It was the first time a Chinese regime leader attended the elite gathering at the World Economic Forum (WEF) usually reserved for die-hard capitalists, not the leaders of a formally communist country.
And previously, it wasn’t really necessary to come either. Everything was going China’s way. Since its admission to the free-trade club at the World Trade Organization (WTO) in 2001, China has gamed the system in every possible way to benefit from free trade and globalization. It was China’s golden goose.
China has shunned environmental and workers’ safety rules so companies would come invest and produce in China. For the better part of the two decades leading right until 2014, it had manipulated its currency downward to make its product more competitive. It has showered state-run industries like steel and solar with subsidies and artificially cheap capital so they could sell their loss-making products in Europe and the United States, bankrupting its competition in the process. It has also engaged in blatant theft of intellectual property at home and abroad.
So free trade and globalization have been working for China, mostly because it never played by the rules. Millions of jobs, billions in capital, and invaluable knowledge went from the West to the mainland. No wonder Xi Jinping wants the gift to keep on giving.
“We must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening up, and say no to protectionism,” he said at the WEF in Davos, Switzerland, on Jan. 17.
China still does not allow the free movement of capital, micromanages its currency, and arbitrarily prosecutes foreign companies in China for “monopolistic behavior.”
Playing by the Rules
Xi presents a China playing by the rules, which historically hasn’t been the case. And he wants to make sure the United States under Donald Trump and the populist leaders in Europe understand that China would like the current arrangement to continue.
“No one will emerge as a winner in a trade war,” Xi said, adding, “We hope that other countries will also keep their door open to Chinese investors and keep the playing field level for us.”
Xi continued to advance the old and wrong argument that China imports a lot and therefore has contributed much to global growth. The truth is that China exports more than it imports and therefore takes growth away from the rest of the world.
