China’s leadership role in globalisation will benefit all
As the US looks set to turn isolationist, countries will look to China to fill the gap in global trade
Protectionism comes at a price, US President Donald Trump will quickly learn. His fulfilling of an election campaign pledge to pull his country out of the Trans-Pacific Partnership free-trade agreement on his first day in office pleased his supporters, but was also welcomed by China. In jettisoning the deal, the door has swung open wide for Beijing to push its own regional pacts. There is every reason to look to the mainland; the benefits of globalisation far outweigh the disadvantages.
Former president Barack Obama had globalisation only partly in mind in driving the 12-nation TPP. The pact was an element of his strategy to counter Beijing’s influence through an economic, military and political pivot to Asia. China, the world’s second-biggest economy, was excluded. President Xi Jinping responded with the “One Belt, One Road” trade initiative and by backing two rivals to the TPP, the Regional Comprehensive Economic Partnership and the Free Trade Area of the Asia-Pacific.
Trump contended the TPP would take jobs from the US; his opposition tapped into growing voter hostility to trade deals and globalisation. The biggest complaints are that the rich are getting wealthier at the expense of the rest of the population and that jobs are being lost to lower-cost countries. But there are major benefits from the free flow of goods, services, people and ideas across borders. As China knows only too well, cooperation fuels development, grows the economy and encourages the building of friendships and alliances. Xi spelled that out in his speech at the World Economic Forum in Davos earlier this month, saying in defending globalisation that it was wrong for countries to pursue self-interest at the expense of others.
Free-trade deals are complex and require protracted negotiations. Countries that had signed up to the TPP are not only lamenting missed opportunities, but have also lost trust in the US. China is now in a strong position as those nations now look to it to take the lead; Australia and Chile promptly signalled they were ready to do business.
The shift in positions was also on show when a Philippine cabinet delegation visited Beijing last Monday, with the two sides agreeing to a US$3.7 billion package of infrastructure projects and measures to alleviate poverty.
With the US under Trump set to become isolationist and protectionist, China’s taking a leadership role in globalisation is gratifying. Just as its belt and road strategy and Asian Infrastructure Investment Bank aim to boost development from Asia to Africa and Europe, its free-trade agreements and plans have the potential to create win-win benefits for all.