True globalization and free trade economy have been the top agenda of world economies for quite some time, but, however, practically achieving very little. Both globalization and global trade are being effectively mismanaged and thereby controlled by USA and Europe and to some extend by Russia and China to their advantages. Rest of the world has to bear the negative consequences of restricted globalization and refusal to enact global free trade.
G20, the world’s top economies, is the extended version of G8, the western top economies, incorporating medium/developing economies as well to debate and make decisions on the future goals of world economy. The 2016 G20 Hangzhou summit will be the eleventh G20 meeting. It is planned to be held on 4–5 September 2016 in the city of Hangzhou, Zhejiang. It is also the first ever G20 summit to be hosted in China and the second Asian country after 2010 G20 Seoul summit was hosted in South Korea.
Sandwiched between events like the Brexit vote and the US presidential election, leaders of G-20, the world’s major economies meet this weekend in China presumably to take stock of the Brexit impact on world economy. But the world economies at G20 need to mount a realistic defence of the free trade and globalization they have long championed. At stake is the post-World War Two concord on globalization that proponents say has helped lift so much of the world out of poverty. China, the host of the Group of 20 meeting, has itself been one of the biggest winners from free trade, becoming the world’s leading exporter.
Britain’s shock vote in June to leave the EU and the rise of protectionist Donald Trump in the USA has shaken that accord ahead of the G20 summit in Hangzhou that starts on Sunday.
Hangzhou in China
China as the Olympic host this year, has left no stone unturned, no wall unpainted and no sewer unsealed in getting ready Hangzhou for the G20 Summit, an annual gathering of the leaders of the world’s 20 leading economies. Public offices will close for a special seven-day holiday. Private businesses have been urged to do the same, even though the summit itself only runs for two days. Hangzhou residents will receive 10 billion yuan ($1.5 billion) in tourism vouchers to visit other cities in Zhejiang province (of which Hangzhou is the capital) during the G20. The mayor boasts that a 760,000-strong volunteer force stands ready to serve the G20. One persistent rumor is that the city is spending 160 billion yuan ($24 billion) on the G20. If true, this would be remarkable, eclipsing Rio’s $5 billion expenditure on the Olympics. Many public organizations, however, criticised the government for wasting money in the name of a summit and disrupting ordinary people’s lives against communist principles.
Just 40 minutes west of Shanghai by bullet train, it is one of China’s wealthiest cities. The misty waters of West Lake at its heart, fringed by rolling tea fields, have inspired poets for centuries. In recent years, it has become an entrepreneurial hub, most famously as the hometown of Alibaba, an e-commerce company.
The G20 summit, to be held on September 4th and 5th, will be the first in China in the eight-year history of such meetings and a hugely important diplomatic occasion for President Xi Jinping. He clearly hopes that the event will highlight how central China has become to solving the world’s problems
It came as a surprise when China announced that Hangzhou, a second tier city in the eastern province of Zhejiang, would host the 2016 G-20 leaders’ summit, the political equivalent of the Olympics or the World Cup.
Over the past decade, China has hosted a series of high-profile international events mainly in its first-tier cities, such as the 2008 Summer Olympics and the 2014 APEC in Beijing and the 2010 Expo in Shanghai, in order to showcase the break-neck pace of China’s economic developments since it adopted the Open Door in 1978. Hangzhou, the ancient capital of the Southern Song Dynasty (1127-1279), was traditionally hailed as one of the most beautiful cities in China. The city has been transformed into a home for many high profile tech firms such as e-commerce giant Ali Baba, setting an example of how China’s splendid and rich culture and history in the past can still live on in a modern city with an innovative economy.
China, the economic giant
It’s an image that China wants to promote this weekend to the world’s top leaders, breaking away from its image as the world’s cheap labor factory. For China, it is beginning to catch up with the rest of the world in spending every year on research and development. The percentage is about 2.4% of the GDP, right now. That is close to what the United States is spending. And also, it’s growing at a fast pace. To make that case, Hangzhou is an obvious choice as a G-20 summit venue.
The information economy, championed as a new driving force for economic development in the era of “new normal”, accounted for 23 percent of Hangzhou’s GDP, contributing to over 45 percent of GDP growth in 2015, according to Hangzhou city. It was only natural that questions were raised as to why this relatively obscure city was chosen to host the summit meeting of the world’s 20 largest economies, representing two-thirds of the global population and 85% of the global economy.
