Two years ago Chinese President Xi Jinping — in the wake of the twin election victories of Brexit and Donald Trump — arrived at the Davos World Economic Forum as the would-be savior of international free trade. “We should adapt to and guide globalization, cushion its negative impact, and deliver its benefits to all countries and all nations,” he declared in a landmark speech. Last year it was Chinese Vice Premier Liu He’s turn at the Swiss ski resort, boldly claiming that within three years Chinese debt would be assuaged and the nation would be able to comfortably withstand a trade war with the U.S. As the 49th World Economic Forum opens today, China is again center stage, but the storyline is shifting, following reports that Chinese growth is at its lowest rate in nearly 30 years.
Davos has historically been a platform for Western economies to gather and gloat, and was in fact limited as a summit for European leaders for the first 16 years of its existence. Xi’s 2017 speech marked the first visit of a Chinese head of state at the gathering, and seemed to signify a turning point in the world’s political-economic balance of power. Shedding both distant isolationist and more recent Communist pasts, China appeared ready to take the lead in liberal trade, rebuking Trump’s America as they did so in a sharp twist of fate.
As China’s economy stalls, the reverberations can be felt by its neighbors.
Yet the cold realities of capitalism were bound to reach Beijing. China’s growth rate this year has continued its downward trend, reaching its lowest point since 1990 at 6.6%, and potential solutions seem to be a refocus from international trade onto domestic growth stimulation.
The potential knock-on effects include a worldwide economic slowdown, and worries run high — particularly in the face of a brewing U.S.-Chinese trade war. Indeed, President Xi has joined an assortment of embattled world leaders choosing to avoid the Davos summit this year to address their own domestic issues, including the likes of France’s Emmanuel Macron, Trump and Brexit-beset Theresa May.
WEF founder Klaus Schwab welcomes Xi Jinping in 2017 — Photo: Manuel Lopez (World Economic Forum)
Instead of President Xi, it will be up to Vice President Wang Qishan to navigate through what Marie de Vergès calls in French daily Le Monde a "political and economic fog hanging over an entirely uncertain world" that will be driving discussion in Davos.
As China’s economy stalls, the reverberations can already be felt by its neighbors. While Beijing reduces its imports from countries like Taiwan, Malaysia, and Singapore, forecasts are already being made for growth in the Asia-Pacific region to slow down from 6.3% to 6% for this year. Yet optimism remains among Asian business leaders, with roughly half of CEOs in the Asia-Pacific region anticipating an improvement in global growth this year, according to the South China Morning Post. China is learning fast what those in the mountains at Davos have known for a while now: capitalism is as hard to predict as the weather.
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