Leader of Globalization. Does Xi Really Mean It?

Chinese President Xi Jin Ping spoke to defend globalization and advocated for free trade at the World Economic Forum in Davos.  While the speech has been hailed by many, commentators around the world also question whether Xi was sincere about it. See the following:

Forbes: Xi Jinping’s Davos Speech Defends Globalization But Does China Really Mean It?

http://www.forbes.com/sites/douglasbulloch/2017/01/18/xi-jinpings-davos-speech-defends-globalisation-but-does-china-really-mean-it/#36d44e787531

About this time of year, most years, journalists looking for inspiration can always turn their eyes towards the rarified atmosphere of a certain Swiss ski resort, find out what the assembled notaries are discussing, and produce a few thousand words of inconsequential burbling about technology, economics and social transformation. This year, however, the entire world is a target rich environment–excuse the pun–for the doleful hack in need of inspiration.

China’s President Xi Jinping delivers a speech on the opening day of the World Economic Forum, on January 17, 2017 in Davos.The global elite begin a week of earnest debate and Alpine partying in the Swiss ski resort of Davos on Tuesday, in a week bookended by two presidential speeches of historic import. / AFP / FABRICE COFFRINI (Photo credit should read FABRICE COFFRINI/AFP/Getty Images)

Fortunately, the organizers of the World Economic Forum meeting at Davos had the inspired idea of inviting Xi, President of the People’s Republic of China, who arrived to a red carpet welcome on Monday. As brand management strategies go, this is “Grade A,” ensuring the name Davos appeared on today’s front pages around the world, rather than in comment page reflection pieces entitled “Whatever happened to … ?”

Instead, Davos showed the world the urbane figure of Xi, quoting Dickens’ A Tale of Two Cities. “It was the best of times, it was the worst of times,” he said to a flutter of applause, laying an unambiguous claim on the sort of cosmopolitan sensibility that is de rigeur in these climesUnfortunately, Xi also suggested Dickens was portraying the industrial revolution, rather the much bloodier French revolution that informs the story and constructs a metaphor for a progressive, liberal country, rising to global prominence, while its old enemy descends into bloody strife.

There is no escaping, however, that Xi delivering the opening plenary speech at Davos is also a powerful metaphor, the only question is, of what? Many headlines will refer to Xi’s defence of globalisation in the face of endless challenges. Other’s will complement the emerging helmsman for his pragmatism while sneering at Trump’s bombast.

But behind it all is public diplomacy; it is China sounding reasonable, conciliatory, patient, ready to assume the mantle of leadership that so many are so eager to thrust upon it. And the Davos crowd seemed to love it. Xi’s joke about “Schwab-onomics”– after Klaus Schwab, the founder and guiding spirit of Davos–was wooden, but everyone laughed politely anyway. There were no interruptions. No activists bursting in to scream obscenities, no impertinent questions about his private wealth, no mention of the routine censorship and suppression of dissent in China. Just Xi, holding court to a roomful of forlorn globalization disciples, searching for new hope.

The speech itself contained little of substance, many selective embellishments and quite a few glaring omissions, but was what everyone has come to expect of a Chinese leader on the world stage. The real problems, he said, were threefold: Not enough ‘driving force’ for reform and development. Inadequate global governance, by which he really meant that China did not have enough say over the rules and institutions. And lastly, unequal global development.

What is required, apparently, is innovation, and a new economic model to encourage it. One might conclude from these words that capitalism would be worth a try, but no, each country must develop “according to their own conditions,” he said. Absent from the speech was any mention of global imbalances, or closed capital markets and a history of currency manipulation. These were, however, stern demands that countries “honour promises and obey rules.”

Two developments accompanied the speech suggest a degree of predictable choreography for a set-piece performance such as this. The State Council issued new policy guidelines to help foreign investors in China, which only served to remind people that these same promises have been made many times before, indeed they were among the many conditions of China’s WTO accession agreement in 2001, but clearly sticking to those promises and obeying those rules is not in accordance with China’s conditions.

Then it transpired that “state investors bought shares to steady” a declining Chinese stock market, which reminds everyone that the Chinese state maintains its ‘driving force’ for a reason, which is to make markets do what they are told.