President Xi Jinping achieved one of the highest GDP growth rates in China during the period when he held the Communist Party’s top post in this Zhejiang province between 2002 and 2007. World especially the West is eager to know whether China is capable of tackling problems stemming from slowing economic growth and overcapacity, wants to keep the focus of this year’s G-20 summit on economic growth. The summit will look at ways to build “an innovative, invigorated, interconnected and inclusive world economy,” he said.
China remains the world’s major growth engine. Despite all the hand-wringing over the much vaunted China slowdown, the Chinese economy remains the single largest contributor to world gross domestic product growth. For a global economy limping along at stall speed – and most likely unable to withstand a significant shock without toppling into renewed recession – that contribution is all the more important.
The Chinese economy accounts for fully 18 percent of world output – more than double India’s 7.6 percent share. Excluding China, world GDP growth would be about 1.9 percent in 2016 – well below the 2.5 percent threshold commonly associated with global recessions. More broadly, China is expected to account for fully 73 percent of total growth of the so-called BRICS grouping of large developing economies. . Chinese growth would have a much greater effect on an otherwise weak global economy than would be the case if the world were growing at something closer to its longer-term trend of 3.6 percent.
If Chinese GDP growth reaches 6.7 percent in 2016 – in line with the government’s official target and only slightly above the International Monetary Fund’s latest prediction (6.6 percent) – China would account for 1.2 percentage points of world GDP growth. With the IMF currently expecting only 3.1 percent global growth this year, China would contribute nearly 39 percent of the total.
Despite all the hand-wringing over the much vaunted China slowdown, the Chinese economy remains the single largest contributor to world gross domestic product growth. For a global economy limping along at stall speed – and most likely unable to withstand a significant shock without toppling into renewed recession – that contribution is all the more important.
Chinese domestic demand has the potential to become an increasingly important source of export-led growth for China’s major trading partners – provided, of course, that other countries are granted free and open access to rapidly expanding Chinese markets. There are of course the global effects of a successful rebalancing of the Chinese economy. The world stands to benefit greatly if the components of China’s GDP continue to shift from manufacturing-led exports and investment to services and household consumption.
A successful Chinese rebalancing scenario has the potential to jump-start global demand with a new and important source of aggregate demand – a powerful antidote to an otherwise sluggish world. That possibility should not be ignored, as political pressures bear down on the global trade debate.
Unlike the major economies of the advanced world, where policy space is severely constrained, Chinese authorities have ample scope for accommodative moves that could shore up economic activity. And, unlike the major economies of the developed world, which constantly struggle with a trade-off between short-term cyclical pressures and longer-term structural reforms, China is perfectly capable of addressing both sets of challenges simultaneously.
This meeting should send a clear message that world leaders have heard people’s concerns about globalization and are taking steps to better understand and address them. The risk is that nothing much will be achieved. More platitudes about the benefits of global trade and investment will ring hollow.
While there have been recent concessions that not everyone wins out of globalization, the White House has also signaled a renewed push on the controversial Trans-Pacific Partnership (TPP) trade deal as President Barack Obama’s term winds down.
The G20 earned its spurs with a concerted reaction to the 2008 global financial crisis, but recently opposition to free trade seems to have gained purchase and a coherent defence has been lacking. Among the biggest sticking points is overcapacity in the global steel industry, a sore point for China as the world’s largest producer of the metal. Other concerns include barriers to foreign investment, and the risk of currency devaluations to protect export markets.
International Monetary Fund (IMF) Managing Director Christine Lagarde described the global economic outlook as “slightly declining growth, fragile, weak and certainly not fuelled by trade and said this week that G20 leaders need to do far more to spur demand, bolster the case for trade and globalization, and fight inequality. The Centre for Economic Policy Research estimates that in the first eight months of 2016 alone G20 governments implemented nearly 350 measures that harmed foreign interests. The jumps in G20 protectionism in 2015 and 2016 coincide ominously with the halt in the growth of global trade volumes.
The Washington-based U.S. Chamber of Commerce fired a broadside at what it saw as creeping protectionism in the information and communications technology sector, releasing a report citing aggressive new measures from China to Russia to the EU. National security was the reason given by Australia’s government when it rejected Chinese bids for an electricity grid last month, a decision that Beijing labeled as “protectionist”.
