With Donald Trump denouncing globalisation and proposing to diminish the world role of the United States, it was logical that the rival superpower should step into the vacuum. China has been the greatest beneficiary from globalisation since the 1980s and President Xi Jinping duly grabbed the opportunity being created by the President-Elect with his speech at the World Economic Forum in Davis on Tuesday. He championed an open world economy and warned that there would be no winners in a trade war. His address, said the Forum’s Chairman, “gives us confidence for the future.” Davos Man (and Woman) could heave a sigh of relief. Globalisers could look to Beijing as their champion.
It seemed a somewhat odd turn up for the book—the last major state ruled by a Communist Party riding to the aid of an essentially liberal economic system. No matter. By moving into the vacant space three days before the inauguration in Washington, China appeared to have taken another big step towards establishing itself as the rising power set to dethrone the US from world leadership.
Look a little more closely at the new champion, however, and some significant questions arise. For all Xi’s talk of commitment to open trading, China imposes far higher import duties than the US. It controls its currency and capital flows out of the country. State companies are cushioned with cheap money and low input prices, and operate as monopolies. Foreign companies are often obliged to operate with Chinese joint venture partners, and have been voicing rising complaints about discrimination and the lack of a level playing field. This at a time when the economy is slowing, corporate debt is soaring and outflows of money, despite controls, show the concern of households about the safety of their savings.
Or look beyond the economy. Yes, China has become much freer on an individual basis since the death of Mao four decades ago and more people have lifted themselves out of poverty in the past four decades than ever before in human…