The difficulty of interpreting a speech like this is not really in the content of the speech itself–Chinese speeches are always about reading between the lines in any case–so much as understanding reactions to it. China watchers are used to sifting through the dense web of self-justification and misdirection that comprise a major address like this, but such a speech is not really a positive contribution to global dialogue so much as another rehearsal of China’s global outlook.

The setting, however, is of crucial importance as it creates the impression that China is keen to support globalization. An impression Klaus Schwab and the Davos elite fell over themselves to endorse. And what this rapturous reception signifies is that globalization, increasingly abandoned in the West, thinks it has found a new champion in the East.

Towards the end of his address, Xi uttered one of those amusingly mistranslated aphorisms when he said “no pie falls from the sky” when he likely meant “no such thing as a free lunch,” a saying which the applauding dignitaries appeared keen to refute.

China’s Xi Jinping Seizes Role as Leader on Globalization

‘No one will emerge as a winner in a trade war,’ Chinese president says

The Wall Street Journal,

Chinese President Xi Jinping urged the world to “say no to protectionism” with a full-throated defense of free trade at the opening of the World Economic Forum in Davos, Switzerland. Photo: Gian Ehrenzeller/European Pressphoto Agency

Chinese President Xi Jinping issued a full-throated defense of international trade and economic integration before a packed hall here, as doubts about the merits of globalization mount in the U.S. and elsewhere in the West.

“No one will emerge as a winner in a trade war,” Mr. Xi, the leader of the world’s second-biggest economy, said in an hourlong speech on Tuesday to members of the world elite gathered for the annual World Economic Forum. “Pursuing protectionism is just like locking one’s self in a dark room. Wind and rain may be kept outside, but so are light and air.”

The Chinese leader’s message comes as the U.S. prepares to inaugurate President-elect Donald Trump, who has voiced skepticism about the benefits of free trade to the U.S.

Mr. Xi sought to portray Beijing as a benevolent power intent on upholding an international order that has boosted common prosperity. He exhorted world leaders to “join hands and rise to the challenge.”

The speech was portrayed by some who heard it as a response to politicians in the U.S. and Europe who are turning their focus inward.

“There is a vacuum in global leadership. Xi sees it and he seizes it,” said Carl Bildt, a former prime minister of Sweden, who was in the audience. “If the U.S. does take a more mercantilist route, overall the Asians and Europeans will have to combine to preserve global free trade.”

China has been one of the biggest beneficiaries of globalization, which opened the way for the country, with its vast and relatively low-wage workforce, to become the world’s factory floor. Inexpensive goods manufactured in China have flooded the planet.

That shift helped lift hundreds of millions of Chinese from poverty. But it was also a factor that contributed in costing millions of workers in the West their jobs, fueling mounting suspicion of transnational economic integration and the current antiestablishment backlash in politics in much of the developed world.

“Some people blame economic globalization for the chaos in our world,” Mr. Xi said. He dismissed the idea—and acknowledged that globalization had resulted in growing income inequality within many countries.

“It’s important that China is saying that there are important benefits of globalization and acknowledges that there are many problems that have to be worked through,” said David Lipton, first deputy managing director of the International Monetary Fund.

Xi Jinping is the first Chinese president to attend the World Economic Forum in Davos Switzerland; he has presented China as a benevolent global power amid differences with the incoming Trump administration. Photo: Getty

In many ways, Mr. Xi—and his government—are deeply ambivalent about globalization. Mr. Xi is an unabashed nationalist, who resents the West’s lecturing on human rights and democracy. He has sought to bulk up state-run companies and kept China’s internet isolated behind its Great Firewall.

Mr. Xi stressed that no power should attempt to dictate to other countries a specific path. Development, he said, is “of the people, by the people, and for the people,” borrowing a phrase from U.S. President Abraham Lincoln’s Gettysburg Address.

Some in the audience noted irony in the appeal from the leader of a country that has undermined competition.

Foreign companies and governments complain that China has moved to restrict foreign companies’ access to its markets, while buying up technology and assets from firms abroad. The U.S. and Europe also accuse China of selling goods from steel to solar panels at improperly low prices.

“Here, we have the global elite embracing Xi as the anti-Trump,” said Lawrence Freedman, emeritus professor of war studies at King’s College, London.

Donald Trump’s suggestion that he would use Taiwan as a negotiating chip with China to extract concessions over trade hit a raw nerve in Beijing. Photo: EPA/Reuters

Mr. Trump has pledged to defend American firms and workers against foreign competition and impose tariffs on imports from China and Mexico, among other countries. Mr. Trump also accused China of manipulating its currency to boost exports.