West is opposed to free trade with developing nations. When EU Commission President Jean-Claude Juncker and EU Council President Donald Tusk set out their priorities for the Hangzhou meeting this week, free trade was next to last. It was preceded by the refugee crisis, jobs growth, financial stability and tax transparency. While the challenge was recognised, no solutions were offered.
The G20 might discuss how to reverse the slowdown in the growth of trade and foreign investment and to communicate the benefits of trade to citizens while addressing their concerns. The critics argue the benefits of globalization are too often over-hyped by politicians, leading to public disappointment.
Obama has promoted the TPP deal as an engine of job creation yet it might add all of 0.5 percent to economic growth after 15 years. The 12-nation TPP is the number one legislative goal of Obama’s remaining term, yet is under assault at home and abroad. Both the main candidates in the November election, Republican Trump and Democrat Hillary, have come out against it, blaming past deals for destroying Americans jobs. If anything, the TPP highlights the divisions within the G20. It was sold as the economic pillar of Obama’s broader plan to shift U.S. foreign policy toward Asia and counter the rising might of the hosts of this very meeting, China.
As China, among other advancing economies are making big strides in capitalist development actions, the G7 leaders USA and EU have brought them also into what is now called the G-20. One of the reasons is to curb fast climate disorder with the help of these developing economies that are also responsible for rising sea levels, threatening the existence of island nations, like Sri Lanka, Maldives, etc.
An officially communist country, China heavily subsidizes capitalist economy of USA, finances the NATO imperialist wars, has been sympathetic to fascist aggression of Palestine by fanatic Israel, would not appreciate Kashmiri struggle for freedom from Indian yoke primarily because China also occupies a part of Kashmir, taken from Pakistan as a stolen gift.
The G20 needs to do better in communicating the benefits of free trade, while giving the political push that’s needed to unlock stalled multilateral trade liberalization. Delivering a successful G20 summit in Hangzhou means tackling big global challenges successfully through practical actions benefit the world.
Hopefully, the G20 would seriously consider global free trade mechanism so that all under developed nations also benefit from G-20. It is urgent the G20 nations evolve a strategy for a global free trade treaty.
Long trends and disruption: the anatomy of the “post world” of the COVID-19 crisis
What will be the economic architecture of the world after the COVID-19 crisis? This question involves understanding the major trends at work for twenty years now.
The world that will emerge from this crisis will be marked by these major trends, which, for some, will be reinforced by this crisis. However, this crisis has created too specific disruptions, in particular in the field of transport and energy. It has also provoked an awareness of the centrality of sovereignty, and in particular of economic sovereignty. Finally, the economic and monetary policies that have been put in place to combat the economic effects of the epidemic and of containment will have long-term consequences on international financial balances.
An acceleration of the change of the world?
Since 2000, we have witnessed the rise of an “Asian bloc” to the detriment of what we might call the “Western bloc”, that is to say the United States, the European Union and the United States. Japan. This Asian bloc is heterogeneous, as is the Western bloc. In each of these bloc politics is the main factor of homogeneity. But, these blocs also correspond to an economic reality: that of the countries of old industrialization against the countries, which it is better to call new industrialization than emerging ones.
In 2000, the China-India-Russia combined represented only 15% of world GDP, while the United States, the European Union and Japan combined weighed more than 47%, or three times as much. In 2020, the two blocks are tied at around 31.5%. If we take into account the immediate effects of the COVID-19 crisis, this movement is even expected to grow. The IMF has made forecasts which indicate that China and emerging countries should recover much faster from the shock of this crisis than the so-called “advanced” countries, ie countries of former industrialization. The world should see the shift to Asia amplify in the coming years.
The death of oil has been greatly exaggerated… (bcc, Mark Twain)
The COVID-19 pandemic has had a profound influence on the energy market and on oil production. The persistence of the pandemic means that air transport, among other things, will not return to its 2019 level before, no doubt, 2024. This implies a weak demand for kerosene as estimated by the International Energy Agency Forecasts of global oil demand and post-crisis economic growth are determined by different assumptions. In the optimistic scenario, there is a rapid economic recovery in a more or less flattened “V” shape in the first half of 2021, but the demand for oil does not fully return to the pre-pandemic trend. In the more pessimistic scenario, oil demand will not reach 2019 levels until 2023, and its growth will remain well below the pre-pandemic trend. The current evolution of the pandemic suggests that we are closer to this pessimistic scenario. These two scenarios also assume that zero-emission vehicles will represent 60% of new vehicle sales by 2040, because investments are high in these technologies. Therefore, they both forecast a slowdown in demand for oil to peak in the mid-2030s at around 105-108 Mb / d. What will be the consequence?
