Amid growing protectionism in the West, China has been backed to “reglobalise trade” by a leading industry expert in Hong Kong.
The One Belt One Road (OBOR) initiative, the launch of the Beijing-backed Asian Infrastructure Investment Bank (AIIB) and the pro-trade rhetoric of China’s leaders show that with the retreat of the US from its role as bastion of free trade, China is ready to take the lead.
These were the words of Nicholas Kwan, the director of research at the Hong Kong Trade Development Council, who denied popular claims that China’s sizeable outbound investments were a way to push its political agenda in Asia.
OBOR is a massive spending spree by China on pan-Eurasian infrastructure projects. It will run into hundreds of billions of dollars, and will allow Chinese companies and banks to push out, as per the instructions of Chinese President Xi Jinping.
Kwan says that rather than enriching only China, it will stimulate growth and benefit countries around the world, particularly those who choose to participate in projects.
He also refuted comparisons between OBOR and the US’ Marshall Plan, through which it invested in post-war infrastructure reconstruction in Europe, in the process installing itself as the global leader in international finance. For a start, China doesn’t have the capital to embark on such a large programme, and instead needs the co-operation and collaboration of other nations.
Instead, Beijing is pursuing a policy of “reglobalisation”, in a bid to buck the recent backlash against globalism from Europe and the US.
Ostensibly Communist China may seem a strange choice for the leader of the global capitalist system, but President Xi Jinping has made a number of speeches, most notably at the World Economic Forum in Davos, suggesting it is ready to step up to the plate.
“This is not a trade agenda. This is China’s way of reglobalisation – connecting the world on a social and economic basis. It does not have a military focus, which is different from the United States,” Kwan said at the GTR Asia Trade & Supply Chain Finance Conference 2017 in Hong Kong.
He says that no single country can enforce this change alone, and that China should rely on international collaboration and market forces to help dictate its policies regarding OBOR and AIIB lending. In this respect, he regards Hong Kong as being crucial to the plans.
“If you want the international network to support OBOR, you have to come to Hong Kong,” he said, adding that Hong Kong has the highest number of international chambers from countries around the world.
Kwan is a highly respected economist in Hong Kong. In recent years his views have been rather bearish on global trade. Surprisingly, his tone at the conference was more upbeat. He says that global trade growth will be a battle between the momentum achieved by the recovery from the commodity crash and the disastrous policies implemented by many governments in reaction to the global financial crisis.
Many turned to austerity, when stimulus was required, subduing demand and setting global growth back. Now, with slight recoveries in the likes of Japan, Russia and Brazil, the picture is slightly rosier – although the trading system is still vulnerable to political shocks, as proven by Brexit and the election of Donald Trump in the US.
Contrary to many, Kwan says the greatest risks for Asian trade come from Europe rather than the US. In recent days, Trump has made a dramatic shift in his views on China. Throughout his electoral campaign, he promised to class the country as a currency manipulator and to pursue requisite economic sanctions.
Now, reportedly under duress from US corporate interests, he has backtracked. This, according to Kwan, shows that Trump’s unpredictability may not be as great as initially feared: he will represent those who support him, namely the military, the energy sector and certain other industries, none of whom would wish for a trade war with China.
“With so many elections and breakaways, the biggest issues are in Europe. Brexit could be just the beginning – we just don’t know,” he added.