Name: U.S.-China trade is booming, despite all the 'decoupling' rhetoric
Uploaded: 2021-07-29
Duration: 14 min 16 s
Description: Experts discuss the current state of globalization

Experts discuss the current state of globalization

U.S.-China trade is booming, despite all the 'decoupling' rhetoric

International

Even with decoupling, U.S.-China trade is still booming

I wonder if we can get the conversation started perhaps by uh turning first to pascal lamy. Uh let me you have really been at uh at the forefront of many of the key developments in the emergence of the global trading and an international finance system. Over the course of your long career, I wonder if we could maybe just ask you to reflect a bit on that and and let us know your thoughts about where you think the idea of globalization stands right now. Globalization is both incredibly efficient and very painful. And if you don't get the balance of uh pain and gain right in terms of what this brings to the people, then the feeling that has developed for the last 10 or 15 years, at least in the west, that the balance is not right for them, that lots of games are in the pockets of a few and lots of pain are spread for many is the origin of this wailing to some extent in the West support for globalization. So what we have to watch in the future and that's my basic answer to your question is how does globalization as a process as, as an idea? How does this vote and what new arrangements do we need in order to keep benefiting from the efficiencies of globalization? Why addressing the sort of resistance and the specific problem digitalization region? I love that idea about, you know, getting the balance right between pain and gain and it in a way it's a perfect segue to uh turn to uh DR JENN uh, you know, cables cases of um you've written and spoken a lot about how enthusiasm for globalization, this idea of openness often goes in cycles. Uh, people are enamored with it then they recoil from it. Um, I'm curious to hear your take on where we are in the current cycle. And can you give us any kind of indication of when this cycle is going to shift again and and in what direction and what that might might look like if we look at the global supply chain or the map of the world. There's only 222 regions, Greenland and sub Saharan Africa. That's actually not part of the global supply chain. Uh These days you need 12 countries to make an electric bicycle. Two thirds of world trade is actually intermediate trade, which means it's all about uh you know, shipping and inputs and then all part of this global supply chain. Uh and that is really the world we live in and trade wars between the US and china has not really diverted trade towards other countries. Supply uh supply chain still functions after the pandemic, although many, many countries will start to rethink about resilience, but the fact is, and you know, including FBI has flown to china even from the US to china at record levels last year. Um There is a sentiment, there is the politics, there's a heretic, but then there's actually the fact, I guess one question I haven't and perhaps uh Professor Mahbubani will turn to you next on on this Is whether in the last 18 months we've had a lot has happened in the world and has The recent developments the last 18 months helped to kind of put us into a new place in terms of what the world thinks about the idea of globalization. If you had any doubts at all that the world has been globalized COVID-19 has killed that doubt. Covid 19 is proven that there are no bodies in this world and even Greenland and sub Saharan africa Government 19 can reach you okay without supply chains even okay. So it shows you that the world has really shrunk and become a small interdependent place And as pastor knows, and I've used this analogy of simple boat matter for to explain how much the world has changed fundamentally. I would say in the last 30, 40 years And in the past when 7.8 billion people live in 103 separate countries, it was as though they were genealogy separate boats. So in one boat got public 19. Didter't matter the next boat wouldn't get it anyway, right? But the world is shrunk and now all 7.8 billion people living 103 separate cabins on the same boat. And that's why Covid 19 go through the board. It's really crazy. I want to turn to you if I could. Um you have also been at the forefront of building a lot of the architecture that makes the global system run. You've been a trade lawyer for almost 30 years, worked for a long time at Philips support that companies including Uh Samsung and Xerox and joined Huawei in uh in 2019. Huawei has really been at the intersection of this debate about globalization and kind of buffeted back and forth uh in in recent years from a technology standpoint. How what's your read on where we are right now in terms of global attitudes about the value of openness and collaboration and free exchange of ideas and capital uh and and people across borders. What we're seeing coming ahead of us now is the evolution of general purpose digital technologies such as artificial intelligence, the internet of things, cloud uh and fifth generation. And I think this offers an enormous potential to enable digital trade to drive the next way of globalization. And I hope we can move to back to or forward to a happier phase. But I think we are unstable because there's a justified feeling of inequality from many parts the world. People feel that they left out, they've been left out from the benefits of globalization. And I think we've taken a turn a poor turn in the last five years with talk about decoupling. But basically I from everyone I talked to in the technology sector, we don't want a decoupling of technology. And worse still, there is no desire for a schism in technology standards. And I think that's what we should be working to avoid. But I think also we're on the cusp of an opportunity and that is to guide the energy of globalization and human creativity into the real issues today which are controlling covid climate crisis and the economic recovery and it's inequality and I believe that's where our focus of attention should be for the next cycle. You know, it's