In the medium term, OPEC will have to manage the probable return of part of the 5.7 Mb / d of unused production in OPEC countries (Venezuela, Iran and Libya) and non-OPEC countries (Syria and Yemen). OPEC will also have to deal with the resumption of US hydrocarbon production (particularly shale oil), a recovery that may be slow due to falling investment, as demand and the price of oil rise. US production of hydrocarbons has fallen by more than 2 million barrels / days, due to the closure of existing wells, reduced storage capacity and reduced demand.
The impact of COVID-19 on oil demand will therefore be profound, particularly in the event of a deep and long recession associated with a protracted pandemic. Without aggressive intervention by OPEC, the average crude oil price could thus remain below $ 50 / barrel until mid-2022. During the second half of this decade, supply and demand are expected to move closely towards equilibrium as non-OPEC production, especially from Russia, begins to decline and US hydrocarbon production reaches a low. tray. The price of oil is expected to rise to around $ 80-90 / barrel (optimistic scenario) or $ 70-80 / barrel (pessimistic scenario), even without OPEC intervention.
As we can see, however, despite all voluntarist proclamations one can hear here and there, oil will remain a major source of energy for at least the next thirty years.
The return of economic sovereignty
A more direct change brought about by the COVID-19 pandemic is the realization of the importance of economic sovereignty. Of course, a number of countries, China, Russia, but also the United States and India, were acutely aware of the importance of this sovereignty. The European Union, for its part, had adopted a very negligent attitude on this subject. The strong disruption of international trade caused by the pandemic caused a real shock on this point. Of course, there is no question of returning to more or less self-sufficient economies. But, the economic, social, and even strategic damage caused by free trade policies are globally more taken into account today.
This will accelerate the return of nations and the crisis of multilateralism that we could already observe. The economy is once again becoming a breeding ground for strategy. Through the policy of economic sanctions, which the United States has used and abused since well before the election of Donald Trump, we are witnessing an acceleration of the fragmentation of the world economic space. American pressure on Huawei, or on the Chinese social network “Tik-Tok” is an example. De-globalization had passed from the stage of possibility to that of concrete fact; with the effects of the pandemic it will pass from that of fact to that of major fact.
This return to economic sovereignty induces the great revenge of politics over “technology”, the triumph of decisions over the automaticity of standards. However, ” technology” is embodied today mainly in economics and finance. The pandemic heralds the return of sovereignty, and being sovereign is above all having the ability to decide. The countries will then be referred to logic of bilateral relations, or even to regional logic. It will then be necessary to seek allies.
The questioning of the “global” character of the companies linked to the INTERNET, the desire of several countries to build their “digital sovereignty” is an example of the struggle that is looming for economic sovereignty. This resurgence of politics does not mean that, in our societies, certain spaces are not governed by the technical order, and that there are spaces dominated by technical legitimacy. But, these dimensions will now become second in relation to the political, which will recover its rights. The economic and the financial will once again become instruments at the service of politics. What the political will do with it remains to be determined.
A Debt apotheosis or an end of debt?
A final point remains the explosion of both public and private debts due to the pandemic. In most countries, the COVID-19 crisis has resulted in the collapse of various barriers to the expansion of public debt.
The latter has therefore increased to finance the fall in tax revenues during the confinement period but also the considerable additional public expenditure generated by the crisis. In addition, there are liquidity facilities, consisting of guaranteed loans, equity investments and the like. The result of all this is that the indebtedness of states (especially in the Western bloc) and that of companies will increase considerably by 2021. This debt will not be covered by an increase in taxes because it would imply a deep recession. Reducing public spending beyond 2022 will hardly be a possible solution, for the same reason.
These debts will therefore be absorbed by central banks, in one form or another. The same will be true of a large part of corporate debt. What will then be the consequences for the currencies (mainly the US Dollar and the Euro) of these policies? What will also be the medium-term consequences on the equity and bond markets?
