Chinese president Xi Jinping delivered a stern rebuke of protectionism during his keynote speech at the World Economic Forum in Davos, Switzerland on January 17. His remarks, seen as a response to the rising tide of nationalist and protectionist sentiment around the world - notably manifested by events such as the UK’s Brexit vote and the election of Donald Trump in the US – signified China’s increasingly assertive role and influence in global trade. The speech also marked the first time a Chinese head of state has ever attended the forum.
“No one would emerge as a winner in a global trade war,” said Mr Xi. “Pursuing protectionism is just like locking one’s self in a dark room. Wind and rain might be kept outside but so are light and air.”
Mr Jinping also compared the global economy to a “big ocean that you cannot escape from”, arguing that attempts at isolation were just not possible. “The right thing to do is to seize every opportunity and jointly meet challenges and chart the right course for globalisation,” he stressed.
Mr Xi's words often appeared to be a direct message to incoming US president Donald Trump, who has avidly argued against international trade deals such as the North American Free Trade Agreement and the Trans-Pacific Partnership (TPP) and has suggested imposing steep tariffs on Chinese goods, something that economists say could trigger a trade war and potentially lead to another global recession.
The apparent role reversal and seeming irony of this development – China’s head of state hailing economic openness while the US’s leader does the opposite – has not been lost on many observers.
Deborah Elms, executive director of the Singapore-based Asian Trade Centre, told fDi: “Mr Xi's speech was a stark reminder of the upside-down trade world coming in 2017. China was urging restraint, openness and multilateralism. The US was absent. Mr Xi's presence clearly signalled China's intention to lead – not just Asia but globally.”
China’s increasingly clear aim to run the game in the Asia-Pacific region may ironically be aided by the US’s likely abandonment of the TPP, which leaves the 10 Asian and Pacific Rim countries included in the deal to search for another trade pact. China can now offer its Regional Comprehensive Economic Partnership, or RCEP, a free-trade agreement between the 10 member states of the Association of South-east Asian Nations (Asean) and the six states with which Asean has existing free-trade agreements: Australia, China, India, Japan, South Korea and New Zealand. It excludes the US.
“The rules of the game in Asia going forward are increasingly going to be written by China,” said Ted Alden, a senior fellow at the Council on Foreign Relations. “The new RCEP is going to become the central regional trading agreement; other countries in the region are a part of that. The loss of the TPP is really going reduce US influence and leverage in the region.”