George N. Tzogopoulos
For almost half a century, the annual Davos World Economic Forum (WEF) has constituted a useful platform for the exchange of views between politicians, economists and scholars on international developments. Since 2008 in particular, it has acquired additional significance due to the financial crisis threatening world stability. Amid uncertainty, leaders managed to avert the worst case scenario but failed to inspire masses by improving – or at least keeping stable – living conditions, especially of the middle class.
Within this context, a serious confidence crisis broke out and the gap between the elites and positive public opinion started to widen. Davos WEF could not escape from being – often in an unfair way – criticized. It is considered by many people a place where discussions irrelevant to their own problems are being held. On the day of this year’s opening session, leading American media extensively focused on the new reality and some potential obstacles to globalization imposed by the coming Brexit and the beginning of Donald Trump’s presidency.
These circumstances were ideal for the participation of the first Chinese President – Xi Jinping – in Davos WEF. Difficult times require responsive leadership. In the absence of Trump and German Chancellor Angela Merkel, Xi had the opportunity to offer with his speech an encouraging and sober analysis not only for participant elites but also for ordinary citizens. In addition, it is useful for Western audiences to think outside of the box and familiarize themselves with the Chinese line of reasoning.
Xi’s remarks at the opening session were a hymn to globalization. To start with, he was correct in saying that “many of the problems troubling the world are not caused by economic globalization.” This is a necessary clarification for a comprehensive understanding of current developments, despite ongoing populism in both the U.S. and Europe. Wrong, incomplete or delayed political decisions have to come under scrutiny, but the process of globalization itself does not. Adding to this, it is a myth that both Brexit and Trump’s election have led to an economic fallout. London’s FTSE 100 and Dow Jones Industrial have risen since last June and November, respectively.
Subsequently, the principal challenge is not to alter the historical course and cancel globalization but to “chart the right course for [it],” as the Chinese president asserted. This right course might entail invigoration, inclusion, sustainability and a balance between equity and efficiency. The latter can guarantee that the economic benefits of globalization are fairly distributed among different countries and demographic groups.
With reference to the development of the world economy, Xi shared his vision for the future in Davos. Acknowledging the problem of anemic growth, he specified three proposals for a kick-off. These are the implementation of structural reforms with a combination of old engines with new technologies, the transformation of a global governance scheme whereby emerging economies will gain better representation and the combat of poverty and inequality. The Chinese president also named policies and instruments that can contribute to future success. He, inter alia, referred to the need of innovation, investment liberalization, global free trade and the protection of the environment.
Xi finished his keynote address by briefly describing China’s economic achievements over the years as well as the current course of the country’s economy. More importantly, he focused on how the world economy has benefited and will benefit by China in the future, making reference to the Belt and Road initiative. In that regard, he announced his decision to hold a relevant forum in Beijing in May. This will be another good opportunity for the country to promote its world economic policies and improve its public image.
Last but not least, another message from Xi’s keynote speech is that China has cultivated its international profile as a globalization force. Although – as he said – Beijing “had doubts” in the past, it has gradually evolved as an active and powerful supporter.