The outbreak of the international financial crisis in 2008 became the “watershed” of globalization that had stridden forward triumphantly since the end of the Cold War. Subsequently, there has been the longest de-globalization ever since World War II. How to treat the ever-increasing current trend of thought and tendency of de-globalization? Where will economic globalization be going?
“From the beneficiaries of globalization to the victims of de-globalization”
What is the economic indication of de-globalization? According to the latest statistics provided by the World Bank, the proportion of the world import and export trade volume in GDP dropped from 51.86% in 2008 to 44.99% in 2015, a decrease of 6.87 percentage points, equivalent to the level of regression to the beginning of this century. Among which, the United States and Japan decreased by 2.24 and 0.96 percentage points respectively; China was not spared either, with a decrease of 19.82 percentage points, and the decline was significantly higher than the world average, as if the biggest beneficiary of globalization has become the biggest victim of de-globalization. Meanwhile, the World Trade Organization expected that the global trade growth in 2016 might be lower than the economic growth rate for the fifth consecutive year.
What is the political indication of de-globalization? Faced with the new situations of “globalization twists and turns”, such as the world economic depth adjustment, lack of recovery momentum, intensification of growth differentiation, and downturns of international trade and investment, which are coupled with the accelerated rise of the vast number of developing countries, the USA and other developed countries become rather sensitive and uneasy. The once free trade advocates have already embarked on the inward path, turning from the neo-liberalist paradigm emphasizing the release of market forces to the advocacy for social protection. In 2016, the European Union (EU) suffered a setback of membership reduction, exposing its multiple difficulties, such as slow growth, weak recovery and employment downturn. The US President even threw the protectionist remarks, including the “abolition of the U.S. trade agreement” and “the cancellation of the Trans-Pacific Partnership Agreement (TPP)”, which will bring great uncertainty to the world economic operations.
Why is there de-globalization? There are three deep-seated reasons: first, the widening gap between the rich and the poor. In the process of economic globalization, the wealth gap has deepened due to unbalanced internal benefit distribution in various countries. Second, the highlights of unemployment problems. Due to the labor division and layout of the global industrial chain and the value chain as well as the establishment of the global production and outsourcing systems, the labor-intensive manufacturing industry is mainly distributed in developing countries, leading to increased unemployment in the manufacturing sector in the Euro-American developed countries. And such unemployed personnel have become the main groups of de-globalization. Third, the resurgence of nationalism. The most fundamental and core relationship between countries is the relationship of interests. As a kind of alienation of state sovereignty and denationalization from the economic perspective, globalization will, to some extent, cause the dissatisfaction among the governments of the state parties concerned, making the overall political situation tend to be conservative and the economy as a whole introverted.
The rise of the Southern countries accelerates and the multi-polarization is more obvious
How to analyze the world situation in the face the diffusion of the de-globalization ideological trend? How to treat the overall situation of economic globalization? Secretary-General Xi Jinping pointed out that economic globalization has entered a stage of adjustment, there are skepticism as well as hesitations. But it should be noted that economic globalization is in line with the needs of development of productive forces and the interests of all the parties concerned, and it is therefore an irresistible trend.
The “irresistible trend” of economic globalization derives from the rebounding of international trade, cross-border investment and cross-border movement of personnel after the international financial crisis. From the perspective of international trade, although the proportion of the world’s imports and exports of goods in GDP declined in 2015, such a proportion from 2011 to 2014 was basically equivalent to the level in 2007 prior to the outbreak of the international financial crisis, reaching about 25%, without a serious decline. In the meantime, the service trade became a new bright spot in trade growth, with its proportion in GDP rising from 12.5% in 2008 to 13% in 2015. In terms of cross-border investment, the global net inflow of foreign direct investment as a proportion of GDP also rebounded, dropping from a high of 303.2% in 2011 to a low of 218.6% in 2014, and rising to 286.7% in 2015. Meanwhile, the flow of personnel factors intensified, which will also drive the global mobility of other factors in the long run.
The “irresistible trend” of economic globalization results from the accelerated rise of Southern countries and the reshaping of the global economic pattern where national strengths of the Northern and Southern countries decline or rise. From the perspective of the current pattern of globalization, despite the fact that the Northern countries hold a contractive attitude toward economic globalization and opening up, the Southern countries unanimously call for opening up. As the Southern countries quicken their pace to catch up with their Northern counterparts, the change in the pattern of strengths between the Northern and Southern countries shall inevitably promote the further accumulation of positive factors and the further decline of negative factors in economic globalization. In terms of trade strength, both commodity trade and trade in services rose from 20% in 1990 to 40% in 2015 for the Southern countries: the Southern countries’ exports of goods rose from 23.92% to 42.1% in proportion to the world’s total, the ratio of their imports of goods rose from 21.5% to 38.93%, their commodity trade ratio rose from 22.71% to 40.51%, and their trade service ratio rose from 18.48% to 34.52%. From the perspective of economic strength, when calculated by the exchange rate method, the GDP of the Southern countries in proportion to the world’s total rose from 17.2% in 1990 to 37.6%; and measured by purchasing power parity (PPP), the Southern countries’ total GDP proportion has already surpassed that of the Northern countries, with a gap to be further widened in the future. Thus it can be seen that the evolution of the world trade and economic pattern is accelerating, and the trend of multi-polarization is more obvious.
