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Economic Globalization Still Has Strong Momentum

Oct 24 , 2016
  • Wu Zhenglong

    Senior Research Fellow, China Foundation for Int'l Studies

New developments in the West, including the British referendum for quitting the European Union and the rise of populism in electoral politics in the United States and some EU countries, have prompted suggestions that “anti-globalization” or “de-globalization” is fast becoming a trend in the world, which may reverse the globalization process in certain countries and even lead to a collapse of it across the world. Will that really happen?

The economic globalization is undoubtedly a double-bladed sword. While giving a great boost to global productivity and economic growth and bringing unprecedented opportunities for developing countries to catch up with the developed ones, the globalization also intensified international competition, brought greater risks and seriously impacted many countries’ state sovereignty and national industry.

However, the adversity can be averted. Any country, developed or developing, can change the unfavorable conditions into favorable and optimize its national interests in the process of globalization so long as it adopts the right policies based on reality.

China has set a good example in benefiting from the economic globalization. Thanks to an active participation in the globalization process, China succeeded in narrowing the gap between itself and other nations and became the world’s second-largest economy. In just 30 years, China lifted 660 million people out of poverty and expects to eradicate poverty by the year 2020 and build a 700-million-person middle class, expected to be the largest in the world by then. The Chinese economy has become a major growth engine for the global economy.
Like China, many developing nations, such as India and Indonesia, and a few developed countries, such as Germany, have also benefited immensely from economic globalization in terms of both the value and size of their economies.
However, the other Western countries and the United States failed to exploit the globalization to resolve their rich-poor disparity; instead, the wealth gaps inside and between countries became widened, resulting in intensified social conflicts. The middle class in these countries witnessed their wealth depreciating while blue-collar workers saw job opportunities diminish. Their failure in global competition generated a keen feeling of frustration, which developed into strong resentment against the economic globalization.
According to OECD statistics, manufacturing industrial employment in the United Kingdom has dropped by one-third since 2000, while the US saw a decrease of about 20 percent. Such an “emptying” trend of industry in developed countries has nurtured a political ecology that is suspicious of economic globalization, for instance attributing all problems in their countries to external causes, such as influx of immigrants and imports of foreign products. In fact, those problems were not caused by the globalization but rather by the administrative authorities’ policy of leaving capital unbridled in pursuit of interest at the cost of common people’s interests.
There is no denying that the global economy has not yet recovered from the 2008 financial crisis, with the risk of further slumps still lurking. Financial markets across the world keep fluctuating and trade protectionism has begun to gain ground. Obviously, and unavoidably, the economic globalization is at low ebb.
However, one should not be misled by the superficial phenomenon, for the basic elements of economic globalization are still there unchanged.
First, the basic conditions for globalization — namely the global dominance of market economy and the free flow and optimized allocation of production essentials. Second, a basic mechanism to clear the way for globalization, namely the G20 of developed and newly arising economies taking emergency moves in unison to overcome all adverse conditions. Third, the institutional guarantee for economic globalization provided by the World Trade Organization by establishing a global mechanism for regulating international trade. Fourth, the role of transnational corporations in expediting the process of globalization. Fifth, and the most important, the trend of global economies becoming integrated remains unchanged thanks to the rapid development of information technologies, which breaks through national boundaries and helps shorten distances between countries and regions.
Like all historical processes, economic globalization has its highs and lows, but it never stops surging forward. The G20 summit held in Hangzhou last month passed the G20 Strategy for Global Trade Growth and the G20 Guidelines for Global Investment, which reiterate commitment to fight protectionism and set the goal of establishing an open, cooperative global economic system for common benefit. These measures are necessary for overcoming the negative impacts of the globalization ebb and preparing for the next high tide. It is evident that the international community is optimistic about the prospects of globalization, which continues to have strong vitality.
Since the Industrial Revolution, the world has experienced four ebbs of the economic globalization, followed each time by a greater tide of advancement. One has every reason to believe that the next high tide of globalization – thanks to the joint efforts of the international community – will bring greater and more inclusive fortune and felicity to the human world.
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