With Brexit and the Trump phenomenon, there is rising concern about so-called “Black Swan” moves. The decade-long of current wave of globalism has faced setback lately.
To some extent, such worry might be exaggerated, at least in the case of the US presidential election. Indeed Donald Trump has been widely viewed as “anti-globalization”, as he has threatened to quit the TPP (Trans Pacific Partnership) Agreement, and to renegotiate the NAFTA (North America Free Trade Agreement). He has even coerced the Ford and Toyota automobile companies not to invest in Mexico, or they would face border taxes up to some 30% when exporting their “made-in-Mexico” cars into the US.
However, Trump is not against trade. What he wants is a “fair-trade” vis-à-vis America’s trade partners. He may intend to renegotiate the NAFTA, rather than to abolish it. He prefers bilateral trade negotiation and pacts, rather than a multilateral formula. Therefore, in terms of trade, he may be still an internationalist, though not much a globalist.
This would slow the motion of globalization without stopping internationalization. Many would be wary of the consequences of the Trump administration for its unpredictability. Honestly speaking, to readjust and refine the pace of globalization is not evil, but to dramatically slow it could be harmful. But, as long as the Trump administration would not quit the World Trade Organization (WTO), America, like any other member of this organization, has to accept the WTO arbitration mechanism to settle any trade dispute. It is for the WTO rather than the US to be trade arbiter.
Still, the Trump preference of bilateralism, rather than multilateralism, upsets many. In an extreme sense, if America would “become great again” by treating other trade partners unilaterally, it would probably end with America being sick again.
At a time of global gloominess, China stands out. As the second-largest economy in the world, or the No. 1 economy in purchasing-power parity as calculated by the World Bank in 2015, Beijing is surely a major beneficiary of globalization. By joining the United Nations, China has been able to play a major role in this international body and in the present international system. By joining the World Bank and International Monetary Fund, China has been both a major recipient of their grants for its economic opening and development, and a main contributor to their financial resources to assist more developing countries. By joining the WTO, China has both widened its access to the global market, and further opened its own market for the international community. In terms of trade of goods, China is now the largest exporter and second largest importer. It is increasingly offering jobs to other countries by importation from abroad and investment abroad.
President Xi Jinping is paying his state visit to Switzerland, and he has just delivered his speech at the World Economic Forum in Davos. He is also visiting the Geneva headquarters of the United Nations, and World Health Organization and International Olympic Organization. His first visit abroad in 2017 sends a clear signal to the world that despite the frustrations of globalization elsewhere, China is firmly committed to international cooperation through multilateralism.
In the annual Davos forum, the Chinese delegation is prominent given the absence of head of state of a number of major powers. While the US is to change its leader within days, China ever loudly voices its commitment to supporting globalization, especially criticizing the rise of protectionism that promises to end with no winner at all.
President Xi has indicated that globalization is not the source of the current international economic downturn. Instead, that is caused a combination of factors, such as lack of growth impetus, the deficiency of present global trade and investment institution, as well as the unbalanced economic returns that have contributed to the current international economic slowdown.
The solution is not to reverse the tide of globalization, but to refine and upgrade it. At Davos, President Xi urged for innovation, coordination, global governance, as well as common development. It is innovation that would drive a new wave of development, and it is coordination among nations that would deny protectionism. At a time of globalization, global downturn would be ideally addressed globally collaboratively. By refining a more balanced development mode, nations would have a chance to be lifted all together.
At the G20 summit last September in Hangzhou, China put forward a proposal for Global Infrastructure Connectivity Alliance, which was well-received. China’s ongoing Belt-and-Road Initiative has been such an attempt, linking Asia, Africa and Europe. By investing in other countries, China renders opportunity of development to its partners, while assuming risks and hoping for chance to share return. If major developed economies could collaborate under a shared roof of interconnectedness, the global economy surely would be robust again soon.
While Donald Trump stresses the need for bilateralism, China’s proposal may echo his effort to boost infrastructure in America. The US used to lead the world in infrastructure development, but it is now less impressive in this regard given the rise of new economies. His plan to invest half a trillion dollars on infrastructure would increase, rather decrease, chances of international partnership to help him making America great again. China is pleased to extend its hand to America.
On the one hand, the world is watching Trump’s presidential inauguration and his uncertain policy formulation that could make globalization regressive. On the other, China is advancing global partnership with its own conceptive and substantial contribution. It is interesting to note such changes of leadership at the outset of 2017.