“China has profited immensely from the open global trading system. But whether it remains open depends on the actions of the West’s increasingly reactive democracies”.
In January 2017 the global economy changed guard. Xi Jinping, President of China, came to Davos to defend the global trade system against attacks from US President and his protectionist war cries. China would play the responsible global citizen. The bad guys were swapping places with the good. “Some people blame economic globalization for the chaos in our world,” Xi told Davos. “We should not retreat into the harbor whenever we encounter a storm or we will never reach the other shore”. As far back as 1902, British historian John Hobson anticipated a resurgent China that would turn the tables: “China, passing more quickly than other ‘lower races’ through the period of dependence on Western science and Western capital, and quickly assimilating what they have to give, may re-establish her own economic independence, finding out of her own resources the capital and organizing skill required for the machine industries and … may quickly launch herself upon the world-market as the biggest and most effective competitor, taking to herself first the trade of Asia and the Pacific, and then swamping the free markets of the West, and driving the closed markets of the West to an ever more rigorous Protection.” From less than 1% of global trade in 1978, China rose to become in 2013 the world’s leading trading nation with a quarter (25%) of its annual flows. At the turn of the 21st century, the US accounted for three times as much global trade as China. Nothing on this scale or speed has been witnessed before in history. In 1750, China and India accounted for three quarters (75%) of global manufacturing production. By 1914 their share had shrunk to 7.5%. The return of China is dramatically reconfiguring the global power structure. Within my lifetime, the emerging middle class has gone from virtually nowhere to supplant the established Western middle class as the engine of global growth. Since 1970, Asia’s per capita incomes have increased fivefold. Even in Africa, the world’s worst performing continent, incomes have almost doubled. The West’s median income, meanwhile, has barely shifted in the last half-century.