"No one will emerge as a winner in a trade war." The World Economic Forum (WEF), in Davos, started with a bang. China’s President Xi Jingping took to the stage to defend globalisation, discussed the outcome of an introduction of trade barriers and dismissed protectionism.
It was a historic moment at the World Economic Forum China’s presence at the WEF is incredibly significant, as not only is it president XI’s first visit, but it’s the first visit of any Chinese president. Xi acknowledged that there are issues with globalisation, when he said ‘it is true that globalisation has created new problems, but it is no justification to write it off altogether.’ He enforced the point that no one would emerge as a winner from a trade war. With it being a few days before Trump’s inauguration, this was a stark parallel to Trump’s view on retreating within the US borders.
Asset TV kicked off the WEF with an interview with Jennifer Blanke, WEF Chief Economist, covering responsive and responsible leadership as well as social inclusion and inequality.
In a post-Brexit and post-Trump world, what are the economic under pinnings of the populist movement?
With static living standards and inequality levels not seen since the 1920’s, people feel theirs and their children’s lives will not improve, this drives them to look towards people who say they can correct this, whether it means closing markets or deglobalisation. However, despite the increased competition associated with globalisation, there are signs that it can coexist with social inclusion.
Amid the growth of populism in the western world, President Xi has been described as ‘the only adult left standing in the room’. He wants to play a bigger role in globalisation, so where can China to fit into this? Blanke says,
So, with the US’ views on deglobalisation changing the rules in the game and China stepping in, could a new type of globalisation be developing?
With China’s attendance at the forum being the first of, presumably, many it could mean that China will step up as the arbiter of globalization, staving off a US-China cold war.
S&P’S Paul Sheard said, on the outcome of a trade war, economically China would fare worse.
Although, China, being a one party state, could fare better when it comes to the political consequences of a trade war. Sheard says,
While many headlines going into Davos have focused on China as the "leader" of globalisation, WEF chief representative officer of Greater China David Aikman says that the Western framing of this term is wrong. So, what are the implications of President Xi being at the WEF meeting?
Xi’s presence reflects an important moment in both Chinese and world history. Across numerous nations, we’re entering a new era, where the view is against globalisation, it’s a step back from the free trade ideals of China. In this interview with Asset TV’s Gillian Kemmerer, Aikman says
Globalisation works for China, but how can China ensure that globalisation is working for the rest of the world? China’s economy still is in the process of further reforms but it’s moving in the right direction, with an interesting vision, matched with efforts on the ground, they appear to be succeeding in lifting the population out of poverty, whilst fighting the negative views on globalisation rising from populism. Look out for more updates as the WEF continues and political events unfurl.