Wang Huiyao: Globalization has not died, but it is no longer Americanized
Author: Wang Huiyao, Founder and Chairman of the Globalization Think Tank (CCG).
Source: Bloomberg News, May 7, 2022; Globalization Think Tank (CCG)
WeChat platform editor: Zhou Yue
Trade, investment, and technological ties between countries are still booming, but they are becoming increasingly managed and less influenced by Hollywood and Washington.
First the financial crisis, then Brexit, the election of Donald Trump as PRESIDENT, followed by the trade war and the COVID-19 pandemic, which is just the latest event to claim that globalization is gone.
Since the Russo-Ukrainian War, wall street personalities such as media columnists, Laurence Fink, president of The BlackRock Group, and Howard Marks, co-founder of OakTree Capital, have decided that the era of expanding global trade and financial ties is over. However, this does not correspond to the real-world experience that many of us see, especially in Asia.
The reality is that the world seems to be more connected. Last year, global trade hit a record at $28.5 trillion, up 25 percent year-on-year and 13 percent higher than in 2019 before the pandemic. Despite the delinking rhetoric, U.S.-China trade grew by more than 20 percent last year to $687.2 billion. Even in the event of a war in Ukraine, global trade is expected to grow in 2022, albeit at a slower pace.
Cross-border investment also exceeded pre-pandemic levels last year, rising to $1.65 trillion. China, in particular, is more integrated into the global economy than ever before. In 2021, China's FDI inflows grew by a third to a record high of US$334 billion. In the first quarter of this year, FDI inflows grew by more than 25% year-on-year.
The recovery of tourism has slowed. Since peaking in 2008, international trade as a share of global GDP has declined. At the same time, globalization is constantly evolving and emerging at other non-material dimensions.
During the pandemic, global monthly data traffic has soared, reaching 780 exabytes by 2026, more than three times higher than in 2020. Every day, 500,000 new users are connected to the Internet.
We have more access to images and ideas around the globe than ever before. Billions of people are watching the Russian-Ukrainian conflict, which New Yorkers call the "First TikTok War," via satellite imagery, civilians and soldiers, and live broadcasts. Ukrainian President Volodymyr Zelenskiy has used digital globalization to win the world's attention through selfie videos and speak in multinational parliaments through Zoom, which was hard to imagine before the pandemic.
So why do so many experts believe that globalization is dying? In a way, they seem to focus on the set of American-centered neoliberal globalization ideas that prevailed after the Cold War.
One of the core beliefs is what New York Times columnist David Brooks calls "convergent globalization" — that as nations become more global and developed, they become "more like our Western countries."
Indeed, as the scholars Heather Berry, Mauro F. Guillén, and Arun Hendi reported in a study cited by Brooks, "Nation-states in the global system have not significantly become closer (or more similar) in many ways over the past half century." Globalization has not led to Americanization.
On the contrary, globalization is becoming less and less like the United States, but more and more global.
Before 2000, the United States was at the helm of global trade; today, trade with China has increased by two-thirds of the countries. Since Trump turned his back on the Trans-Pacific Partnership Free Trade Agreement and the World Trade Organization, the center of multilateral trade liberalization has shifted to Asia.
In global finance, while the dollar still dominates, its share of global foreign exchange reserves fell from 70% in 2000 to 59% in 2020. The sanctions have accelerated attempts by Russia and other countries to develop alternatives to the dollar and SWIFT interbank information systems.
In the cultural sphere, American pop culture faces increasing competition from alternative cultures such as Bollywood, Korean pop music, and Turkish soap operas. Last year, the best-selling music show (bulletproof boy band) and Netflix's most popular show, Squid Game, were both South Korean; the world's most downloaded app, TikTok, and the biggest fashion retailer (Shein) came from China. So while global capital flows continue to grow, Washington, Wall Street, and Hollywood are less involved.
The war in Ukraine shattered the second neoliberal assumption about globalization, that market liberalization would open a virtuous circle of peace, prosperity, and openness, intertwining the economic interests of countries until the conflicts between them became unimaginable.
This idea is not entirely wrong. But it doesn't realize that connectivity is a double-edged sword, and that people care about things other than money.
As Mark Leonard writes in Times of Peace, it is becoming increasingly clear that the connections that connect the world together— from trade to immigration, from global finance to the Internet — can also be weaponized as a source of conflict.
Globally, governments are increasingly concerned about the threats of globalization to national security, the interests of citizens, and the environment. To mitigate these risks and make globalization more acceptable, many countries are moving from Washington-style laissez-faire policies to a more hands-on approach to "managing globalization."
The European Union is a pioneer in this regard, passing new rules on cross-border movements such as the General Data Protection Regulation and the upcoming Carbon Border Adjustment Tax. China's "double cycle" model can be seen as a form of managing globalization, seeking to exploit its advantages while reducing external uncertainty. Even the United States is pushing for more aggressive cross-border flow management measures, such as imposing global minimum taxes on multinationals.
This augurs well for a more cautious approach to globalization, taking into account long-term resilience and political realities, rather than a massive retreat to self-sufficiency. We have entered a phase of global integration driven by new forces that will be more diverse and manageable than previous phases. This is not necessarily a bad thing.
*Disclaimer: This article only represents the personal views of the author and does not represent the position of this official account
Think tank of the digital economy
Political Science and International Relations Forum
In order to better serve the construction of digital China, serve the construction of the "Belt and Road", and strengthen theoretical exchanges and practical exchanges in the process of digital economy construction. Experts and scholars from China's digital economy and the "Belt and Road" construction have established a digital economy think tank to contribute to the construction of digital China. Wei Jianguo, former vice minister of the Ministry of Commerce, served as honorary president, and well-known young scholars Huang Rihan and Chu Yin led the way. The Political Science and International Relations Forum is a dedicated platform under the umbrella of the Digital Economy Think Tank.