18 January 2017

President Xi preaches globalisation’s merits, but is anyone listening?


In his first speech to the World Economic Forum yesterday, China’s President Xi Jinping turned to Dickens to describe the current predicament facing globalisation: “It was the best of times, it was the worst of times.”

The best because Xi believes China’s trade boom is likely to continue, with the economy growing by 6.7 per cent last year, and planned imports of $8 trillion worth of goods over the next five years. The best because China is finally assuming the position of global prominence that its leaders have long craved – as witnessed by President Xi’s reception at Davos.

And the worst because the election of Donald Trump threatens to throw these rosy prospects into the dumpster, by raising the spectre of global trade barriers and a return to protectionism.

Indeed, without naming the president-elect directly, the main focus of Xi’s speech was to contradict Donald Trump’s protectionist rhetoric. “No one will emerge as a winner in a trade war,” was his message.

Yet it was less the content and more the context of President Xi’s speech that was so striking. Here was the leader of a nominally Communist one-party state, lecturing Western delegates in an upmarket Swiss ski resort about the merits of economic liberalism.

While delegates fretted over the incoming US administration and what Theresa May really means by Brexit, President Xi launched himself on to the vacant ground, positioning China as the new world leader in free trade.

“China will keep its doors wide open,” he told delegates. “We hope that other countries will also keep their doors open to Chinese investors and maintain a level playing field for us.”

The problem for Xi, though, is that he has assumed leadership of a global order which in many ways no longer exists.

While his speech clearly met with approval from the audience, it came after the thumping rejection by Western electorates of “Davos Man” and all he stands for.

This year, Team Trump was notable by its absence, the US being primarily represented by President Obama’s administration in the guise of John Kerry and Joe Biden. Even an election-conscious Angela Merkel chose to avoid the champagne and private jets this year.

Yes, David Cameron and George Osborne could be relied on to turn up, albeit a bit further down the pecking order, but they are so last year. The current regime in the UK were busy with the more pressing duty of addressing to their domestic audience. (Although in fairness, Theresa May will be popping over briefly later on.)

This may be the essential problem with Xi’s argument, however well-articulated. The Chinese Premier deployed several metaphors to outline his concerns over protectionism, from “locking yourself in a dark room” to “honey melons grow on bitter vines”. But for all the hundreds of delegates crammed in to hear his speech, in Davos at least there were very few minds to change.

For a new US administration elected on a protectionist platform, which has just made a China hawk its chief trade negotiator, there is not much that Xi can say that will make a difference. Xi’s intentions may be good, but it is not the delegates at Davos he needs to speak to.

This is not to say that the liberal causes beloved of the Davos delegates are doomed. Yesterday, we heard Theresa May arguing that the vote for Brexit was a chance – even an instruction – to make Britain more global-facing, not less. Indeed, by making globalisation more than an elite sport for the Davos few, it might have more chance of succeeding.

Perhaps it is fitting that an organisation accused of entrenching oligarchy should find a new leader in the General Secretary of the Politburo. Yet as more Western leaders get their mandates directly from an engaged, and increasingly enraged, public, forums such as Davos are likely to become less relevant.

The benefits of free trade need to be propounded – but the case has more chance of success if it is made to the people, not the elite.

Henry Williams is acting Deputy Editor of CapX