JOHN MASON: The “Good Guy” in World Trade: China

Friend of the Peak, John Mason, on how China is making it very clear to the world what its position is on global trade

AUTHOR: John Mason

China, the Chinese are arguing, is the “good guy” when it comes to global trade, the chief country supporting the actual expansion of trade, but also is the primary mover in building the world trading system.

Now, they are saying, that the United States is challenging world trade landscape, it is necessary for other countries that believe in open trade, to join together and march forward to protect what has been achieved and to move the process even further forward.

I have written about the “trade war situation” recently in View from the Peak in an article titled “China/United States Trade Wars.”

In the article I argued that the underlying historical force behind the move toward greater and greater amounts of globalization is the spread of information, a fact of life and something that nations can only slow down but cannot completely stop.

As information spreads, people become more and more connected. And as people become more and more connected, trade grows. In this modern era we have observed a tremendous expansion of information and a tremendous expansion of global trade.

My argument is that China’s leadership has recognized this fact and has accepted the fact that if they are to be a force in the world they are going to have to participate in the growth of world trade and even take a leadership role in this movement.

In late 2016 and early 2017 China’s leaders saw a surprise opening. The newly elected president of the United States, Donald Trump, was withdrawing the US from its leadership position in world trade, a leadership position the US had held for most of the past seventy year, since World War II.

China’s president, Xi Jinping, recognized the opening and moved right in to fill the vacuum. The opening thrust came in the middle of January 2017 at the World Economic Forum held in Davos, Switzerland. Mr. Jinping faced his audience and informed the world that China believed in the health and expansion of global trade and China would become its driving force in the future.

Since that time, China and Mr. Xi have been developing their position, consolidating their power, and have been preparing to take on this leadership.

It appears as if China and Mr. Xi are starting to move.

Liu Xiaoming, China’s ambassador to the United Kingdom, has written an opinion piece titled “Europe and China Must Stand Together Against Protectionism” in the Financial Times. The reason for the essay:

“The recent protectionist measures by the US administration are dangerous and risk triggering a trade war. The world is at a crossroads between co-operation and confrontation.”

Mr. Liu’s conclusion:

“Only if the UK, Europe, and China stand shoulder to shoulder will they be able to uphold openness and co-operation, and safeguard the international trade regime from the dangers of protectionism.”

China’s role is all of this.

“China has been the powerhouse for global growth and a main contributor to an open world economy in recent years.”

“At the 19th Communist Party Congress, China reiterated its commitment to opening up on all fronts and building a community with a shared future for mankind. “

China "has undergone four decades of effective reform and opening up and will continue to do so in the next 40 years.”

This is why China, the UK, and Europe have shared interests and need to combine together.

So, there you have it.

China knows that economically it will have to open up more and “play by the rules” of international trade.

The Chinese, as Mr. Liu writes, has been moving in this direction for some time, and will continue to do so in the future.

The problem the west has had with the “opening up” of China has been that, initially, Western leaders believed that moving further and further into open markets would mean that China would move even further into a democratic society.

Recent events have pointed to the fact that this latter occurrence may not take place and this has discouraged many.

But, the Chinese are pressing ahead. They seem to understand that globalization is going to continue and that they must open up, in their own way, to play a role in this movement and be accepted and trusted by others.

In terms of its government, the Chinese are going to “open up the Chinese economy," but in a Chinese manner. That is, the Chinese leaders believe that they must maintain control of the political scene in order for things to go smoothly and for benefits to spread.

Others may have a hard time with this, but this is what is going to have to be accepted if globalization is to move forward.

For now, globalization is going to progress and its looks as if Mr. Xi and the Chinese are going to lead it. If China can pull together the UK and Europe and co-operate on this movement, then the United States could face some real opposition in its protectionist efforts. And, in this case, the US does not have history on its side.

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