Li Keqiang meets with Global 500 enterprises' heads at China Development Forum on March 20. Photographer: Etienne Oliveau/Getty Images
Global elites gathered at a three-day forum in Beijing pushed back against the protectionist rhetoric of U.S. President Donald Trump, while warning China it must curb what some see as its own mercantilism if globalization is to retain legitimacy.
In contrast to the Group of 20 finance ministers’ meeting that ended Saturday in Germany, where nations couldn’t agree on a pledge against protectionism, attendees at the China Development Forum were united against it. Their focus was instead on how best to fix globalization’s flaws by ensuring that any future gains are more equitably shared.
At stake is the rules-based system of international trade designed to prevent the wealth- and growth-destroying trade wars that wracked the global economy between two world wars. With such confrontations a looming threat under Trump, China was in the spotlight even on its home turf because of a yawning trade surplus with the U.S. and a widespread perception that policy changes are further skewing its market against foreign competitors.
“China has become the U.S. lightning rod for trade with lower-wage countries," Charlene Barshefsky, a former U.S. Trade Representative and primary negotiator of the Asian nation’s 2001 entrance to the World Trade Organization, told delegates. “Both the U.S. and China bear very substantial responsibility for an open global market. With respect to China that means a further reform and opening of the Chinese economy and the pullback of discriminatory measures will be essential if globalization is to retain legitimacy.”
G-20 finance chiefs meeting in Baden-Baden set aside a pledge to avoid protectionism and signed up to a fudged statement on trade instead, in response to the Trump administration’s call to rethink the global order for commerce.
The forum arranged by China’s leaders, held after the annual National People’s Congress, is attended by a who’s who of officials led by Vice Premier Zhang Gaoli, executives from the world’s biggest companies, former U.S. officials, leading academics, and Nobel Laureates.
Forum attendees reassured one another about globalization’s benefits, but concerns about the implications of a growing backlash across the world were never far from the surface.
Anxiety over protectionism and an apprehension over “surly nationalism” hung over the meeting, said former U.S. Treasury Secretary Lawrence Summers. “This is a gathering of elites, so it’s probably inevitable that they feel less comfortable,” he said in an interview.
Apple Inc. Chief Executive Officer Tim Cook told the forum Saturday that the worst thing to do would be to say that globalization is bad because it doesn’t help everyone. “The problem is that globalization hasn’t helped everyone and it’s hurt some people,” said Cook. “Countries that are closed and isolate themselves, it’s not good for their people.”
Anxiety also was driven by what some delegates saw as a lack of leadership. The gathering was striking for the near absence of any mention of the U.S. in future economic integration or in regional initiatives, Barshefsky told Bloomberg in an interview. “Asia is powering ahead,” she said. “The U.S. is an afterthought.”
With protectionism and isolationism becoming important trends, the world should be careful not to throw out the baby with the bathwater, said Vice Commerce Minister Qian Keming. Qian also echoed other top leaders in saying China is not in a position to assume a global leadership role and help fill the void left as the U.S. retreats from that role under Trump.
Former U.S. Treasury Secretary Henry Paulson said the U.S.-China trade relationship had gotten out of balance and that now is a good time for a reset, while Barshefsky said changes in economic philosophy in China disadvantage foreign companies and skew the economy in favor of local companies.
Foreign companies operating in China have also been more vocal. The country’s “Made in China 2025” plan to modernize key high-tech industries risks fueling overproduction, distorting markets and heightening trade tensions if public money is used to drive the blueprint, the European Union Chamber of Commerce in China said in a report this month.
While conference speakers generally offered few concrete solutions to how to tackle the backlash to globalism, Joseph Stiglitz suggested developed nations implement policies to reduce inequality and add social protections.
Discontent over globalization that’s spread to the developed world is caused not just by the poor and middle income groups getting a smaller share of the gains, but because they’re actually worse off, the Nobel Prize-winning Columbia University economist said.
“Globalization and world economic integration have suffered setbacks for one big reason: lack of shared benefits and polarization between haves and have nots,” said Jin Liqun, President of the China-led Asian Infrastructure Investment Bank. “I absolutely deny there are losers. If there are losers, you’re really not doing a very good thing in your domestic policy. Please fix it.”
— With assistance by Peter Martin, and Kevin Hamlin
About CDRFThe China Development Research Foundation (CDRF) is a public foundation initiated by the Development Research Center of the State Council (DRC). Its mission is to advance good governance and public policy to promote economic development and social progress.