often said in these discussions that uh people who understand the benefits, many of which we've we've touched on just in this kind of opening round of comments of globalization uh need to work harder to communicate and to remind the general public of what those benefits are. Um but carol, I wonder if your thoughts on that, You know, we chatted a little bit about this earlier. I know you feel that this is more than just a communication problem, that there are also things that policymakers need to do to uh shield people who have not benefited equally from some of the pain part of the equation. We have two, I think, distinguished globalization and the way it works and the way it deserves on the one side and on the other side, the governance of globalization, both at domestic level. And this is about this challenge which can you rightly underlying between winners and losers that can damage the idea that openness is good. This is one thing which is unfortunately in my view happening. Well, this is because we haven't at least in the West properly adjusted our welfare system to the real forces of globalization, which are much more disruptive than they were in the past to uh pascal has highlighted the rise of china, which is a very important part of this uh discussion. You've often observed that uh globalization and and divided opinion over globalization and the rise of china are two related things, but they're not necessarily the same thing. How does how does the rise of china as an economy transformed this debate uh about globalization and getting the balance between pain and gain right? So um globalization the started a long time ago before the rise of china actually china was excluded from the first wave of globalization and and the missed out. And this time I would say that china has also impacted the you know the consequence of globalization in a major way because china is so big and also just so competitive. It was before in the past with massive cheap labor. But really over time the key advantage is competitive uh competitive meaning the cost relative to its productivity relative to its innovation. But I do believe that china having benefit from globalization wants to protect globalization and will do what it needs to adapt to the new circumstances and therefore change behavior where it's necessary. You sure what's your thought about that? Well I I completely agree with care you that there are many different issues and they're being complaint it together. You go by the arguments of economics china and the U. S. Should be cooperating with each other. Unfortunately, an older logic, 2000 years of geopolitics has taught us that whenever the world's number one emerging power today is china is about to overtake the world's number one power, the world's number one power always pushes down the world number one emerging power. And sadly this is the pieces of my book of course as china one I predict with great confidence That the United States is going to make a massive effort to keep China down in the next 10 years. Even though it goes against all the laws of economic craig, you're a very interesting uh sort of position uh someone who has worked in the trade and technology area for for so long. How do you see all this and what does it mean for companies like Huawei? Do you see any chance for huawei to kind of rekindle discussion with the biden administration that perhaps it wasn't able to have with with with the trump administration about getting into the american market. Uh where's the room for manoeuvre for for uh of chinese companies like Huawei? I think why would anybody want To go for decoupling? We want next time to have a 6G. East and A six G. West version. I don't think so. I think in in the wake of covid economic devastation, the world simply can't afford forced technology decoupling. And I think the the consequences of this as well as illustrated in the economist intelligence unit report on the cost of the globalization which puts the cumulative loss Over 10 years, that's something like $50 trillion. We can't afford that. How do you how do you read this globalization discussion? Are we in for more of it before it gets better or are the underlying technologies in the complicated interwoven supply chain so resilient that you don't really think that that's a genuine phenomenon. I hope there will be as little as possible of the complaint so that we keep the benefits as a cooperative management of global goods. And I think the resilience digital infrastructures has become a global good thought. We have to recognize that on the regimes of that are what we have to organize is not convergence, but coexistence and it's a different ball game because it's about it's about managing interface is a system that will remain different. Okay, I know you thought a lot about this. I mean, you don't Yeah, the argument between the US and china has partly just been about the trade balance and that is sort of baked into this first day. Won't face one truth that the two countries have worked out. But there's this larger uh fundamental arguments about about different systems behind a lot of these challenges. Do you see any chance that that debate gets reconciled and resolved by china saying okay, you know what? You're right, we're gonna we're gonna abandon our state led system and it's not, what does that what does that mean? It's coexistence possible if China is unwilling to do that, as we said, You know, there are different systems, one is free market, one is state led uh market economy and they will have to find a way of coexisting. Um I think with the U. S. Really I think even if china actually ironically china does everything that the U. S. Wants to do it will make China even more powerful and more successful because it would just be more productive, more innovative and you know better protection of intellectual property rights etcetera will just make china stronger. And I'm not actually sure not sure that that is actually what the U. S. Wants to see. So the answer is even if china does do that, I think the ultimate differences ideological but also economic political rivalry that will still remain as the most intractable issue.