Globalization in Reverse and Its Transformation

Xu Jian

Globalization in Reverse and Its Transformation

Xu Jian

The current globalization process has presented two distinct features: one is the increasingly severe backlash against globalization; the other is the urgent and imperative need for its transformation. These two trends are closely connected. It is essential to analyze the underlying causes of these two trends, understand how they affect each other, grasp the current situation, and guide the future development of globalization.

Problems Arising from Globalization

The trend of globalization in reverse is a hot issue in the current international landscape and it has been especially prominent in Western developed countries. Brexit, Donald Trump’s election as President of the United States, and the tremendous impact of far right forces on the political ecology of France, Germany, Italy and other major European countries, have reflected the rampant backlash against globalization in Western countries from different angles. In some developing countries, protectionism and nationalism have also emerged to varying degrees in recent years, which shows the trends of reverse globalization, anti-globalization and deglobalization are not limited to the developed world, but a worldwide phenomenon with varying forms and momentum in different countries and regions.

Although it is an indisputable fact that there is a backlash against globalization across the world, opinions, controversial at home and abroad, vary on how to view the trend and evaluate its impact on the development of globalization. Proponents and opponents of globalization have divergent views on the above-mentioned issues. The former are optimistic about the prospects of globalization, take the tide of reverse globalization as a counter current to the trend of historical development and condemn it, while the latter emphasize the harm of globalization to countries and are pessimistic about its prospects. Both opposing views have a point, but they also carry some bias caused by excessive emotion. In this case, it is particularly important to understand the relevant problems of globalization with an objective and rational attitude.

There are deficiencies in both optimistic and pessimistic argumentation about whether the reversing trend will lead to the stagnation of globalization. The pessimists argue that as the uneven development of globalization brings more and more problems to some countries, globalization cannot be sustained any longer, and that deglobalization is the inevitable choice for relevant countries to protect themselves. This view is confronted with double problems in terms of theory and policy. On the one hand, there is no convincing evidence that the plight of relevant countries in economic and social development has its root in the negative effects of globalization; on the other hand, it cannot prove that against the backdrop of today’s highly interdependent world, deglobalization and protectionism can make countries concerned immune from the harm of their own isolation. Unable to justify itself, globalization in reverse has not only been harshly criticized by the optimists of globalization, but also provided a powerful argument for the latter’s support for globalization.

The optimists generally hold that the interdependent relationships in the world resulting from globalization is a reality that no country can get ridof or surpass, that globalization is the inexorable trend of economic, social and cultural exchanges in the world, and that the trend of globalization heading forward cannot be reversed. The optimistic view is certainly correct when put in the long cycle of human history, but it is not invulnerable if we look at the process of globalization in different development stages, as it ignores or belittles the twists and turns of the course of globalization. Some important indicators of globalization in recent years show that the process of globalization is becoming more and more tortuous. The World Trade Organization estimated that the volume of global trade in goods and services grew by only 1.7 percent in 2016, lower than the growth rate of the world economy for five consecutive years. One of the key reasons is that the worldwide protectionism exerts more influence than expected. From November 2008 to October 2016, protectionist measures adopted by members of the G20 reached a record 5560, with 401 new protectionist measures implemented in the latest year, according to the Global Trade Alert report released by the Centre for Economic Policy Research in the UK.1Quoted from Xu Xiujun, “Governance Deficit Worsens Distributional Inequality,” People’s Daily, April 14, 2017, p.23.If coupled with protectionist measures implemented in the same period by developing countries, the relevant data will undoubtedly become more nerve-racking. The worldwide trade protectionism is an important factor in the sluggish recovery of the world economy and the tardy growth of international trade. These data suggest that the backlash against globalization carries great weight on the process of globalization and has slowed its pace to a large extent. If the tide of globalization in reverse further intensifies, it will hit globalization even harder.

The cause of reverse globalization is also a question that needs rational thinking. One popular view in support of globalization is that reverse globalization harms others without benefiting oneself. The Great Depressionin the 1930s has taught us a painful historical lesson in this respect, that is, the implementation of beggar-thy-neighbor protectionist policies hurt others and led to the harm of self-isolation, so it is infeasible and cannot prevent the advance of globalization. This argument makes sense in theory, but in practice whether it’s tenable hinges upon two premises. One is that all parties can rationally learn the historical lessons. The paradox of historical development, however, is that many things that seem counterintuitive and should not have happened eventually happened, and in a repeated way. The most typical example is nations’ recourse to force for resources and economic interests. Many wars have turned out to be as harmful to others as to themselves with the loss outweighing the gain, but it is still difficult for human beings to avoid the same tragedies. Similar problem manifests itself in the frequent violence between people in every society. Since human beings cannot eradicate irrational behavior, what seems to be something that should not have happened does not mean it will not happen. The same applies to how far reverse globalization can go, and whether it will block the development of globalization. Second, the two sides must go beyond mutual accusation and form minimum consensus, based on mutual understanding, on issues in dispute at the very least to avoid irrational behavior. Under the current situation, the two opposing views on globalization have more mutual accusation than mutual understanding, which tends to magnify differences without helping reach more consensus and increase the probability of irrational behavior of both sides. In this context, while there is only a faint possibility of overall suspension or retrogression of globalization, the risk of globalization further slowing down or being distorted is on the rise. To avoid the latter trend, both sides should think in each other’s shoes and look at each other’s concerns and issues in a more rational way. And the side in support of globalization should, in particular, face up to the problems reflected in reverse globalization. As Chinese President Xi Jinping said, “Problems are not to be feared. Whatshould concern us is refusing to face up to problems and not knowing what to do about them.”2Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth: Keynote Speech at the Opening Session of the World Economic Forum Annual Meeting 2017,” January 17, 2017, http://news. xinhuanet.com/english/2017-01/18/c_135991184.htm.

