The contrast was striking. While Donald Trump has promised a retreat of the US from the world stage, China made a bold statement at Davos that it’s willing to fill the void left by Washington when it comes to globalisation.
President Xi Jinping was the first Chinese President to address the World Economic Forum, a gathering of the global business elite, often criticised for being out of touch with the common man. “Team China” — if you will — came here in full force with their largest entourage ever — over one 100 delegates representing 40 companies.
Xi delivered what was a robust defence of globalisation, arguing that economic integration has powered human advancement and improved the lives of millions of people. He left no stone unturned in his nearly hourlong address to a packed plenary hall when it comes to trade. Xi said it would be a mistake to blame globalisation for the world’s challenges of job displacement and lower wages.
“Many of the problems troubling the world are not caused by economic globalisation”, while adding, “Whether you like it or not, the global economy is the big ocean you cannot escape from.”
China’s president often sounded poetic, suggesting that countries cannot seek shelter in the calmer waters of lakes and streams, but instead should seize opportunities, while many are expressing doubts about the rapid pace of change. Beijing is positioning itself as a global leader at a time when Western powers, and especially the US, are backtracking on the global trade architecture under the umbrella of the World Trade Organisation
“It really is a big imprimatur that China would come here to speak on behalf of globalisation, which ironically is called the Washington Consensus,” said development specialist and author Dambisa Moyo.
China has aggressively pursued global expansion rolling out initiative after initiative to cement its influence and sustain access to natural resources from energy to strategic minerals to support the export giant’s manufacturing prowess. Nouriel Roubini of New York University’s Stern School of Business told me it is all part of China’s economic statecraft. It does not boast about its activities but chooses instead to quietly deliver.
Major initiatives include its “One Belt, One Road” strategy to link China to Central Asia, establishing the Asian Infrastructure Investment Bank with $100 billion of capital, an emerging market investment vehicle, and planting its flag all over Africa. Beijing backed up that foray onto the continent with billions of dollars of investments.
It is now taking that economic model to South America arguably within Washington’s sphere of influence. Roubini predicted China would extend a helping hand to Mexico with Trump continually telling its southern neighbour to build a wall along the US border to stem the flow migrants.
That is a classic Beijing strategy. When Russia was faced with sanctions from the west for incursions into Ukraine and the annexing of Crimea, China signed a long-term energy deal with Moscow.
The chief executive of the Russia Direct Investment Fund said the point was not lost on President Vladimir Putin. “Working jointly when there was economic difficulty was an important sign for us for future work as well,” said Kirill Dmitriev right before Xi took the stage.
He added Russia has what now can be described as a codependency on China since it has maintained a thirst of commodities to fuel growth.
Meanwhile, Trump has sustained a campaign of Beijing bashing for alleged currency manipulation and has threatened to impose tariffs on Chinese imports. China represents about half of America’s trade deficit running above $500 billion and Trump is eager to reverse that trend.
Xi presented his counter argument to policymakers and the corporate titans in the audience. “We must remain committed to free trade and investment. We must promote trade and investment liberalisation,” he said. “No one will emerge as a winner in a trade war.”
Xi acknowledged to Davos participants that globalisation is a double-edged sword, and people around the world had felt the pain of its failings. But he said it would be a mistake to retreat into isolationism.
Behind the scenes, Xi’s presence at this annual retreat was viewed as victory of sorts for the World Economic Forum, which has had to defend itself this year against a global populist backlash.
Founder Klaus Schwab received his first Chinese delegation well back in 1979. He has welcomed four Chinese premiers in nearly four decades, the first being Li Peng when China began its move onto the global stage.
Xi capped off the Forum’s strategy to tilt to Asia for membership, which helps keep the institution relevant when globalisation is taking some hard knocks.
The writer is CNNMoney’s Emerging Markets Editor.
