China must press ahead with reforms to protect the gains of globalisation
President Xi Jinping’s staunch defence of the global economic order is in stark contrast to the protectionist sentiment sweeping the Western world
The irony of the world’s most powerful communist leader defending the capitalist system is testament to the threat of protectionism to the global economy. President Xi Jinping’s (習近平) keynote speech to the World Economic Forum in Davos, Switzerland, was a spirited defence of globalisation against forces trying to turn some major economies inwards. Amid rising fears of isolationism that would wind back the unprecedented benefits of international trade and economic integration, Xi insisted that globalisation was not to blame for the economic woes that had led populist political leaders to question it.
Just three days before the inauguration of US president-elect Donald Trump, his audience of about 3,000 business and political elites took his remarks as a response to Trump’s threats of a trade war. At the same time, he disavowed any intention to boost China’s competitiveness by devaluing its currency, let alone launch a currency war, and pledged to address the vexed question of fair market access in China for foreign companies, a potent issue in the hands of protectionists.
There is no question that China is the biggest beneficiary from globalisation, which has left it open to the criticism, fair or not, that it has been a free rider in liberalisation rather than a driving force. Now that China would be the biggest loser from a backlash, amid global uncertainty following Trump’s unexpected election, it is time for Beijing to step up in defence of it. Not only does the US look likely to become increasingly isolated, but Britain faces a hard Brexit landing and populist forces are stalking national elections this year in Germany, France and other parts of Europe that will help shape the international environment.
Even though China is now trying to steer its economy away from reliance on exports to lead growth, trade and investment remain significant, along with foreign technology , talent and know-how. Politically, too, globalisation is paramount because if isolationism prevails it would strengthen the hand of conservative elements in China who would turn back the clock on economic, social and slow-moving political reform.
Against this background, Xi’s remarks were also directed at a domestic audience. He made it clear China must play its part by reforming its economy and making it more open. It could start with projecting leadership by seriously implementing new policy guidelines aimed at addressing obstacles to foreign investment and companies, thus leading by example in protecting the gains of globalisation.