Reality check from Davos: the globalised world as we know it hasn’t ended, yet
The past year was replete with narratives of US decline and China’s aspirations for global leadership. Any fawning over China as a defender of an open global trading system seems way over the top, given the restrictions faced by foreign businesses there.
President Donald Trump’s message to the globalist elite might as well be: Get some perspective.
Trendy topics of the moment, or hour, at events like the World Economic Forum in Davos, Switzerland, tend to overshadow the deeper, broader themes and interests that last longer than a week and are often years or decades in the making.
Let’s consider the case of a high-profile world leader of an influential country who swept to electoral victory on a can-do, pro-business record. He styles himself as a strong man. It was the first time his nation’s leader has attended Davos since the late 1990s.
I’m talking about Prime Minister Narendra Modi of India (not Trump, who is to appear on Friday). I recall hearing one person say that Modi might position himself as the anti-Trump.
Why on earth would Modi do that? There are long-term economic, strategic and political forces pulling India and the U.S. closer regardless of who is in the White House or the C-suite on Raisina Hill in New Delhi.
Those forces are bundled up in China’s rise. India feels squeezed by China in the Indian Ocean and the Himalayas and is wary of the Belt and Road Initiative through central Asia. India is cuddling up to America’s allies as well, chiefly Japan, Israel and, to some degree, Australia. Trump is almost incidental to this. It began before he took office and will continue long after Trump departs.
In the end, of course, Modi’s remarks were mostly uneventful: The country is “removing the red tape and laying out the red carpet” for business, Modi told Davos attendees on Tuesday.
It fell to Keith Bradsher of the New York Times to note that while Modi made the right noises to the right audience, he skipped a few key details. India itself restricts imports to entice more foreigners to manufacture in country. “In essence, he is pursuing a protectionist agenda, at odds with the mantra of globalisation,” Bradsher wrote.
Oh for more of that kind of context! It’s popular to discount Trump and waning U.S. influence, and to credit whatever others say as pure, honest and on the money. But history will show that’s too simplistic.
Many people in the milieu at these kinds of confabs -- to be fair, it’s broader than Davos -- tend to suffer from bulk confirmation bias.
One sign of lockstep: Trump is out with this crowd, though he probably craves their acceptance. Another: The past year has been replete with narratives of American decline and China’s aspirations for global leadership. Any fawning over China as a defender of an open global trading system seems way over the top, given the restrictions faced by foreign businesses there.
Let’s just step back a year. Like many people, I had my head in my hands listening to Trump’s inauguration address last January. It sounded like a “forget you” to the rest of the world and seemed to reflect some of the kooky conspiracy theories his base holds.
It was also a year ago when President Xi Jinping appeared at Davos, positioning China as a role model -- exquisite timing. (Trump and Modi probably have grown tired of people continuing to drone on about that speech.)
One very experienced Asia foreign policy hand, who served in a couple administrations, told me later that Davos was really the only place Xi could have made that speech. The confirmation bias of the audience ensured it would be a hit with little scrutiny. In Asia, this person said, the audience might be stifling chuckles at the hypocrisy of a protectionist nation paying lip service to free trade and openness.
The Davos crowd, though, was quite ready to suspend disbelief and cheer for China. That says something about the dismal expectations for America at that moment.
And yet the sky didn’t fall during Trump’s first year. There was no trade war with China, which turned out not to be a currency manipulator after all; NATO is intact; Nafta is still alive, though it sometimes needs its pulse checked.
Heck, the CEOs at Davos have warmed to the economic agenda of the administration, at least its tax cuts and regulatory clawback. A year ago, they were full of trepidation.
So keep some context in mind about this year’s themes as well. Trump hasn’t been the end of the globalised world order. Neither has Brexit.
In fact, as I’m in Asia next week, I doubt I’ll hear much about Brexit at all. Nor remarks at Davos. When officials, investors and analysts discuss what’s on their minds, I expect to hear lots about the long-term trends of the U.S., China and India. Just a hunch.
Daniel Moss writes and edits articles on economics for Bloomberg View. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.