US President Donald Trump, who promised during the election campaign to scrap the Trans Pacific Partnership (TPP), signs the executive order on withdrawal from the multilateral trade arrangement on January2Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth: Keynote Speech at the Opening Session of the World Economic Forum Annual Meeting 2017,” January 17, 2017, http://news. xinhuanet.com/english/2017-01/18/c_135991184.htm.3, 2017.

Globalization in reverse and global trade protectionism are not accidental phenomena; there is a deep background for their rise and they are closely related to some problems of globalization, the most prominent of which is the inequality of social distribution and the uneven development among nations. Unequal social distribution is a weakness inherent in market economy, but economic globalization further exacerbates the problem. In market economy, the profit of different economic factors varies significantly, among which the difference between capital and other factors of productionis most outstanding. The findings of French economist Thomas Piketty in this regard deserve special attention. Piketty believes that if the return on capital is much higher than the economic growth rate over a relatively long period, the risk of wealth distribution differentiation will become considerable. The main reason that Piketty’s research findings cause huge response in the West is that he has found, after studying the long-term economic development data of some 20 major Western and emerging economies, the Kuznets curve, which has been regarded by Western economists as a golden rule in recent decades, fails to hold. The difference in wealth distribution does not, as the Kuznets curve claims, tend to shrink spontaneously and go along the path of “balanced growth” after economic development reaches a certain stage. Instead it is quite the opposite. “Income inequality has increased markedly in developed countries since the 1970s, especially in the United States, and the concentration of wealth in the first decade of the 21st century has returned to (actually even slightly exceeded) the level of the 1910s.”3Thomas Piketty, Capital in the Twenty-First Century, translated by Ba Shusong, et al., CITIC Press, September 2014, p.16.This result not only provides a new theoretical explanation for the increasingly severe social differentiation of Western countries, especially the United States, after the financial crisis in 2008, but also has important significance for analyzing the current problems of globalization. Globalization offers greater profit margins for capital, particularly the big capital of multinationals, as the advantage of capital in liquidity has been further strengthened compared to labor, and capital owners are able to make greater use of the benefits of globalized markets than owners of other factors, widening the gap between return on capital and the economic growth rate. This is why the people against globalization in the West mainly come from the middle and lower income social groups with the so-called “populist” feature. Globalization has made social justice a more daunting task, which is a universal problemaround the world. “The richest one percent of the world’s population own more wealth than the remaining 99 percent. Inequality in income distribution and uneven development space are worrying,” President Xi said in a keynote speech at the World Economic Forum. Therefore, “we should also recognize that economic globalization is a double-edged sword. When the global economy is under downward pressure… the relations between growth and distribution, between capital and labor, and between efficiency and equity will be strained even further. Both developed and developing countries will feel the punch.”4Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth: Keynote Speech at the Opening Session of the World Economic Forum Annual Meeting 2017.”

The problem of uneven development among countries that arises from the process of globalization is equally profound and complex, which has two manifestations: the North-South problem and the East-West problem. For the North-South problem, globalization has not only spawned a group of emerging economies that contribute to the collective rising of developing countries, but also marginalized a number of others. Such countries not only have limited benefits from globalization, but are also facing increasing risks and pressures. As a result, the gap between them on one hand and the developed and even emerging countries on the other is widening further. This situation has exacerbated the political and social ecology within these countries and is also one of the key factors in some continued regional conflicts and unrest. There are complicated reasons for the marginalization of some countries in globalization, both domestically and internationally. On the international front, the biased rules of globalization have forged an international competitive environment that is detrimental to the well-being of these countries. Until recently, globalization has been dominated by developed countries, and relevant rules have accommodated their interests. This situation has improved considerably since the beginning of the 21st century, with the efforts of developing countries, but there are still many unjust factors in the international order, and the North-South contradiction remains a prominent problem in the development of globalization.