One of the most striking consequences will be the influx of liquidity as a result of central bank action, while production will remain relatively depressed and the outlook for investment will be uncertain for several years. Currencies should therefore experience significant fluctuations. The current downward trend in the share in central bank reserves and the US dollar and the euro in favour of the group of “other currencies” (Sterling, Yen, Australian and Canadian dollars, Renminbi) should therefore accelerate.
Its to be noted that the Euro share went down significantly under the level of older currencies included in the Euro and that the group of “other currencies” significantly increased their share since 2010.
The economy of the “world after” the COVID-19 epidemic will therefore present both the characteristics, in a more accentuated form, of that of the world before but also a certain number of ruptures linked to this epidemic. This combination of strong trends and ruptures will result in a “de-globalized” world which will reorganize itself on the basis of bilateral alliances or regional groupings.
From our partner International Affairs
Flattening the Eastern Hemisphere through BRI: The Geopolitics of Capitalism
The Pivot of Asia: Conceptualizing the Peaceful Rise
The Belt and Road Initiative is a trans-continental multibillion-dollar infrastructural network linking China to what Bernard Cohen called the ‘Eurasian Continent Realm’ and the ‘Atlantic-Pacific Maritime Realm’. This economic expansion is diametrically opposed to the US hegemonic expansion. China with its economic and military development claims a peaceful rise which is non-aggressive and multilateral in its nature. Its policy of peaceful rise and development conveys to the international and the regional community, the willingness to endorse other state’s sovereignty, peace, and stability.
The BRI is considered as the ‘Project of the Century’ encompassing around 70 states, stretching around 3 continents, and affecting 60% of the world population. It is a global development agenda on the part of China to address the infrastructural gap, capacity gap, and technological gap. It is aimed at re-routing the inter-continental trade through China as a pivot. This economic saturation of China is being materialized by two of its mega-projects as indicated in figure. 1.
Overland SilkRoute Economic Belt (SREB): Consisting of six corridors for the trade of goods and services in and out of China.
Maritime Silk Route (MSR): Consisting of a chain of seaports also known as the string of pearls to the guard shipping routes.
These two projects of the BRI indicate the scope and size of its socio-economic implications for the region and the security-based ramifications for the international community.
The BRI Development Agenda: From Globalism to Regionalism
The process of globalism has been effective for the developed world however, the benefits of development and modernization have not trickled down equally in the peripheral regions of the world. That is why the world is witnessing the rise of new regionalism based on a multidimensional approach to deal with the global transformations which negatively affect the political economy of the developing and underdeveloped states. And this system is very aptly backed by China. With a history of the tributary system, China can integrate the regional states is a system of loose diplomatic relations based on shared benefits, mutual trade agreements, and interconnectivity.
The old tributary system of China is in a state of revival through the BRI. The cardinal principles of these two asynchronous simultaneous developments are indicated in figure.2
This system of new regionalism holds China as its central state through a spherical worldview rather than a vertical view purported by the US. The prospects of this system for the socio-economic prosperity of the eastern hemisphere are imminent. It is the reincarnation of the Flying Geese Model of development utilized in the development and modernization of the East Asian economies. According to this mode, wages increase vis-à-vis economic development causing industries to lose their comparative advantage. And China appears to be mitigating this through ‘going out’ for cheap labor. This new system shall reshape the following spheres which were previously dominated by the entrenched center-periphery discrepancies of West imposed structural imperialism.
|Domain of Influence||Prospects of BRI-led Regionalism|
|Social||The BRI led regionalism can increase the societal viability through redistribution of wealth and sharing of technology The investment pattern can show a shift from security funding to a development-based expenditure It will revamp the employment opportunities in the region and the net incomes will rise to threefold to fourfold Would lead to cross-cultural understanding in solving collective action problems within the regionThe infrastructural development will reinvigorate the interest of the regional community on the issues of environment and sustainability|
|Economic||Conflict prevention through comparative advantage-based development A move away from dependency culture systematically induced and maintained by the international financial regions of the World Bank and International Monetary FirmWould enhance the collective bargaining leverage of the developing and the underdeveloped statesWould ease and emancipate the terms of trade which have mostly been disadvantageous to the marginalized statesEconomic development strategies and projects will become stable, consistent, and acceptable due to regional continuities|
|Security||The regional security regimes can be consolidated Collective anti-terrorism and counterterrorism strategies can be devised and implemented Regional monitoring bodies can provide effective security input to the already exiting international organizations like the FATF, UN, etc.|
The shift from the globalism to regionalism offered by China is both comprehensive in its nature and appealing to the states of the Eurasian region and even extending to other regions including Africa. However, a study by Brantley Womack uses a rational choice rather than a cognitive psychological approach to understand the Chinese nuanced tributary system in form of the BRI. To him, not the Confucian morality that dictates the Chinese foreign policy of win-win approach and peaceful rise but the security dilemma which leads to a relative accommodation of the underdeveloped states to avoid the coming of the new anarchy.
