Cool and calculating China is trying to build up global trade even as things fall apart around the world

South China Morning Post Dipublikasikan 00.11, 18/11/2019
Cool and calculating China is trying to build up global trade even as things fall apart around the world

With the United States in the midst of presidential impeachment hearings, Britain locked in self-destructive Brexit combat, the European Union suffering severe internal stresses and Hong Kong seemingly melting down, economic developments have understandably taken a back seat from the viewpoint of world attention.

"Things fall apart, the centre cannot hold; mere anarchy is loosed upon the world," the Irish poet W.B. Yeats wrote in the aftermath of World War I. If he were alive today, he might lament even more loudly the collapse of global trade, investment and economic cooperation, not to mention growing civil unrest.

But once things begin to settle (unless they escalate into even more vicious conflicts), the need to tackle seemingly more mundane economic issues, such as rebuilding trade, investment and business confidence, will reassert itself and the issue of who is best placed to do this will be of primary importance.

Setting aside for a moment the authoritarian nature of Chinese rule (although key figures in international finance who visited China recently suggest that growing internal stresses there cannot be ignored), the Beijing government at least appears to be following a rational economic game plan.

It would be bold or rash to suggest that this plan can materialise when there is turbulence all around. But in comparison with a US that seems to have lost its economic and political bearings and an EU some argue is disintegrating, China's cool and calculating approach is vaguely reassuring.

It does not take a China apologist to appreciate the logic of Beijing's external economic policies, especially with regard to the Belt and Road Initiative and related developments. Assuming that the world does not go completely mad, this logic seems likely to assert itself once the smoke clears.

While US President Donald Trump continues to insist that the US is winning the trade war with China, milking the issue for presidential campaign gain and allowing business confidence and investment to erode further while tearing the fabric of trade pacts in the process, China is seeking to create new trade.

Beijing is actively seeking trade agreement with the EU while pushing for completion of what would be the world's biggest free-trade pact in the shape of the Regional Comprehensive Economic Partnership (RCEP). But it is going a very important - and overlooked - step beyond that.

The Belt and Road Initiative will provide the logistical underpinning to this potentially huge gain in trade. There is little point in having paper agreements to boost trade and investment if the infrastructural links to support it are lacking.

Hence the expansion of the belt and road network to include South, Southeast, Southwest and Central Asia, and even parts of Africa and the Middle East as well as, of course, the entire European continent. This is an integrated and comprehensive approach to global trade expansion.

Admittedly, much of this may never come to fruition (or not for years or decades at least) but it is a constructive and forward-looking plan that contrasts dramatically with the trade-destroying tactics of the Trump administration and the eroding economic cooperation within the EU.

In my column last week, I quoted a paper published recently by Michael Witt, senior affiliate professor of strategy and international business at Insead, suggesting that a deglobalised world is likely to be a patchwork of economic linkages in the shape of bilateral and regional trade agreements.

If this is indeed the fate of the global economy in coming years, then, at least China, other countries in Asia and maybe European nations that have secured physical links with each other via transport infrastructure, rather than pursue Trumpian economic autarky, have a better chance of surviving the new cold war.

But the purpose of this column is not to argue the relative strengths and weaknesses of any particular system - Chinese, American, European or whatever - but to urge a return to constructive rationality instead of mutually destructive economic and political irrationality.

As Yeats said in his poem: "The best lack all conviction, while the worst are full of passionate intensity." Never has that been more true than in this period of loud, populist national leaders whose political instinct is to act first and think afterwards.

Anthony Rowley is a veteran journalist specialising in Asian economic and financial affairs

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