By Gordon. G. Chang
Xi Jinping will address the World Economic Forum on Tuesday in Davos, the first time a Chinese leader has done so.
Chinese state media tells us he will speak strongly in favor of globalization. That message will be difficult to accept, however, as his country is closing off its market, restricting outbound capital flows, and delinking from the world.
Yet there is a more important storyline about the trip to the Swiss Alps. Xi will be begging for foreign investment. His country needs cash.
Xi, according to Chinese officials in Geneva, will advocate “inclusive globalization.” Jiang Jianguo, the chief of the State Council Information Office, said China’s president hopes for “a human community with shared destiny.” As People’s Daily said Saturday, he “will present a confident, open, responsible, and positive Chinese voice to the world.”
Xi may be “confident,” “responsible,” and “positive,” but “open” he most certainly is not. He has, after all, been closing off the Chinese economy with enhanced state subsidies, unnecessarily restrictive national security rules like last November’s cyber security law, and highly discriminatory prosecutions of multinationals. His tenure has been marked by the increased favoritism toward state enterprises.
Xi’s general approach is embodied in his signature phrase, “Chinese dream.” That dream, unfortunately, contemplates a state-dominated society, and a state-dominated society does not sit easy with the notions of an open economy. Call it China for Chinese competitors only.
Moreover, since the fall of 2015 he has informally restricted outbound transfers of cash. Last fall, Xi began applying those restrictions in earnest to foreign companies. For instance, multinationals can no longer “sweep” $50 million worth of currency out of the country using expedited procedures. The limit for this popular procedure is now only $5 million.
The concern in the foreign business community is that Beijing will further restrict cash transfers, and this, of course, discourages not only inbound money transfers but also additional foreign investment.
Chinese President Xi Jinping has delivered a robust defense of globalization, arguing that economic integration has powered human advancement and improved the lives of millions of people.
“Many of the problems troubling the world are not caused by economic globalization,” Xi said Tuesday at the World Economic Forum in Davos. “Whether you like it or not, the global economy is the big ocean you cannot escape from.”
Xi is the first Chinese president to attend the annual gathering of political and business leaders high in the Swiss mountains.
His speech is rich in symbolism: Beijing is positioning itself as a global leader at a time when Western powers, and especially the United States, are retreating from the world stage and questioning the particular brand of globalization that now defines global trade.
“We must remain committed to free trade and investment. We must promote trade and investment liberalization,” he said. “No one will emerge as a winner in a trade war.”