“China has no intention to boost its trade competitiveness by devaluing the renminbi, still less will it launch a currency war,” Mr. Xi said.

China’s yuan weakened almost 7% against the dollar last year, nearly double the drop in the year earlier. In recent weeks, China’s central bank has stepped up its effort to prop up the yuan as Beijing pledges to keep the currency largely stable.

In his speech, Mr. Xi built a case that China should have a greater formal role in guiding the world economy. He gave his endorsement to the 2015 Paris agreement on carbon emissions, calling on countries to “stick to it instead of walking away from it.”

Mr. Trump has called climate change a hoax, fueling speculation that he might pull the U.S. out of the accord.

Some in the audience questioned the readiness of China to adopt the leadership role that Mr. Xi was viewed as mapping out.

“In these times of a lack of leadership, particularly in Europe, it was quite impressive,” said Werner Hoyer, president of the European Investment Bank, which is owned by the 28 member states of the European Union.

But when asked if he thought that China’s institutions were ready to take on the leadership of the world economy, Mr. Hoyer said: “Not yet.”

Mr. Xi’s legitimacy at home depends in large measure on his ability to manage a continued slowdown in China’s own economy while continuing to assert Chinese territorial claims despite U.S. opposition.

Mr. Xi said China’s economy has entered a “new normal” of slower but more sustainable growth. Household consumption and services have become new growth drivers for the economy, Mr. Xi said.

He said China’s economy grew at 6.7% last year, within the range of between 6.5% and 7% targeted for 2016.

Still, that growth came through easy credit and other stimulus that revved up industries and the property market, contributing to overcapacity and soaring house prices. Mr. Xi acknowledged those headwinds. China’s leadership has made fending off asset bubbles a key economic task for 2017.

Write to Stephen Fidler at stephen.fidler@wsj.com, Te-Ping Chen at te-ping.chen@wsj.com and Lingling Wei at lingling.wei@wsj.com

 

At Davos, a clarion call by world leaders, including Xi Jinping and Joe Biden, to defend global order

Biden pulls no punches as he warns against protectionism and Russia’s shenanigans

DAVOS (SWITZERLAND) – With the clock ticking down on his last 48 hours in office, US Vice-President Joe Biden delivered a rallying call to government and business leaders here in Davos to keep up their fight to defend the liberal global economic and political order that has come under pressure from populist challengers in recent months.

Leaders in Western countries, led by the United States, had to defend the liberal global order that their forefathers had shown “foresight, audacity and big-heartedness” in building. Institutions and initiatives such as the United Nations, Nato, the European Union, the Marshall Plan and Bretton Woods had helped secure the decades of peace and prosperity that the world has enjoyed, he told his audience at the World Economic Forum (WEF).

Urging leaders not to lose sight of the years of effort it took to build these institutions and foster the community of values that underpinned them, he added that leaders in the West “could not wait for others to write the future they want to see”.

They should reject the impulse to “hunker down, shut the gates, build walls, exit at this moment”, in the face of challenges thrown up by globalisation, from growing income inequalities to a deepening sense of insecurity among voters that the system would deliver on the promise of better lives for their children, he said.

Mr Biden and Mr Xi meeting on the sidelines of the WEF in Davos. Mr Biden chose to deliver his last official speech in Davos, while Mr Xi was the first president from China to address the forum. Both men gave a robust defence of an open, liberal worl
Mr Biden and Mr Xi meeting on the sidelines of the WEF in Davos. Mr Biden chose to deliver his last official speech in Davos, while Mr Xi was the first president from China to address the forum. Both men gave a robust defence of an open, liberal world order against the backdrop of a possible hunkering down by the US under a Trump administration. PHOTO: XINHUA

Noting the unease felt around the world following recent events, he addressed the Republican elephant that has been hanging about the WEF’s cavernous Congress Hall for the past two days. Although he insisted his remarks were not directed at the incoming Donald Trump administration – mention of which prompted a loud boo from someone in the crowd – he set out in plain terms what he thought the world wanted to see from an American leadership.

