China and Davos One Year On

Concerns For the Future

As the World Economic Form at Davos comes around again, it is useful to recall last year’s highlight. This was President Xi’s speech as it made several path-breaking points.

Rhetoric vs reality

In particular, this was the idea of moving China more towards the global centrestage, with the defence of free trade and call for more open economies and economic globalisation while warning against trade wars and the need for more cooperation and offering potential global leadership. President Xi also gave a speech at the United Nations in Geneva last January when he also proposed the concept of a shared future for humankind.

The rhetoric versus reality in this, with posturing and even hypocrisy, are blindingly obvious. The rhetoric was of portraying China as the leader of a globalised world where only international cooperation can solve the big problems, including the environment, terrorism and nuclear disarmament, while isolationism should be resisted and big countries should treat smaller countries as equals instead of imposing their will on them.

Cuts both ways

The reality is that trust in trade and other matters works both ways. As President Macron made clear during his recent trip to China, there needs to be greater balance, openness and equality in trade. Furthermore, there is China’s pollution and emissions record and numerous other concerns about its dismal rights record in a variety of areas.

Governments have accused China of widespread rights abuses, lack of democracy, ethnic minority issues, poor labour conditions, while many countries, including its smaller neighbours, say it has expansionist ambitions in the South China Sea and needs to respect the ‘rule of law’.

This year, China’s delegation to Davos will be led by President Xi’s top financial and economic adviser, Liu He. Perhaps China’s own challenges and opportunities will be more to the fore.

The new challenges

One challenge is the need to flexibly and imaginatively address its own uneven internal economic development and also the ‘demographic time bomb’, bringing in its wake an ageing workforce and a society which may grow old before getting rich in a socialist-market economy with growing demands for democracy.

Then there is the need to deal with the ending of mass rural migration resulting in greater labour shortages/costs challenging their exiting economic models. This involves the need to ‘upgrade’ manufacturing and services with greater value-added and productivity and deal with demographic and population flows.

Another area is China’s need to prevent a ‘financial bubble’ and a version of the 2008 global financial crisis. This includes far better and more rigorous regulation and real, meaningful and enacted penalties on financial services to reduce a key cause of crisis – the creation of ‘moral hazard’.

Finally, China needs to start thinking about the implications of technology and AI. It needs to be proactive in terms of what is possible and what is demanded from such developments and opportunities.

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Headline image Mountains clouds historical great wall of china by Manuel Joseph via pexels.com

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