The world-wide debate about globalization has been upended by “the Trump Phenomenon” and its wild-fire spread to Europe and elsewhere. The two separate camps of “Deglobalization” versus “Reglobalization” are pitted against each other in a tug-of-war with no clear winner.
From a historical perspective, globalization and, for that matter, the world history has not been linear in its progress. There have been ups and downs as well as twists and turns. With several decades of fast growth of globalization, the world has reaped unprecedented benefits, but we have also seen the widening gap between the rich and the poor and deeper division between the capital and the labor as predicted by Karl Marx. So, the conclusion should be that globalization will continue but with a different paradigm or narrative, thus ushering in a new era of “reglobalization” wherein China is called upon to play a key role of leadership. China’s President Xi Jinping is going to Davos World Economic Forum in January 2017 which again indicates that China attaches great importance to “make globalization and global governance work again” even though now globalization is somewhat in shatters and in urgent need of changes.
The emerging world order is being shaped by the ongoing twists and turns of globalization. Although what anti-globalization measures President-elect Trump will take and what will happen in European politics in the next few years are mostly in the domain of unknowns, there are a few trends that will no doubt continue.
One trend is that after 2008 financial crisis neo-liberalism has been retreating or receding at a rapid pace globally. The other is the fact that despite global economic slowdown, China’s economic growth path and model have been proven of great salience in global economic governance with its resilient political system and strong institutional arrangements.
The contrast between a collapsing neo-liberalism of the west and the much-welcomed new development model espoused and practiced by China is not to be missed. I am certain that it will be featured prominently at the upcoming annual Davos gathering too. In the last decade or so, China has taken a proactive approach to the provision of global commons ranging from Shanghai Cooperation Organization to the Asia Infrastructure Investment Bank (AIIB), from RCEP the new free trade agreement that is almost at the finishing line to “One Belt & One Road” Initiative that promotes new thinking of common development in global governance.
Amid growing uncertainty caused by political and economic sand shift in major advanced nations like the US, UK, Italy and France, China stands out as an anchor of stability and continuity in global governance and international efforts to tackle global challenges such as climate change. The greatest uncertainty is doubtlessly what economic and monetary policies Mr. Trump will come up with. Trade protectionism, reduction of taxes, increasing investment in infrastructure to the amount of one trillion dollar and continuance of Fed’s rate hikes are already on the table. That mix of policies will impact the global trade and economy. The question is how much and how long as economies of the world are virtually interdependent for global production and financial flows. Any disruption to the current system could be costly to many countries especially small economies or single commodity economies.
Of course, it is not just about China and the US. It is about the changing political and economic landscape of the world we live in, about the “rebalance” or “convergence” between the developed and developing nations on a scale that has not been seen since the industrial revolution a few hundred years ago. In other words, global governance is undergoing a historical process of “western governance” to “co-governance by East and West”. Will we succeed in shaping the emerging new world order that will be more fair, more just and provides better global governance architecture to the community of nations that are a de facto entity of common interest with mutually beneficial relationships. That is a big challenge to all of us. It will be tragic if a country or countries hijacked by domestic politics and economics or geo-politics will become roadblocks rather than movers in “reglobalization”. There is no time to waste when the new era is already on the horizon and a fast-changing world certainly requires a meeting of minds and concerted actions in global governance by all members of the international community to make “reglobalization” work.
Last but not the least reglobalization does not mean throwing away the current global governance system. China has repeatedly expressed its firm position that it wants to safeguard and reinforce the existing governance system. What needs to be done after careful and wide consultation among nations is what reform measures should we contemplate and be taken to improve the system with apparent imperfections.
The rising populism in the US and Europe is not something happening out of the blue that can be ignored. It is resulted from and enhanced by the persistently widening income and wealth gap from the disparate gains between the capital and the labor, to speak in general terms. Populism is only a label. The root cause that keeps feeding the populist anger against the elites in the US and some European countries is now crystal clear. If that angst cannot be diffused, any talk of a new world order would be futile. China’s success in continuous growth and her tremendous efforts to reduce and eradicate poverty can be a good example for other nations.