Chinese President Xi Jinping travels to Davos with a tough sell on his hands
World looking for clues on direction of world’s second-biggest economy
With choking smog, a weakening currency and a widening wealth gap at home and a fragmented global capitalist system abroad, President Xi Jinping is determined to take advantage of an elite forum this week to assure the world that China is doing fine and is ready to help pull the world together.
Xi, who has made himself the strongest Chinese ruler in decades, will be the first Chinese president to attend the World Economic Forum in Davos, Switzerland, which begins on Tuesday. He will use the opportunity to tell thousands of political and business leaders about China’s view of itself and the world in general. He arrived in Zurich on Sunday.
His speech at the snowy resort in the Swiss Alps on the first day of the forum, just days before US president-elect Donald Trump’s inauguration, will offer clues on how he plans to guide the world’s second-biggest economy and how China will behave in a world of Trump and Brexit. Those in attendance will be on the lookout for any direct response to Trump’s threats to label China a currency manipulator and slap a 45 per cent tariff on imports of Chinese products.
“Xi will take advantage of the present global vacuum in leadership, i.e. US in transition, EU in disarray and the rise in protectionism, to seize the global stage,” said Professor Tan Kong Yam, a former World Bank senior economist who now works at Singapore’s Nanyang Technological University. “I believe he will project a strong, responsible China leadership on the global stage.”
That gels with the annual Davos forum’s theme this year: responsive and responsible leadership.
The forum, which dates back to 1971, has served as a public relations platform for Beijing before. In 1992, two and a half years after the Tiananmen Square crackdown, a beleaguered China used the Davos forum to seek to convince world leaders that it was shifting focus to economic development.
Sweeping the military crackdown on the student-led pro-deomocracy movement under the carpet, then premier Li Peng reassured investors the government was committed further deepening reform and opening up. His talks with businessmen and later meetings with several European leaders eased hostility towards Beijing.
Last year, China was represented at Davos by Vice-President Li Yuanchao and Fang Xinghai, a vice-chairman of China’s securities regulator. They used the occasion to play down risks in China’s equity and currency markets.
Xi’s speech this year is expected to perform a similar function, as part of the government’s efforts to boost external confidence in China’s economy and markets. Despite gross domestic product growth of 6.7 per cent, investment concerns have been mounting about China’s weakening currency, rising debt level, deadly pollution and, most importantly, excessive state intervention in economic activities.
But foreign ministry officials said Xi’s key message would be broader. Li Baodong, a vice-minister of foreign affairs, told a briefing on Wednesday that Xi would set out China’s proposals to “promote economic globalisation along a more inclusive path”.
The World Economic Forum’s founder and executive chairman, Klaus Schwab, wrote in an article published by the South China Morning Post last month that populists made gains in 2016 by “fostering reactionary and extreme beliefs”.
“Responsible leaders, for their part, must recognise people’s fears and anger as legitimate, while providing inspiration and constructive plans for the future,” he wrote.
However, analysts said Xi would emphasise China’s commitment to free trade but would find promoting his views a tough sell.
“China will express its willingness to tide over difficulties together with other countries amid economic doldrums,” Professor Shi Yinhong, an international relations specialist at Beijing’s Renmin University, said. “But it will not promote its economic model, as the economy is in painful restructuring itself.”
Li Xiangyang, a researcher with the Chinese Academy of Social Sciences, said China would be “very careful” and shun any talk which might imply it sought a role at the vanguard of a new world economic order.
“Trump has already made China a primary target of the US,” Li said. “Beijing will try to avoid the US joining hands with Russia and containing China.”
Beijing has been restrained in its response to Trump’s provocations, hoping the threats will be replaced by engagement when Trump takes office. However, when he cast doubt on the “one-China” principle following his telephone conversation with Taiwanese President Tsai Ing-wen last month he ran into a bottom line of the mainland’s ruling Communist Party, and his nomination of several China critics as key advisers has also alarmed Chinese officials.
John Wong, a professorial fellow at the National University of Singapore’s East Asia Institute, said Xi might tell those at the forum that it would be a great calamity for the world if its two largest economies engaged in a full-scale trade war, and that the global economy would be the loser.
“China’s leaders in any international forum have stressed things like mutual benefit, win-win, peace and prosperity. Global responsibility,” Wong said. “If Xi this time were to be a bit more technocratic, he would remind Trump that the [yuan] today is actually overvalued, with its central bank spending a lot of efforts and foreign exchange to defend the [yuan] and prevent it from sliding down.”
Additional reporting by Catherine Wong