Con­tours of a new in­ter­na­tional eco­nomic or­der

People's Review - - COMMENTARY -

The first China In­ter­na­tional Im­port Expo (CIIE) that suc­cess­fully con­cluded on Novem­ber 10 in Shang­hai presents China as the world's most promis­ing mar­ket for im­ports of goods and ser­vices in the decades to come. More­over, this prospect is open­ing the way to imag­i­na­tive ideas that will broaden the hori­zons of in­ter­na­tional eco­nomic co­op­er­a­tion. It is ironic that many West­ern com­men­ta­tors hes­i­tate to rec­og­nize this. Ironic, yes, but not en­tirely sur­pris­ing. The West­ern mind is fo­cused on the im­me­di­ate - the ex­ist­ing tar­iffs, the ex­ist­ing prac­tices in the pro­tec­tion of in­tel­lec­tual prop­erty and above all, the im­me­di­ate like­li­hood of in­creased prof­its. This logic is un­der­stand­able but no longer suf­fi­cient. A long-term per­spec­tive is nec­es­sary. Oth­er­wise the world will be­come vic­tim of short-term mea­sures and coun­ter­mea­sures and the re­sult­ing ten­sions, a pat­tern in which ev­ery­body will lose. What we need to­day is a vi­sion of medium and long-term de­vel­op­ment in which ev­ery­body can win. In Shang­hai, China has of­fered such a vi­sion. This vi­sion does not have to be ab­stract - it can be ex­pressed in very con­crete busi­ness de­ci­sions. Many of them were made in Shang­hai. More­over, new de­ci­sions on ex­pand­ing eco­nomic co­op­er­a­tion with China fit well with some re­cent ex­pe­ri­ences. Let us take a re­cent spe­cific ex­am­ple from eco­nomic co­op­er­a­tion be­tween China and Slove­nia. Ear­lier this year, Chi­nese com­pany Hisense from Shan­dong Prov­ince ac­quired the Slove­nian com­pany Gorenje, an in­ter­na­tion­ally renowned man­u­fac­turer of home ap­pli­ances. China has a very big and ex­pand­ing mar­ket for home ap­pli­ances where Hisense is a ma­jor player. With its grow­ing stan­dard of liv­ing it is ex­pected that China will be the world's most im­por­tant mar­ket for home ap­pli­ances in the decades to come. Gorenje, be­ing it­self ac­tive in the global mar­kets, is very well aware of this dy­namic. After all, it was the dy­namic of con­stantly im­prov­ing stan­dard of liv­ing of the West in which Gorenje grew in the past decades and be­came a glob­ally rec­og­nized player. In that process it de­vel­oped tech­nolo­gies, de­sign, know-how and busi­ness prac­tices which fit very well with the needs of Hisense to­day. For Gorenje, it would make no sense to ex­pand man­u­fac­tur­ing in the ex­ist­ing fac­to­ries in Europe. It is bet­ter to join forces with part­ners in China and find a win-win for­mula for the fu­ture co­op­er­a­tion. One of the in­ter­est­ing as­pects of the Hisense-Gorenje ex­pe­ri­ence was how quickly the pub­lic in Slove­nia un­der­stood the win­win logic of the ac­qui­si­tion and how easy it was to gain pub­lic opin­ion. And this un­der­stand­ing re­lates to both - the short-term trans­ac­tion of pur­chase and the longert­erm vi­sion of a win-win co­op­er­a­tion. There are thou­sands of such sto­ries like these in all parts of the world and they are all rel­e­vant to the mes­sage of the first CIIE. Ev­ery in­formed ob­server to­day un­der­stands that China is rapidly de­vel­op­ing from an ex­port de­pen­dent, largely man­u­fac­tur­ing econ­omy to­ward a ful­ly­mod­ern­ized econ­omy based on do­mes­tic de­mand and the grow­ing im­por­tance of ser­vices. A sin­gle sta­tis­ti­cal indi­ca­tor tells a story of global im­por­tance: In 2006, the gross ex­ports from China to all coun­tries equaled 35 per­cent of its GDP, while in 2017 the fig­ure was only 18 per­cent. And this change