As the Sun Sets on Globalisation, China Positions itself as the New Poster Boy of Free Trade
2017-01-27 | Future Market Insights | Chemicals & Materials
The events of the past few months have set in motion a process which is increasingly leaning toward protectionism. As nations struggle to find that ever-elusive balance between free trade and conservatism, it is becoming increasingly clear that globalisation is under the most serious threat it has ever faced in recent times.
The period after World War II was marked by a frenzied focus on lifting archaic trade barriers. As Europe and U.S. witnessed a period of steady economic growth, the term ‘globalisation’ gained acceptance and reverence. As a trade philosophy, it survived tumultuous and watershed moments in recent history, only to appear unscathed.
Anti-Globalisation Sentiment Came to Fore in 2006-07
The global recession of 2006-07 brought to the fore a deep economic and social divide. While ordinary people struggled to make ends meet, behemoth corporations were bailed out by the government through taxpayer money. The fissures in the class divide became wider and more pronounced; questions were asked if globalisation was the root cause of all evil. While world leaders were successful in deflecting these concerns in the short-term, the seeds of anti-globalisation were sown in the minds of the populace. Years later, these pent-up emotions and anger largely contributed to populist moves, including Brexit and the election of Donald Trump, symbolising a tectonic shift from globalisation to localisation.
It would be an understatement to say that globalisation is under threat. Whether or not rhetoric is put into action, the foundation with which globalisation was marketed to the entire world has suffered a dent in credibility. However, as the people in the west look for an alternate to free trade policies that rob them of their employment, China, of all nations, is positioning itself as the new poster boy of free trade. While Theresa May and Donald Trump drop subtle hints of leaning toward the 21st century version of socialism, Xi Jinping is luring investors to look eastwards.
The U.K Prime-Minister Theresa May, in her speech at the World Economic Forum in Davos, clearly supported the concept of ‘localisation’ stating that Britain should be country in control of its own destiny. Furthermore, in a bid to deal with the unemployment crisis in the U.S., Trump is also seconding the concept of ‘localisation’, through which he believes citizens of U.S will have the leverage to work in their own country. With consumer rights activist protesting against CETA and TTIP, the question remains that remains unanswered -- is this a ‘wave of anti-globalisation’ or the bourgeoisie romanticism for ‘Trumpism’?
What China Stands to Gain and Lose
As popular anti-globalisation sentiment simmers, first-world governments are busy disassociating from the decades-old pro-business policies. However, not all is lost for global corporations as the heir apparent China is laying a red carpet for those who suddenly find U.S. and Europe anti-business. Addressing global leaders at the Global Economic Forum, China’s President Xi Jinping said that Beijing will take the onus to carry the traditional pattern forward for globalisation. Instead of becoming a collateral damage in the anti-globalisation wave, China’s leaders may be effective in selling the nouveau version of globalisation that has a communist, pro-socialist tinge to it.
Even if China is successful in formulating free trade and pro-business policies, its status as the global manufacturing hub will come under threat in an ‘anti-globalisation’ political environment. China accounts for nearly one-eighth of the value share of total global exports. Protectionist trade policies in the U.S. and Europe can severely impact China’s exports, which consequentially, will have a bearing on its robustly-growing economy. How China tackles this double-edged sword remains to be seen.