This article appeared in The Australian Financial Review.
There is a rising tide of protectionism worldwide. For Australians its most immediate manifestation is Donald Trump’s in-your-face “America First” approach, which has seen the US withdraw from and rewrite bilateral and multilateral trade agreements, or threaten to do so. It has also seen the imposition of tariffs on $250 billion worth of imports from China, culminating in a looming trade war. Brexit and European populist movements stand as other prominent examples of this trend.
China is another example.
At the World Economic Forum in Davos in January 2017, shortly before Trump took office, Chinese President Xi Jinping touted the benefits of “economic globalisation” and stated, “China will keep its door wide open and not close it”. He said, “An open door allows both other countries to access the Chinese market and China itself to integrate with the world”. Xi claimed China would “enable the market to play a decisive role in resources allocation”.
At the time, some applauded his speech, and considered it evidence that China would be taking the mantle of global trade leadership; that it represented an antidote to Trump’s disdain for free trade and open markets.
The reality, of course, is much more complicated.
This year marks the 40th anniversary of the beginning of “reform and opening up” in China. Introduced in 1978 – just two years after Mao’s death and the end of the Cultural Revolution – it enabled participation of private enterprise. The policy ultimately led to China’s emergence as an economic powerhouse, which in 2011 became the world’s second largest economy. This was an achievement previously unimaginable for a purportedly socialist country.
Since reform and opening up, the Chinese government has proclaimed its commitment to openness and fairness, while continuing to implement protectionist policies. Under Xi, China is becoming less, not more, open – both economically and politically. But now, in contrast to Xi’s speech at Davos, less is being said to mask this.
The image and narrative of reform are changing.