While US postwar policies in Asia are shifting, a new Sino-US historical opportunity has emerged. US and Chinese visions of globalisation could still prove complementary.
President Trump’s gruelling 12-day Asia tour took place amid a worrisome historical moment. Since the mid-2010s, global economic integration – as measured by trade, investment and migration – has come to a standstill. Trade has been falling. Investment continues to stagnate. And slower migration has given rise to elevated global displacement and refugee crises – the worst since 1945.
After Japan, South Korea, China and Vietnam, Trump attended the Asia Pacific Economic Cooperation (APEC) Summit in Da Nang, Vietnam, followed by the 50th Anniversary of ASEAN in Manila.
It was the two leaders’ speeches in the Vietnam that seemed to leave room for an emerging opportunity – a new kind of globalisation.
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Competing Views – Only Part of the Story
In a defiant address, President Trump told the APEC meeting that the US would no longer tolerate “chronic trade abuses”. In turn, President Xi announced that globalisation was irreversible.
In his speech, Trump complained about trade imbalances, arguing that America had lowered market barriers and ended tariffs, whereas other countries had not responded in kind. “Such practices hurt many people in our country,” he lamented.
Trump believed that those Bretton Woods multilateral organisations that America had created in the postwar era have become dysfunctional. So he railed against the World Trade Organization (WTO), which sets global trade laws, claiming that it “cannot function properly” if all members do not respect the rules.
Speaking right after his US counterpart, Chinese President Xi Jinping gave a strong address about the benefits world trade. Unlike Trump, Xi defended multilateral trade deals, which can help poorer nations to benefit: “We should support the multilateral trading regime and practice open regionalism to allow developing members to benefit more from international trade and investment.”
Yet, neither leader has illusions about pure free trade ideals in which markets would be self-disciplinary and which thus would only generate winners.
“Globalisation is an “irreversible historical trend”, Xi noted. Yet, he argued that the philosophy behind free trade must be repurposed to be “more open, more balanced, more equitable and more beneficial to all.”
The Great Opportunity
Unsurprisingly, most Western media headlined the APEC Summit with the startling contrast: “Trump and Xi offer competing visions for trade.” What got lost in the translation was the intriguing fact – and historical opportunity – that the Trump and Xi visions need not be seen as exclusive.
In fact, both the US and Chinese visions support globalisation, but with caveats. Both criticise the old multilateral international banks, though for different reasons. Both believe in rebalancing that is not accompanied by excessive trade deficits and foreign investment that should benefit both investors and destinations.
As aging advanced economies suffer from secular stagnation, they can no longer fuel world trade, investment and migration as vigorously as before. That’s reflected by Trump’s pessimistic narrative of a globalisation victim.
Yet, the global economy is also amid a secular transition that is characterised by increasing South-to-South trade, investment and migration, which are now fuelled by emerging and developing nations. And that’s reflected by Xi’s more optimistic narrative of a globalisation champion. The big picture includes both narratives.
In the 21st century, the international environment that fuels global economic integration is shifting dramatically. While globalisation was initiated by advanced economies in the 20th century, it will be completed by emerging economies in the 21st century. At the same time, the drivers of globalisation are moving from the transatlantic axis to Asia.
It is thus not the competitive US-China visions that will lead to a destructive conflict in Asia Pacific. Rather, it is the inherent commonalities in the Sino-US approaches that have potential to sustain economic cooperation in the region – and globally.
The original, slightly abbreviated commentary was released by Shanghai Daily on November 17, 2017
Photo Courtesy to AFP
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About the Author
Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS), see http://en.siis.org.cn/. The commentary is part of his SIIS project “China in the Era of Economic Uncertainty and Geopolitical Risk”. For his global advisory activities and other affiliations in the US and Europe, see http://www.differencegroup.net/