As is his style, he did not mince his words. He pointedly called out Russian President Vladimir Putin, who, he said, “has a different vision of the future”. He charged that Mr Putin was behind cyber attacks and misinformation to influence electoral outcomes in Western democracies, including the recent US elections. He said the Russian leader also aimed to undermine Western alliances like Nato, seeking instead to build a world divided into spheres of influence where regional players, like Russia, would hold sway. The US, for its part, had stood for an international order where countries were free to decide their own futures and associate with others as they saw fit. “That was our position, is our position, and should be our position,” Mr Biden asserted, noting that he had chosen to deliver his last speech in Davos, in much the same vein as he had set out the Obama administration’s foreign policy agenda in Europe, in a speech in Munich, soon after taking office eight years ago.

BEAR ON THE PROWL

Under President Putin, Russia is working with every tool available to them to whittle away at the edges of the European project, test the fault lines of Western nations and return to a politics defined by spheres of influence… With many countries in Europe slated to hold elections this year, we should expect further attempts by Russia to meddle in the democratic process. It will occur again, I promise you. And again the purpose is clear: to collapse the liberal international order.

US VICE-PRESIDENT JOE BIDEN

TACKLING PROBLEMS HEAD-ON

There is no point in blaming economic globalisation for the world’s problems because that is simply not the case… And that will not help to solve the problems… The history of mankind has shown us that problems are not to be feared. What should concern us is the refusal to face up to the problems.

CHINESE PRESIDENT XI JINPING

These were welcome words for the crowd gathered in this Swiss Alpine resort for the annual WEF meeting, who gave him a standing ovation. There was a note of wistfulness about the passing of the baton to a new team in the US whose commitment to the liberal order seems in doubt, following recent remarks by incoming president Trump, who has called Nato “obsolete” and the EU a “vehicle for Germany”. Just as disconcertingly for observers in Asia, he has said he was ready to bargain with Beijing over the US’ one-China policy, and also seemed headed for a confrontation with China over trade.

Against this backdrop, it was little wonder that, a day earlier, delegates here had clung to the words of Chinese President Xi Jinping, who hit all the right notes in voicing his support for the liberal economic order.

In a speech on Tuesday, Mr Xi rejected protectionism, urged against a “trade war in which there are no winners”, and pledged that China would keep its economy open to the world.

It was pointless blaming globalisation for economic challenges, he said, as this was “not the case, and would not solve the problems”. He also likened protectionism to shutting oneself in a dark room, which might keep out the wind and the rain but also block out the sunshine.

He went on to outline China’s proposals for collaborative projects, from its much vaunted One-Belt-One-Road initiative to foster trade links between Asia and the West, to long overdue structural reforms to “Western- centred” international institutions.

Mr Xi made history by being the first president of China to address the WEF, which rolled out the red carpet for him. He was given top billing for a keynote address on Day One of the week-long conference. He later also witnessed the signing of a “strategic partnership” between China’s National Development and Reform Commission and the WEF to deepen their collaboration over the next 10 years.

Responding to Mr Xi, WEF founder and executive chairman Klaus Schwab hailed his address as a “very important speech at a historic time”. He welcomed China’s efforts to support, as well as reform, the present institutional system and be a “driving force in the world for globalisation”.

Mr Schwab’s sentiments seemed to be shared by delegates, many of whom appeared delighted at the Chinese leader’s robust defence of globalisation at a time when some of its usual champions in Washington and the West seem to have lost faith in the project.

There have been, after all, many calls from these quarters for China to pitch in to uphold the rules-based system that has enabled it to make such rapid progress through international trade and economic co-operation.

The irony, however, of the liberal capitalist order being given a much-needed booster shot by the leader of a nominally Communist state, once itself deeply suspicious about signing up to it, was not lost on delegates.

In discussions afterwards, there were some sceptical voices raised about what a “globalisation with Chinese characteristics” might entail for the world.

Which explains why Mr Biden’s farewell speech was such a hit with the crowd yesterday.

With a new US leader waiting to be sworn in tomorrow, just as proceedings here will be winding down, many remain deeply unsure if the clock was not also winding down on the globalisation project they have long supported, and benefited from.

A version of this article appeared in the print edition of The Straits Times on January 19, 2017, with the headline ‘A clarion call to defend the liberal global order’.

XI JINPING’S DAVOS SPEECH SHOWED THE WORLD HAS TURNED UPSIDE DOWN

China is looking to position itself as the guarantor of global trade after Donald Trump’s election.

