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After Brexit and Trump, leaders question globalisation
This year’s World Economic Forum meeting of the global political and business elite in the Swiss city of Davos, which opens on Tuesday, will address public hostility in the West towards the open and liberal trade policies of economic globalisation. While there was often reluctance to discuss these issues,the UK's vote to leave the European Union and the election of Donald Trump have forced it onto the agenda.
Even the organisers of the Davos summit are saying this year’s meeting has to consider existential questions.
“Responsive and Responsible Leadership” has been chosen as the theme of the summit, in response to what organisers call a “backlash against globalisation leading to two surprising vote results and a rise in populism in the West”.
The results in question refer to the UK’s vote to leave the European Union last June and Donald Trump’s election as president of the United States in November.
Both votes are interpreted as a rejection of the open and liberal trade policies of economic globalisation.
“In Davos there will be lot of soul searching as to what went wrong with globalisation,” says Holger Schmieding, chief economist with the bank Beremberg in London.
“The discussions will be more grounded, realistic and sober than they were over the past three years.”
Schmieding believes the forum’s 3000 delegates will seek “a stronger focus on helping the losers of globalisation in the Western world,” and especially “on education, on helping people to find new jobs if their old jobs vanish due to technological change or competition from other countries around the globe.”
However, others question whether the forum is taking the right approach in choosing the theme of leadership.
“There is always a danger in these situations that we put too much emphasis on calling on individuals to do the morally right thing, and too little emphasis on the conditions under which these individuals and leaders operate,” says Clemens Fuest, president of Munich-based economic research group the IFO Institute.
“Today, governments are operating under the pressure of populist ideas – simplification and neglecting facts – and it would be necessary to talk more about these conditions and not necessarily how leaders behave.”
China to attend
In another sign of how the global economic landscape is changing, the forum also features the first-ever appearance of a Chinese head of state, President Xi Jinping.
Not all economists are convinced the Chinese leader is prepared to follow through on recent suggesting of opening the country’s economy to foreign investment.
“China to this day maintains a very long list of what they call the negatives list, industries that foreign investors cannot even invest into in China,” American economist Christophe Balding told reporters.
“China could go a long way to addressing the concerns of Donald Trump and other countries in the world, by making some key concessions in these area, which should also promote their own idea of transitioning the economy and increasing foreign investment.”
However, China will not necessarily be attending the meeting feeling it needs to make concessions.
“There will be some discussion of China having to open its markets more, but I don’t think China will take any advice from outsiders,” says Holger Schmieding.
“The US at the moment is preoccupied with its own affairs, and Europe is basically busy with itself as well, so China feels free to pursue its own policies freely without having to look too much about what other countries are thinking about those policies.”
Xi is to speak at the opening of the summit on Tuesday morning, which in itself will be a show of Beijing’s strength.
“The Chinese president brings the clear claim that China is to be taken very seriously as a global economic and political power,” says Schmieding. “And, in the absence of a high-level representative from the US, he will receive a lot of attention.”