Reshaping the Regional Value Chains: The SRM Mechanism and Spatial Fixes
The entire functioning of the BRI which targets the socio-economic advancement of the Eastern hemisphere is based on Surplus Recycling Mechanism (SRM) and Spatial Fix Mechanism. The underlying logic of the BRI and its investment initiatives is indicated in these two processes. These are targeted for three major purposes of growing industrial output, increasing labor employment, and accumulating financial capital. Though highly effective, both the BRI mechanisms for infrastructural development indicate intricate fault lines which can roll-back the major socio-economic gains of the mega-project by raising international skepticism. They indicate a move towards the geopolitics of the infrastructural development with little regard to the regional states. This criticism has been echoing in the US and the regional skepticism is also on the rise. So, the adverse socio-economic ramifications of the BRI based on the fault-lines of these two mechanisms are given below and there is a need that China becomes more transparent about the strategic connotations underlying its benign investment initiatives.
Some of the adverse impacts these mechanisms of the BRI could have on the socio-economic aspects of the region of the Eastern hemisphere are stated below:
- It will wage a new war of capital accumulation between the Eastern hemisphere led by China and the Western hemisphere led by the US. This dichotomous rise will affect the marginalized states of the region drastically as also indicated by the US-China trade war where the financial market came on the verge of collapse.
- The peripheral states of the region might not wholly benefit from the development as it might appear as a way of China’s debt-trap diplomacy and the states might turn assertive in refuting China’s role in the region.
- The flattening of the region based on capital accumulation needs bringing down barriers which can lead to a contagion effect even the Chinese economy falters.
- The policy gaps in the inter-regional network can only work through a highly transparent, robust, and monitored system, which lacks inmost states of the region.
- The regional contagion can also spread pandemic conditions as observed during the coronavirus crisis.
- Unlike the South East Asian region, there is no cultural emulation in other parts of the Eastern hemisphere and China’s cultural assertiveness might raise national and cultural opposition to China’s enhancing role in the region.
- The eastern hemisphere might just end up being a captive market if the productive capacities are not utilized in the peripheral region. This will end up in neo-colonialism the global inequality will take nuanced shape but shall persist.
- The intermingling of the workings with weak governance structures can lead to gender-disparity, sexual-based violence which can only end with the grassroot level reforms are set as a precondition for development.
These impacts of BRI can drastically revamp the social mobility of the citizens, increase interconnectivity and raise inter-cultural tolerance however, the downside of it can have major blowbacks to the projects as a whole and to the region it covers. Thus, it is high time that China addresses such issues on mutual understanding and cooperation to mitigate the negative socio-economic ramifications.
Regional and Extra-regional Dynamics:
All the infrastructural development projects for decades are accompanied by geostrategic and geopolitical motives. Such developments in a highly politicized world are determined by geopolitical constraints. The BRI is no different, it offers avenues for advancement, but it goes in hand with China’s geopolitical and geostrategic goals of ensuring capital development and security in a volatile political environment. Hence, the mega project of BRI is under intense scrutiny from both the states within the BRI and those outside of it.
The BRI project takes around 82% of the total gain and a big chunk of which goes to the high-income states of the region including China and East Asian states. This trend might increase inter-regional discrepancies with uneven globalization with some benefiting more and others remaining mostly stagnant. These unequal benefits will lead to negative spillovers feeding inter-regional skepticism.
The impact of the BRI led flattening of the region holds negative consequences if the links with the non-BRI states are not properly maintained. The internal trade of the region shall show consumer cost reduction, lowered trade barriers, and trade facilitation. However, the non-BRI region will face increased trade diversion which might become the reason they rebut the BRI led development.
