From Davos to Boao, globalization beckons

Liu Chang
Shang Jun
China supports globalization because it has contributed to the well-being of its people. More importantly, improved globalization will benefit people around the globe.
Liu Chang
Shang Jun
From Davos to Boao, globalization beckons

A bird’s-eye view of the venue of Boao Forum for Asia, Hainan Province. 

OVER a year ago, Chinese President Xi Jinping defended free trade at the World Economic Forum annual meeting in Davos, impressing the world with China’s staunch support for globalization.

That defense has become more relevant today. Globalization, the historic process which has brought different countries and peoples closer over the past two centuries, is now under attack and regarded with growing doubts.

The “America First” doctrine touted by US President Donald Trump in Davos in January poses a serious challenge to the rules-based multilateral trading system once established by Washington itself.

At this defining moment when globalization desperately needs support, the annual Boao Forum for Asia conference is setting the stage for President Xi to further define China’s stance.

Boao, once a barely known fishing hamlet in China’s southernmost Hainan Province, has become one of the country’s gateways to the wider world.

The emergence of this beach resort is but one example of China’s rise from an isolated and underdeveloped country to the world’s second-largest economy. The magic formula for this is China’s opening-up to the outside world.

Ironically, the Western world where globalization originated has now become hostile to globalization in one way or another. Skeptics argue that globalization, which means free and open trade, is costing them their jobs at home and their way of life.

But those who rant against globalization tend to forget that the West remains the biggest beneficiary of economic globalization. The rich countries boast the largest number of the biggest multinational corporations, like Apple, McDonald’s and IKEA. These MNCs have operations overseas, where operation costs are lower, to jack up their profits and then remit back the lion’s share of that, leaving the assembly line workers in developing countries with only crumbs.

When Boao participants bring their iPhones to the forum, some calculations might be helpful before they head into brainstorming on globalization.

John Bellamy Foster, a professor of sociology at the University of Oregon, said: “Chinese workers that assemble iPhones for Foxconn, which subcontracts for Apple (in China), are paid wages that only represent 3.6 percent of the final total manufacturing cost (shipping price), contributing to Apple’s huge 64 percent gross profit margin over manufacturing cost on iPhones.”

But that’s just money matters.

Western powers’ dominance of global institutions has brought them even greater payoffs. Following the end of World War II, the United States, along with its allies, has been leading the World Bank and the International Monetary Fund, the pillars of the global financial system. Indeed, the post-war world order is seen by many as an age of “Pax Americana.”

Unequal distribution

So what has led to the rise of anti-globalization sentiments in the West? The key reason is the increasingly unequal distribution of the economic pie.

According to last year’s World Inequality Report by the World Inequality Lab at the Paris School of Economics, the top 1 percent captured 28 percent of the aggregate increase in real incomes in North America and Western Europe between 1980 and 2016, while the bottom 50 percent received just 9 percent of it.

In the face of this widening wealth gap, politicians in some Western countries have failed to look inward in search of solutions. They look outside for scapegoats.

China supports globalization because it has contributed to the well-being of its people. More importantly, improved globalization will benefit people around the globe. This year marks the 40th anniversary of China’s reform and opening-up policy. Despite rising anti-globalization sentiment around the world, China remains a champion of globalization and a fairer world order.

The success story of the Chinese economy is a perfect reminder that the courage to push forward domestic reforms and embrace the outside world can lead to more sustainable development. Globalization begins at home.

The authors are Xinhua writers.

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