President Xi Jinping’s proposal to build an open global economy has been adopted as a key topic at the upcoming G20 summit in Hangzhou. It is a timely prescription for the ailing world economy to recover, and to realize strong, sustainable and balanced development.
An open global economy calls for all countries to open up in an all-round manner, realize all-round connectivity, and engage in close benign interaction, continuously deepening globalization. A core task is to oppose trade and investment protectionism, formulate a mutually beneficial global value chain and market, so as to facilitate global trade and investment as much as possible, and fully tap trade and investment potential as a major propellant for economic progress.
Increasingly, global economic development and economic progress in individual countries hinge on international trade. International trade and investment have become a barometer of world economic health as well as a pillar and driver for countries’ economic growth. Rapid global economic growth in the 20 years before the 2008 financial crisis was inseparable from robust global trade in the same period.
The bleak global economic landscape in recent years has a lot to do with the stagnation of globalization, with many countries — such advanced economies as the US, Japan and European nations in particular — indulging in trade protectionism, resulting in withering world trade, which directly encumbers world economic growth. Developed countries thought resorting to trade protectionism and reducing inflow of foreign commodities might help them shake off the crisis and stimulate growth at home. But the result is quite the opposite. While their foreign trade dropped drastically, average growth has lingered below 2 percent, sinking in a rarely seen period of stagnation since World War II.
The sharp contrast offers a lesson for developed countries: They should proceed from the macro picture of global economic health, demonstrate political resolve, dismantle artificial trade and investment barricades, and work together to build an open global economy. As the world’s largest economies, China and the US are key to fulfilling such a goal, and are obliged to make their due contributions. China, as the initiator, has assumed its due share of responsibilities. The US, though having not openly expressed resistance, has erected various barriers in both policies and actions.
First, adopting a “beggar-thy-neighbor” policy, erecting high trade barriers. According to an authoritative global trade report issued recently, the US introduced more than 600 discriminatory measures against other countries from 2008 to 2016, being no.1 worldwide, which is the biggest mockery for the US, the self-proclaimed banner-bearer of free trade.
Second, displaying a worrisome propensity for politicizing international economic cooperation, linking foreign economic relations to ideologies. The US has refused to acknowledge market-economy status for WTO member countries, including China, that have different social systems, restricting or prohibiting exports of hi-tech products to them, or restricting their normal investment activities in the name of “national security”, which seriously hampers normal international economic cooperation.
Third, challenging multilateral economic and trade systems, striving to get around the WTO and launch a new regime. After negotiating the TPP, the US is accelerating negotiations for the TTIP, so as to exclude the majority of developing countries while highly liberalizing trade among its “partners”. This goes against WTO principles, and may lead to fragmentation of world economic governance, even the world economy. The US has recently claimed it would give up Doha-round negotiations. While dealing a heavy blow to the WTO, the US is attempting to create a new US-dominated world trade body. If it succeeds, there will be disastrous impacts on the WTO, global free trade, and the world economy.
Such US deeds are against the ideal of building an open world economy. China, on the other hand, is resolutely opposing trade protectionism. The Chinese proposals, to improve global governance, preserve such multilateral trade arrangements as the WTO, eliminate trade and investment barriers, to continue promoting Doha-round negotiations, to make trade agreements open, inclusive, transparent and non-discriminatory, and to prevent world market and trade fragmentation, constitute the essential elements of an open global economy. Besides, China has made practical contributions with the “Road and Belt” initiative and the AIIB. The G20 Hangzhou summit may see important consensuses reached regarding the formulation of an open world economy.
The US should follow the historical trend of trade liberalization, abandon protectionism, and engage in non-discriminatory free trade. That is the only all-win solution to its own and the rest of the world’s economic difficulties.