Scott Sumner  

Arrival: Xi Jinping, Davos man

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Last night I saw the sci-fi film "Arrival". (Spoiler alert.) At the beginning of the film, 12 alien spacecraft visit Earth, and there are attempts to communicate with the aliens. The film mostly takes place in Montana, where one of the ships is stationed, but there are occasional references to China, where a nationalistic general threatens to attack one of the spacecraft if they refuse to leave Chinese territory. In the end, the Chinese leader turns out to be a hero, and ushers in a new era of international cooperation and peace. It's one of those films that have the hokey message (common in sci-fi) of how from the perspective of 20,000 miles up the Earth is a single fragile planet and that nationalism is foolish. (Actually, the film is much better than I made it sound.)

It felt slightly surreal seeing this film one day after the Trump inauguration, where the President struck an "America First" theme. Even more so, when I read the Financial Times this morning:

China's president launched a robust defence of globalisation and free trade on Tuesday, drawing a line between himself and Donald Trump just three days before the US president-elect's inaugural address in Washington.

"The problems troubling the world are not caused by globalisation," Xi Jinping said in an address at the World Economic Forum in Davos. "They are not the inevitable outcome of globalisation."

The spectacle of a Chinese Communist party leader in the spiritual home of capitalism defending the liberal economic order against the dangers of protectionism from a new US president underscored the upheaval in global affairs brought about by the election of Donald Trump.

"Countries should view their own interest in the broader context and refrain from pursuing their own interests at the expense of others," Mr Xi said without mentioning Mr Trump by name. "We should not retreat into the harbour whenever we encounter a storm or we will never reach the opposite shore."


There was no need to mention Trump by name:

"As the Chinese saying goes: People with petty shrewdness attend to trivial matters while people with great vision attend to governance of institutions," Mr Xi said.
Of course real life is not like a Hollywood film, and China falls far short of Xi's lofty rhetoric, as for instance when it ignored the International Court of Justice's ruling in favor of the Philippines' sovereignty over some disputed islands. And America still has a far more open economy (and society) than China.

Even so, one can't help noticing that the recent trajectories of these two countries are quite different from each other. China is gradually opening up its economy, while the US seems determined to move in the opposite direction.

Mr Xi argued that China's economic growth had global benefits, with the world's second-largest economy expected to import $8tn worth of goods and services over the next five years. He added that Chinese outbound investment over the same period would reach $750bn, exceeding expected foreign direct investments of $600bn.

As he was speaking, China's State Council announced it would further open the country's mining, infrastructure, services and technology sectors to foreign investment.

"China will keep its doors wide open," Mr Xi said. "We hope that other countries will also keep their doors open to Chinese investors and maintain a level playing field for us."


Despite recent trends, I predict that Trump's trade policies will not be successful, and that the current wave of protectionism will peter out after a few years. Still, it certainly feels like we are in a completely different world from what I grew up in. I never would have imagined a American inaugural address full of highly charged nationalistic rhetoric, followed a day later by the Chinese leader at Davos, vying with Angela Merkel for the title "leading advocate of global economic liberalization". I feel like I'm in a Twilight Zone episode. (Maybe I am.)


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COMMENTS (4 to date)
Todd Kreider writes:

"Despite recent trends, I predict that Trump's trade policies will not be successful, and that the current wave of protectionism will peter out after a few years."

A few years? No way. It is hard to see how it can last even a year. How is this supposed to play out?

Also, China is not "gradually opening its economy." Each decade has been far more open than the previous one and there is no turning back.

Scott Sumner writes:

Todd, I agree about China.

Thaomas writes:

Xi Jinping: Neo liberal. :)

ColoComment writes:

I do wonder how China will resolve the inevitable clash between (a) a China opening its economy to, and soliciting, foreign investment, and (b) China trying to grow a domestic market for its products; and (i) China's preference for iron central control over its population and commerce, and (ii) the desire of a burgeoning capitalist middle class for private property rights and rule of law.

There appears to be a [possibly apocryphal] Chinese saying about living in interesting times....

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