities for Outbound Investment 2016 was held to discuss the new report, Global Risk Report 2016, which was jointly put out by the World Economic Forum, Marsh, and other partners. The report observes the major global risks for companies in different countries and sets forth the shared views of experts in various fields regarding the most impactful global risks in the next decade.  The seminar also analyzed the main trends in the outbound investment activity of Chinese companies, especially  in North America and countries along the “One Belt, One Road,” as well as the potential opportunities and challenges they face in globalization.

The release of this report coincides with the rapid growth of Chinese outbound investment in recent years.  In 2015, Chinese outbound investment exceeded for the first time foreign direct investment into Mainland China.  However, Chinese firms investing abroad also face rising external risks, making it imperative for them to devise methods for early identification of such risks.

Li Ming, Marsh China CEO

Miao Lu, CCG Secretary General

On behalf their respective organizations, CCG Secretary General Mabel Miao Lu and Marsh China CEO Li Ming extended their greetings to nearly 100 guests attending the seminar from Chinese companies, including numerous investment firms, and academic institutions.

Alex Wittenberg, Managing Director of Marsh & McLennan

Alex Wittenberg, Managing Director of Marsh & McLennan Companies and one of the authors of the new report introduced its key findings.  This work is the 11th global risk study report issued by the organization and is based on a global risks perception survey involving almost 750 experts and decision makers in the World Economic Forum’s multi-stakeholder communities this year. They were asked to consider 29 global risks falling into five categories—social technological, economic, environmental, and geopolitical—over a 10-year time horizon and rate each risk according to their perceived likelihood of it occurring and possible impact.

According to the report, the world faces a greater number of risks in 2016, and these risks are interconnected and their impact is both dramatic and uncertain.  The five risks posing the biggest threat are the failure of climate change mitigation and adaptation, weapons of mass destruction, water crises, large-scale involuntary migration, and severe energy price shocks (increase or decrease). The risks rated as being most likely to occur are large-scale involuntary migration, extreme weather events, failure of climate change mitigation and adaptation, and major natural catastrophes.

In addition, the report analyzes international security and identifies the major factors influencing developments in this key issue area.  In response to the three potential scenarios in the future, the report suggests mitigating risk  through public-private partnerships. Considering the size of Chinese economy and its impact on the global economy, the report also reviews the fragility of China’s financial system and transformation of its economic growth in the “New Normal” era.

Huo Jianguo, Former president of CAITEC

Former president of Chinese Academy of International Trade and Economic Cooperation in the Ministry of Commerce, Huo Jianguo, delivered a presentation on the potential risks investing in the countries along the “One Belt, One Road” and ways of dealing with these risks.  He pointed out five main kinds of risks:  1) changing global economic conditions; 2) difficulties in project selection and implementation; 3) lack of funds; 4) financing problems; and 5) geopolitical complications.  Huo proposed five countermeasures for addressing such risks:  1) expanding financial support; 2)  accelerating the use of the Renminbi in the countries along the “One Belt, One Road;”  3) leveraging the Asian Infrastructure Investment Bank and Silkroad Fund, 3) exploring possibilities of international multichannel financing; 4) strengthening the role of insurance companies; and 5) and increasing investment in industrial parks.

He Weiwen, CCG’s senior research fellow

He Weiwen, CCG’s senior research fellow and co-chair of the China-US-EU Research Center of Chinese Academy of International Trade and Economic Cooperation, presented his view about China’s outbound investment in the United States.  In particular, he identified the key factors Chinese companies must consider when investing in the U.S., including stakeholders such as government agencies and business partners, selection of projects, investment immigration policies, legal and tax policies, and political barriers.