The BRI project is a new mode of regionalism with a different means to the geopolitical ends. It identifies the flattening process to be a derivative of the geopolitics of globalization and capitalism. Though the socio-economic impacts of the project of the century are vast and all-encompassing yet the risks like debt sustainability and governance can adversely lead the project in another dimension if not addressed through a system of communication, coordination, and transparency. Though the menaces of capitalism cannot be completely mitigated due to its structurally enmeshed nature. But the BRI shows the alternative mode of its practice based on authoritarian capitalism of China. The world awaits what benefits it will reap. How equitable will the ‘equitable globalization’ be and how peaceful will the ‘peaceful rise’ be?
Protectionist headwinds in the US Trade Policy under Trump Administration
At the end of the First World War, US led internationalism was initiated by the then President Woodrow Wilson. When we look deeper into the origins of the first Great war, it clearly shows signs of deep rooted animosities, triggered by culture, race and delusioned nationalism. Once the war ended, Woodrow Wilson embarked on a utopian idea to make the world truly an international place. The breed of politicians in America and its allies the British Empire and France, supported the idea and laid the foundations of world’s internalist movement, Never in the history of mankind a world sets sails on such an ambitious project to make the world a global stage for commerce where every aspect of human life will governed by a certain set of rules, which will form the basis of rule based order. A journey of rule based system was not smooth and its first test came in the form of a second world war, a war which was again fought on the basis of rogue nationalism and race. The victors at the end world war II was committed to forward the idea of globalism, United States was the only country which rose from the ashes of the world war II with minimal damage, it first supported a war ravaged Europe with a Marshall Plan, and then they together embarked on a path to liberal internationalism. The United States journey in making the world truly a global place is unique and unprecedented, with all the allegations of doublespeak and forwarding its own agenda of undisputed global power, United States global project was indeed a sincere effort to govern the world through supranational democratic institutions, early examples of such bold agenda were United Nations and Bretton Woods institutions.
Journey in and after the cold war
Obama Presidency : At the end of Bush Presidency, the protectionists were bracing for an extreme stance on new winners in the Global economy and especially China, commonly denoted as Frankestien at that time. President Bush in 2001 granted China PNTR a permanent normal trading relation status. Many trade hawks in the US think that this decision was a turning point, which helped China to become so big. President Obama was an overt globalist and He in his presidential campaigns regularly highlighted the importance of globalization, that how and why we need to appreciate new winners in the global economy, he cited computational technology as the main driver behind a dispersed value chain rather than concentrated one. Obama in his presidency supported the Trans pacific partnership TPP deal, and supported the idea of equal opportunity in the global economic system. He repeatedly highlighted the importance of globalization and termed as the force which can never be rolled back.
Trump Presidency and a wave of non stop protectionism
President Trump in an his election campaign termed TPP trade deal as a “rape of America”. When he won election, he issued endless warnings to trade partners and threatened to eliminate NAFTA the North American Free Trade Agreement, NAFTA now USMCA, United States Mexico Canada Agreement was later rescued at last minute negotiations, which took place in several rounds spanning over many months. Trump launched a full blown trade war against China, and its allies in Europe accusing them of using America to their advantage and stripping the US of billions of dollars. He is now pursuing a most hawkish policy in the trade realm to disband the world trade court also known the World Trade Organization. This anti trade policy is aimed at reviving the US industrial base, which according to many experts is a lost cause in the era of global value chains.
Panda, A., 2020. Bush Gave China Permanent Normal Trade Relations Status With The US 15 Years Ago. What Did That Change?. [online] Thediplomat.com. Available at: <https://thediplomat.com/2016/12/bush-gave-china-permanent-normal-trade-relations-status-with-the-us-15-years-ago-what-did-that-change/> [Accessed 4 June 2020].
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Business World Now Able to ‘Walk the Talk’ on Stakeholder Capitalism
The World Economic Forum today launched a set of metrics to measure stakeholder capitalism at the Sustainable Development Impact Summit....
Countries urged to act against COVID-19 ‘infodemic’
The UN and partners have urged countries to take urgent action to address what they have described as the “infodemic”...
Flattening the Eastern Hemisphere through BRI: The Geopolitics of Capitalism
The Pivot of Asia: Conceptualizing the Peaceful Rise The Belt and Road Initiative is a trans-continental multibillion-dollar infrastructural network linking...
Climate Heat Maps Show How Hot It Could Get for Today’s Tweens
Climate-related impacts such as the wildfires in the western United States will only become more severe if we allow the...
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