Elec­tions re­flect spread of glob­al­iza­tion fears

China Daily (Hong Kong) - - COMMENT -

The Brexit vote in Bri­tain, Don­ald Trump’s vic­tory in the United States and the like­li­hood of fur­ther elec­toral up­sets in other coun­tries in the com­ing year re­flect wide­spread dis­con­tent in the West over the ben­e­fits of free trade and glob­al­iza­tion be­ing un­evenly dis­trib­uted.

Among the tar­gets of dis­grun­tled vot­ers on both sides of the At­lantic are a widen­ing in­come gap, the rise of in­ter­na­tional elites to whom the laws of eco­nomics do not seem to ap­ply, and what they see as the machi­na­tions of ne­far­i­ous for­eign­ers buy­ing up in­dus­tries and snap­ping up jobs.

Part of Trump’s elec­toral ap­peal was an “Amer­ica first” pol­icy that ap­pealed to vot­ers in the old in­dus­trial Rust Belt states by di­rectly blam­ing China for de­stroy­ing the lo­cal econ­omy.

It is a po­lit­i­cal at­mos­phere in which even the most free trade politi­cians must at least nod in the di­rec­tion of pro­tec­tion­ism or face the elec­toral con­se­quences.

With un­planned irony, UK Chan­cel­lor of the Ex­che­quer Philip Ham­mond an­nounced in Par­lia­ment last month that his cash-strapped govern­ment would plow funds into help­ing high­tech star­tups avoid be­ing taken over by for­eign com­pa­nies. He was per­haps un­aware that the very next day China’s travel ser­vices provider Ctrip would an­nounce it was spend­ing £1.4 bil­lion ($1.7 bil­lion) to buy Scot­land­based Skyscan­ner. The travel price com­par­i­son web­site ex­actly fit the pro­file of the so-called uni­corn com­pa­nies that Ham­mond said he wanted to pro­tect.

On the morn­ing the deal was an­nounced, Bri­tish Prime Min­is­ter Theresa May said for­eign takeovers of UK com­pa­nies would in the fu­ture be ex­am­ined to de­ter­mine whether they were in the na­tional in­ter­est.

May’s govern­ment is not about to slam the door on for­eign ac­qui­si­tions, though. The UK can hardly af­ford to turn down for­eign in­vest­ment at a time when it is strug­gling with the con­se­quences of a vote to leave the Euro­pean Union.

The so far mild em­brace of at least some as­pects of pro­tec­tion­ism has not been con­fined to the UK, how­ever. Ahead of a visit to China this month, Ger­man Vice-Chan­cel­lor Sig­mar Gabriel said it was not right that “Ger­many sac­ri­fices its com­pa­nies on the al­tar of free mar­kets, while at the same time our own com­pa­nies have huge prob­lems in­vest­ing in China.”

Gabriel was re­flect­ing pop­u­lar con­cerns in Ger­many where Chi­nese in­vest­ment funds bought up some 40 lo­cal com­pa­nies in the first half of 2016. That was part of a €72 bil­lion Chi­nese in­vest­ment in the whole of the EU in the same pe­riod.

In Oc­to­ber, the sign­ing of a free trade treaty be­tween the EU and Canada was de­layed be­cause of ob­jec­tions from the Bel­gian prov­ince of Wal­lo­nia, which de­manded pro­tec­tion for lo­cal farm­ers and busi­nesses.

Euro­pean in­dus­trial lead­ers have ex­pressed fears that, if Trump presses ahead with his threat of puni­tive tar­iffs on Chi­nese im­ports to the US, China could re­spond by boost­ing ex­ports to Europe, in turn prompt­ing the EU to erect its own pro­tec­tion­ist tar­iff bar­ri­ers.

It is cer­tain that, in pri­vate, many West­ern politi­cians rec­og­nize that in­ward-look­ing trade and in­vest­ment poli­cies would prob­a­bly dam­age rather than im­prove the liveli­hoods of vot­ers who have been en­cour­aged to re­ject glo- bal­iza­tion. But in the face of the pop­ulist rhetoric from those like Trump and would-be lead­ers wait­ing in the wings in Europe, such as France’s Marine LePen, can­di­date of the right-wing Na­tional Front, free trade sup­port­ers are on the de­fen­sive.

There are many who chal­lenge the pre­vail­ing trend to­ward pro­tec­tion­ism, but their voices are not get­ting through. Those in the US who say the do­mes­tic man­u­fac­tur­ing sec­tor has been en­joy­ing record pro­duc­tion lev­els, and that most job losses were the re­sult of au­to­ma­tion, rather than over­seas com­pe­ti­tion, were drowned out by the sim­ple re­frain that for­eign­ers were to blame.

China’s pol­i­cy­mak­ers can only sit back and con­tem­plate how the West­ern trend will evolve and to what de­gree it will im­pact the do­mes­tic and global economies. In a re­state­ment of the so-called “Go Out” pol­icy, State of­fi­cials said in Shang­hai this week that China would con­tinue to en­cour­age the healthy de­vel­op­ment of out­bound in­vest­ment.

The writer is a se­nior editorial con­sul­tant for China Daily UK.


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