Major test faces Chinese leader at Davos
Xi champions global trade as the West drifts toward more protectionism
WHEN Xi Jinping addresses business elites at Davos, the Chinese president will find himself an unlikely champion of the trade-based global order Donald Trump has derided.
His new role could prove to be one of his biggest tests.
Today, Xi will become the first Chinese head of state to address the World Economic Forum (WEF), a speech a top diplomat said would give a “blueprint for the future progress of human society”. His remarks in the Swiss ski town come days before Trump’s inauguration as US president, after an election that called into question The commitment of the US to free trade and threw the business world into a bout of soul-searching.
Xi’s presence marks a chance to cement China’s clout after decades of US economic and military dominance.
Facing a more protectionist, inward-looking Trump administration and a disruptive British exit from the EU, Xi has been offering assurances that the world’s largest trading nation will defend the structures that have fostered globalisation and economic growth.
What remains to be seen is how far Xi will go toward filling any gap left by Trump on the world stage.
Even Xi, with his regional trade initiatives and goal of a “great rejuvenation of the Chinese nation”, has hewed closely to his predecessors’ policy of avoiding foreign entanglements.
China also lacks experience in global governance to back up its economic heft, leaving it without potential tools to match any bigger ambitions.
Xi faces two big distractions in presenting China as trade’s most reliable defender. Trump’s attacks on China’s trade and currency policies may compel him to retaliate with protectionist measures and hurt foreign investment.
He must also navigate domestic challenges, including mounting corporate debt and a looming reshuffle of his top leadership ranks that could spur a more nationalistic response to US prodding on issues such as Taiwan.
The imperative is high as economic growth has been relatively weak around the world and China’s days of supercharged growth are over.
A major trade spat between the two biggest economies would only slow things further. Global trade has grown by just over 3 percent annually since 2012, according to the International Monetary Fund. That’s less than half the average expansion rate in the previous three decades.
Xi’s speech comes as Trump preaches economic nationalism with promises to build walls, tear up trade agreements, raise tariffs and upend core security alliances.
While Trump’s moves such as rejecting a US-led Pacific trade pact have helped China promote competing measures, the country must overcome wariness among its neighbours about its territorial ambitions.
That could create a public relations problem for Xi in filling a power vacuum if the US pulls back in Asia, even as China pours money into infrastructure in the region.
Still, business leaders in Davos, fatigued by populist headwinds across Europe and the US, will be eager for Xi’s reassurances about keeping the capitalist lines humming. Xi will bring with him the biggest-ever delegation of Chinese executives to visit the WEF gathering.
Xi’s entourage, including port and rail companies, also reflects his priorities to win influence by reviving ancient trading links between Asia and Europe via infrastructure projects.
China is also pushing the Asian Infrastructure Investment Bank to build clout in poorer countries by cleaning up shanty towns and building waterworks, assuming a role once reserved for organisations led by the US and its allies. – Bloomberg