Ma­jor test faces Chi­nese leader at Davos

Xi cham­pi­ons global trade as the West drifts to­ward more pro­tec­tion­ism

The Star Early Edition - - BUSINESS REPORT - Enda Cur­ran

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

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