EghtesadOnline: Chinese President Xi Jinping urged global business and political elites to reject trade wars and protectionism, in his first public rebuttal of the policies advocated by incoming U.S. leader Donald Trump.
In a speech where he did not name Trump, but where his comments were clearly targeted at the president-elect, Xi told the World Economic Forum in Switzerland on Tuesday that failures of governance, not globalization, were fueling anxiety around the globe. He called on the billionaires and political leaders present to close wealth gaps and improve financial regulation, without retreating from policies that have fueled decades of growth, Bloomberg reported.
Xi indicated he recognized that if Beijing is provoked into a trade war with the U.S. under Trump it would also be damaging to China’s own prospects.
“Pursuing protectionism is like locking yourself in a dark room, which would seem to escape the wind and rain, but also block out the sunshine and air,” Xi said, the first Chinese head of state to address the annual summit in Davos. “Waging a trade war will only cause injury and loss to both sides.”
Trump’s surprise win in November -- after a campaign accusing China of “raping” America of jobs -- has helped fashion the Communist Party chief into an unlikely champion of the global capitalist structures that have powered his country’s decades-long boom. Xi’s remarks illustrated he is taking seriously Trump’s threats to confront him with tariffs and currency measures after he takes office on Friday.
“It shows China is not underestimating the danger of a trade war breaking out,” said He Weiwen, deputy director of the Beijing-based Center for China and Globalization and a former business attache in New York and San Francisco. “China used to be a mere supporter of the U.S.-led global economic order. Now, as the incoming U.S. presidency shows signs of retreating, China is stepping up to take a leading role.”
The world’s second-largest economy now represents a bastion of consistency to Davos attendees facing a string of European elections -- in France, the Netherlands, Germany and possibly Italy -- after the twin shocks of Trump’s victory and the U.K.’s Brexit vote. Such “extreme weather events” topped the list of most likely risks in the forum’s annual survey this year.
The protectionist sentiment that threatens to slow China’s own growth also offers Xi a chance to advance his goal of shaping global economic systems. Since taking power in 2012, Xi has showed a desire to take a more high-profile role on the world stage, addressing the United Nations in 2015 and hosting the Group of 20 nations last year.
China has many ways to deal with protectionist actions by the Trump administration, the official Economic Information Daily said in a front-page commentary after Xi’s speech. China should prepare itself for any risks to trade ties with the U.S., it said.
Xi in his remarks cited the Syrian refugee exodus and the global financial crisis as examples of problems resulting from poor management rather than greater economic links. He said world leaders had a responsibility to improve regulation, reduce inequality and ease the “excesses” of globalization.
China is scheduled to release last year’s gross domestic product growth figure on Friday, hours before Trump settles into the White House. The data are expected to land in the middle of the government’s target range of 6.5 percent to 7 percent, but the stabilization has come at a cost of rising debt, soaring property prices and questions about China’s commitment to reform.
China remains the world’s big driver of economic growth despite its own slowdown, and was estimated to have accounted for almost 39 percent of global growth last year, according to the WEF. Xi’s entourage in Davos includes more than 80 business executives such as Alibaba Group Holding Ltd. founder Jack Ma, Dalian Wanda Group Co. Chairman Wang Jianlin and Baidu Inc. President Zhang Yaqin.
Xi spent his final hours in Davos making his pitch for keeping trading relationships open to business leaders. He met over lunch at a hotel with executives including Blackstone Group LP founder Steve Schwarzman, Reliance Industries Ltd. Chairman Mukesh Ambani and Hewlett-Packard Enterprise Co. Chief Executive Officer Meg Whitman. Also there was International Monetary Fund chief Christine Lagarde and Bank of England Governor Mark Carney.
The Chinese leader has sought to leverage his country’s economic strength into diplomatic clout with multinational initiatives such as the Asian Infrastructure Investment Bank and his signature plan to expand infrastructure along ancient trading routes to Europe. At Davos, Xi announced a global summit on the strategy for May, saying Chinese investment in more than 100 countries had surpassed $50 billion over the past three years.
Arthur Kroeber, Beijing-based founding partner and managing director at Gavekal Dragonomics, said that provided Xi a platform to demonstrate his overseas clout back home, where the Chinese leader is preparing for a mid-term reshuffle of the party’s leadership ranks.
“It’s in Xi’s interests to take every opportunity he can and present himself as this leader who is powerful, strong and visionary, to give himself some international prestige,” said Kroeber, author of “China’s Economy: What Everyone Needs to Know.” Xi’s appearance at Davos, which has previous been attended by China’s premiers, is “consistent with the notion that Xi is now the only major authorized spokesman for the whole country.”
Xi urged other countries to also keep their doors open to Chinese investors, drawing another contrast with Trump, and said he had no plans to devalue the yuan in order to boost competitiveness.
“He is persuading Trump to give a second thought to remarks he made as president-elect,” said Wang Wen, executive dean of the Chongyang Institute for Financial Studies at Renmin University in Beijing. Wang said Xi was following an old Chinese adage of “trying peaceful means before resorting to force.”