What a difference a decade can make. China went from being lambasted for being an irresponsible stakeholder in the mid-2000s, to now being seen as the linchpin of global economic stability. This reality set in for many on Tuesday as China’s President Xi Jinping took the stage to deliver a staunch defense of economic globalization, and international cooperation on issues that threaten global prosperity and growth.

Contrast these remarks to the outbursts from President-elect of the United States Donald Trump about the unfair advantages built into the global economy’s rules of the game—rules that have paved the way for the U.S.’s rise to the top—and we are all left scratching our heads.

If Xi’s opening address to Davos’s exclusive club of the economic and political elite is any indication of what is to come in 2017, China could be the most powerful voice heralding the social and economic benefits of globalization, inviting countries to join free trade pacts that it hosts and organizes, and investing into developing countries to gain market access.

That’s right; China, a developing country with swathes of rudimentary territory and hundreds of millions of people still living in poverty, is championing economic globalization. Clearly, we are living in an upside-down world.

In his Davos keynote, President Xi rejected the notion that “outside forces” or economic globalization were to blame for the world’s socioeconomic ills. Likely responding to Trump and the European populist rhetoric that has monopolized headlines for the past several months, Xi took aim at ongoing conflict, geopolitical instability, the rise of terrorism and refugee crises as the root causes of “what has gone wrong with our world.”

Unsaid was a point Chinese officials have made before; that it was sustained American intervention in the Middle East’s political history, most notably in Iraq in 2003, that brought on this regional instability and spillover to chaos we see today.

Xi also hinted at previous U.S. follies of “chasing reckless profits” and poor financial market regulations that ushered in the onset of the 2008 global financial crisis. Xi praised G20 initiatives that improve global economic governance of financial flows and banking regulations, but he and other world leaders ought to be rightly worried about Trump’s likelihood of tearing down the Dodd-Frank financial regulations that had put stronger oversight on American banks and investment firms.

It was New York that was the epicenter of the international financial crisis, but its fallout was far more felt in Athens, Madrid and Dublin.

From finance to trade, it appears Trump’s America will no longer play the role of enforcing the liberal rules and norms the country once coveted and benefited from. Instead, it is Xi’s China that is promising to expand the One Belt One Road (OBOR) initiative to link Asia to Europe and Africa using land, air, and sea. The OBOR is reminiscent of the U.S.’s own Marshall Plan for Europe : Xi heralded it as an ambitious foreign aid program that will bring investment, economic growth, and open trade routes for developing markets. Xi declared that China is open to trade and welcomes the world to take advantage of its market, the largest developing economy in the world, just at a time when the US is expected to raise protectionist barriers and breakdown free trade agreements.

Where the United States once claimed itself to be the center of research and development, technological innovation and intellectual property, Xi noted how China is encouraging domestic consumption and savings, growing its service sector to diversify from manufacturing, and is investing in and promoting green technologies.

Xi rejected the idea that economic globalization brought all ills, pointing to advances made in productivity, technology, and scientific advancements. He did not deny that there will be inequality, since the “ world cake ” cannot be made bigger, but that countries need to cushion against the negative impact. But, Xi reminded us that the world may be on the cusp of new technological changes from artificial intelligence to 3D printing and green technologies. Unlike Trump’s doom and gloom rhetoric about the world, Xi shared some much needed optimism and hope that was well-received by the forum in the Swiss ski resort town.

To ward against another 1930s-like depression of beggar-thy-neighbor policies, U.S. presidents have used monetary policy to shore up global trade. To prevent an exodus of capital from already hurting emerging market economies to the United States, Federal Reserve Chair Janet Yellen has been cautious about increasing interest rates; a monetary policy decision that Trump has railed against. Where the U.S. dollar had been the currency used to shore up world trade, the greenback clearly does not have the domestic political backing it once had. Yet it was Xi who promised not to devalue the Chinese renminbi so as to not cause a currency war.

Trump’s America seems more like the irresponsible and bystander state and China appears more like the guarantor and bulwark of global economic stability through a shared vision of increased economic cooperation and commitment to inclusive growth. Perhaps next year the annual World Economic Forum ought to be held at China’s Yabuli Ski Resort instead, confirming that the world is truly upside-down.

Bessma Momani is professor at the Balsillie School of International Affairs and the University of Waterloo and senior fellow at the Centre for International Governance and Innovation and the Brookings Institution.

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