In a speech that struck all the right platitudes with this pro-globalization audience, Xi Jinping, the first Chinese president to attend Davos, slammed protectionism, defended globalization and free trade, drawing a line between himself and Donald Trump just days before the US president-elect’s inaugural address in Washington, and said he has no intent to boost China’s competitiveness through Yuan devaluation.
“The problems troubling the world are not caused by globalisation,” Xi Jinping said in an address at the World Economic Forum in Davos. “They are not the inevitable outcome of globalisation.”
While Xi did not mention Mr Trump by name, he warned of the dangers of protectionism. “Countries should view their own interest in the broader context and refrain from pursuing their own interests at the expense of others,” the Chinese president said. “We should not retreat into the harbour whenever we encounter a storm or we will never reach the opposite shore.”
He also warned that “no one will emerge as a winner from a trade war” and pledged that China would not seek to benefit from devaluation of its currency or a “currency war”.
As the FT reported, Xi’s appearance at the Davos forum, which required months of planning but was only confirmed on January 10, has highlighted China’s emergence as one of the few powers committed to promoting free trade and combating climate change.
We leave it up to readers to muse on the irony of China – a country which pervasive tariffs and subsidies on virtually every traded product – becoming the Davos elite’s preferred voice for “free trade.”
Here are the key highlights:
- China has no intention of boosting its competitiveness by devaluing the RMB, still less will it launch a currency
- China is expected to import $8TN of goods in the coming 5 years
- China to attract $600BN of foreign investments in 5 years
- China to make $750BN of outbound investments
- China will keep its door wide open
- Many of the problems troubling the world are not caused by economic globalization
- No one will emerge as a winner in a trade war
- The international financial crisis a result of excessive pursuit of profits & lack of financial supervision, not globalization
- He says protectionism is like to “locking oneself in a dark room”
- We must face the challenges of climate change, aging population, and address the negative impact of automation on jobs
- We must release its positive impact and rebalance the process of economic globalization
- Lay out issues restraining global growth as follows: i) lack of robust driving forces, ii) inadequate governance system, iii) uneven global development
- Globalization has become “Pandora’s box” in eyes of many, but world economic problems not results of it
- Economic globalization is a double-edged sword and we must adapt to and guide it
- The most pressing task world faces now is to get global economy out of recession
- World economy remains sluggish for quite some time while new path for growth remains elusive
- Stresses importance of #innovation as a key driving force of growth for individual countries & global economy
- Make a full use of opportunities brought by globalization, but work together before challenges
Bottom line: China, a fervent supporter of free trade and globalization due to its still quasi-mercantilist economy, has sided with the Davos elite and remains on collision course with Trump’s protectionist policies. It is still unclear who, if anyone, will blink first.
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