hap­pened at the time of high growth rates that for the most of the pe­riod ex­ceeded 8 per­cent an­nu­ally. The mag­ni­tude of this change is not dif­fi­cult to un­der­stand. Nei­ther is it dif­fi­cult to un­der­stand that the trans­for­ma­tion of China into po­ten­tially the largest im­port mar­ket of the world has to have global ef­fects. This is why the first CIIE in Shang­hai is so im­por­tant. But the Expo also helps us to form the nec­es­sary imag­i­na­tion of the fu­ture world. All this was surely on the mind of for­eign vis­i­tors, in­clud­ing Slove­nian and other Eu­ro­pean busi­ness­men and gov­ern­ment rep­re­sen­ta­tives who par­tic­i­pated in the open­ing cer­e­mony and sub­se­quently walked through the Expo. They could see the di­men­sions of the cur­rent phase of the openingup of China. They could also think about the op­por­tu­ni­ties for fur­ther im­prove­ment of eco­nomic and so­cial well­be­ing world­wide through strength­ened co­op­er­a­tion and con­nec­tiv­ity. The am­bi­tious ob­jec­tives of the UN sus­tain­able de­vel­op­ment agenda un­til 2030 can be achieved through such co­op­er­a­tion. The key­note speech at the open­ing by Pres­i­dent Xi Jin­ping of­fered an en­cour­ag­ing vi­sion of the fu­ture en­gage­ment of China with the world. This vi­sion is re­al­is­tic and pro­ceeds from very fun­da­men­tal con­di­tions. They in­clude low­er­ing of Chi­nese tar­iffs, sim­pler cus­toms clear­ance and ad­min­is­tra­tive pro­ce­dures and broad­en­ing mar­ket ac­cess for goods more widely. But there is much more that is ex­pected to hap­pen in the com­ing years: lib­er­al­iza­tion and im­proved in­vest­ment cli­mate for for­eign in­vestors and open­ing of ser­vices sec­tor, in­clud­ing in the fields of telecom­mu­ni­ca­tions, ed­u­ca­tion and med­i­cal ser­vices. Pres­i­dent Xi rec­og­nized an op­por­tu­nity aris­ing from the com­bi­na­tion of the ex­ist­ing in­ter­ests of for­eign in­vestors and the short­ages in do­mes­tic sup­ply in China that can be re­duced through in­ter­na­tional co­op­er­a­tion. All this should help de­velop world class busi­ness en­vi­ron­ment in China and cre­ate syn­er­gies, in­clud­ing in the field of in­tel­lec­tual prop­erty. In­no­va­tion should be stim­u­lated through co­op­er­a­tion in sci­ence and tech­nol­ogy and with an ad­e­quate level of pro­tec­tion of in­tel­lec­tual prop­erty. This will en­able an im­proved mu­tual un­der­stand­ing be­tween for­eign and Chi­nese part­ners in this ef­fort. New hori­zons of open­ing up will in­clude "pi­lot free trade zones" that would pro­vide the op­por­tu­nity to de­velop new paths to in­no­va­tion and new mod­els of in­ter­na­tional tech­no­log­i­cal and eco­nomic co­op­er­a­tion. The vi­sion of the fu­ture of­fered at the CIIE re­quires an ad­e­quate global busi­ness en­vi­ron­ment and ef­fec­tive mul­ti­lat­eral in­sti­tu­tions, in par­tic­u­lar WTO. It is the right time now to start con­sid­er­ing re­forms in earnest. Here too, vi­sion and in­no­va­tion will be nec­es­sary. WTO should not only help re­duc­ing bar­ri­ers to trade and set­tling trade re­lated dis­putes. The dis­cus­sion about its re­form will have to em­brace such com­plex is­sues like pro­tec­tion of so­cial rights and de­cent work as well as a preferential treat­ment of in­vest­ments that strengthen the eco­log­i­cal sus­tain­abil­ity of de­vel­op­ment. Is this too much to ex­pect? The an­swer is no. The first CIIE teaches us about the pos­si­bil­ity of fur­ther global trans­for­ma­tion. And yes, this means noth­ing less than cre­at­ing a new in­ter­na­tional eco­nomic or­der.

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