When confronted with the rise of the de-globalization trend, we are supposed to be even more sober-minded and rational. It can be seen that the fundamentals of economic globalization are good and the basic conditions have remained unchanged. The large-scale production, innovative development, large-scale trade and sustained growth in various countries, and the Southern countries in particular, all need even broader domestic and foreign markets, which shall be an inexhaustible motive force for the development of globalization. Some countries artificially sever the ties of communications and cooperation, including international trade, cross-border investment and personnel mobility; however, such behavior shall inevitably result in “loss-loss” or “multiple losses”, and their ensuing losses shall outweigh gains.
Liberalization of trade and investment is conducive to the common development of the world.
The general trend of economic globalization is still ongoing. However, it is undeniable that globalization is a “double-edged sword”. Over recent years, the de-globalization trend has exposed many disadvantages of the traditional globalization dominated by the developed countries. Therefore, it is absolutely imperative that we promote the realization of “neo-globalization”.
What is “neo-globalization”? Firstly, based upon equality, various countries are ensured with equal rights, equal opportunities and equal rules in the international economic cooperation; secondly, oriented by opening up, no exclusive arrangements shall be made, and the closure of governance mechanism and rule fragmentation shall be prevented against; thirdly, driven by cooperation, rules shall be made, mechanisms shall be established and challenges shall be met through joint consultations and concerted efforts and; fourthly, aimed at sharing, the mechanism enabling everyone to get involved and benefit shall be advocated.
What are the differences between the “neo-globalization” and the traditional globalization? Firstly, turning from an unbalanced to a balanced “new international order”, the Southern countries shall be entitled to the discourse right and benefit distribution proportionate to their economic and trade strengths; secondly, turning from an insecure to a secure “new security pattern”, various countries shall give their coordinated, overall response to traditional and non-traditional threats, and jointly maintain systematic security and properly build the fundamental guarantee for political security; thirdly, turning from an isolated to an opening-up, and from a non-inclusive to an inclusive “new economic model”, various countries shall jointly build an open world economy, continue to promote the trade and investment liberalization and facilitation, lower the general tariff level, phase out non-tariff trade barriers, strengthen economic inclusiveness, focus on reducing the Gini coefficient, unemployment rate and poverty incidence, and boost female employment rate and human development index; fourthly, turning from the exclusive to the non-exclusive “new civilization exchanges”, all civilizations are neither superior nor inferior, and no prejudice shall be inflicted upon any other countries, and mutual learning and emulation as well as all-embracing inclusion shall be encouraged to promote the common civilization of mankind in order to accomplish creative, innovative development and; fifthly, turning from a non-sustainable to a sustainable “ecosystem”, various countries shall strive for the joint construction of the global ecological civilization, bolster energy conservation and emission reduction, and jointly cope with climate change.
What can China do for “neo-globalization”? The accountability of a great nation can be highlighted when the world is in turmoil. As the world’s second largest economy, the largest trading country, the largest country to attract foreign capital and the second largest country to invest abroad, China shall continue to make conceptual, opportunity-based and institutional contributions to the world, and become a forerunner, practitioner and leader in promoting the realization of “neo-globalization”.
On the one hand, China shall assume substantial, “gold and silver” accountability for developmental opportunities. In the five years to come, China shall provide the rest of the world with an even broader market, more sufficient capital, more abundant products and more precious cooperative opportunities, including US$8 trillion gross imports, US$600 billion total utilization of foreign capital, US$750 billion total outbound investment and 700 million person/times of overseas tourism.
On the other hand, China shall provide accountability featuring joint consultation, building, sharing and win-win for global governance. As a leader and advocate, China shall participate in the joint building of “the Belt and Road”, establish the Silk Road Fund (SRF), the Asian Infrastructure Investment Bank (AIIB), the BRICS New Development Bank (NDB), and energetically build a global free trade network. Being an advocate, China shall push forward the formulation of the G20 Strategy for Global Trade Growth, and the G20 Guiding Principles for Global Investment, launch the Global Infrastructure Connectivity Alliance Initiative, advance negotiations on Regional Comprehensive Economic Partnership (RCEP), and promote the effective implementation of the Paris Agreement and make commitments on emission reduction.
In short, China shall hold high the banner of “neo-globalization” to actively promote the trade liberalization, investment liberalization and service facilitation conducive to the global common development, advance reform through opening up, seek development through reform, and win prosperity through development, which shall benefit the Chinese people as well as people in the rest of the world.
(The authors are from the National Condition Research Center of Tsinghua University)