The East-West imbalance mainly manifests itself between emerging and developed economies. In the past two decades, the so-called “rising East and declining West” has become a major trend affecting the international balance of power and the changes in the world landscape. The inexorable rise of a large number of developing countries over the past twenty or thirty years, especially major emerging countries, has changed the dominance of Western developed countries in the international balance of power. The world architecture is undergoing unprecedented changes in centuries that strongly boosts the development of multi-polarization. The uneven development has important positive effects on the progress of human society. However, as the world economy is under downward pressure, such a trend has also worsened the contradiction between developed and emerging countries on the international order. Particularly after the international financial crisis, Western developed countries, including the United States and European countries, have been confronted with many development dilemmas, and the contradictions between developed and emerging countries have also become more prominent.

The trend of “rising East and declining West” is mainly related to three kinds of factors. One comes from developed countries themselves. Although developed countries have long occupied a relatively advantageous position in the making of international rules, their comparative advantages are fading because their industrial structure, economic and social policies as well as demographic formation cannot adapt to the new situation of international competitive environment. The second is that the change of domestic and international environment in the past twenty or thirty years is beneficial to the increase of international competitiveness of developing countries. Since the 1980s, an increasing number of developing countries have been involved in the establishment of international rules (such as GATT and later WTO). Their ability to influence the evolution of international rules has gradually strengthened, and the factors favoring them in the international order tend to multiply. The adjustment of international rules and international distribution of interests tends to benefit developing countries, so theebb and flow of international power is more conducive to the emerging economies. The third is about the effectiveness of different countries in implementing international rules and their willingness to evade them. The effect of implementing any rules bears on respective national conditions and varies across the border. Comparatively speaking, since developed countries have relatively sound legal environment, regulated management, high overall national quality and strong awareness of abiding by rules and laws, the implementation of some rules, such as intellectual property right protection, will usually be more stringent with lower cost than that in developing countries. On the contrary, the legal environment needs to improve and the overall national quality is not high enough in many developing and emerging countries. In addition, some countries have traditions in which the rule of man overrides the rule of law; people tend to be arbitrary in their behavior with weak legal consciousness, and they treat the law with more contempt than awe, more flexibility and avoidance than conscious compliance. Therefore the implementation of the rules has limited effects and come with quite high cost. In some cases there even appear the disordered phenomena that a law cannot be enforced when it is breached by the majority and the law is considered a mere formality. Developed countries’ accusation against the emerging countries of free-riding reflects their intention to justify their own problems, but also has bearing on the difficulties of developing countries in enforcing the rules. It is needless to say that fair play depends not only on the fairness of the rules themselves, but also on whether the fair rules are observed as well as on the effect of the implementation. As the economic volume of emerging countries grows, the difference in effects of implementing the rules have been increasingly relevant to the international competition and the order of globalization.

Among the above three main kinds of factors that affect the international competitive environment, the first two reflect a reasonable trend of the adjustment of globalization order. Their impact on the processof globalization is positive on the whole, and the challenges and problems brought to the developed countries should be addressed and adapted to by themselves through reforms. However, the third kind of factors distorts the globalization environment. If left unchecked, it will lead to disordered and deformed development of globalization. They should be gradually eradicated, and developing countries, especially the emerging countries, have to shoulder more responsibility of reducing the impact of such factors. It can be seen that many contradictions arising from the current globalization are economic problems on the surface, but deep down they are social and cultural issues. The economic globalization is also a process in which different cultures collide with and accommodate each other.

To conclude, the current reverse of globalization is the result of various kinds of problems regarding justice and uneven development in the process of globalization. The reasons for these problems are complicated, involving almost all participants in globalization. The resolution of these problems is not a unilateral responsibility of a particular category of countries, but a common obligation of all participants in globalization.

Globalization in Reverse Reflects the Development Law

Both the optimistic and pessimistic views have a point in terms of the impact of globalization in reverse and the prospect of globalization. From the perspective of the long-term development of human history, the optimistic view is correct, because with the development of human interactions and science and technology, the interdependence of the world is a major trend of history. However, looking at each specific period of globalization, the view of pessimism is also reasonable, because the development of human history has always been advancing in a spiral way, filled with twists and turns, and often with staged stagnation or even regression. To examine the impact of reverse on globalization, we should note the difference between these two views, otherwise it is easy to confuse the two kinds of concepts. At the moment, the focus of controversy is not the long-term trend of social history, but thedevelopment of the current globalization process.

Over the evolution history of globalization, reversibility has been one of its inherent attributes. Going through a period of sustained and stable development in the 19th century, globalization had reached a very high level before WWI. Global trade was still at a relatively low level at the beginning of the 19th century, but grew at an average annual rate of 2.3 percent between 1820 and 1850. This rate rose to 5 percent between 1850 and 1870. Throughout the 19th century, global trade had been growing faster than the world income. For Western countries in general, exports had accounted for 10 percent of GDP by 1880 compared to just 5 percent in the mid-19th century. The main reason for the growth was that the industrial revolution drove down trade protection and the cost of transportation, which greatly stimulated the expansion of trade.5David Held, et al., Global Transformations: Politics, Economics & Culture, translated by Yang Xuedong, et al., Social Sciences Academic Press, April 2001, p.217.From the late 19th century to WWI, the industrialization further promoted the international trade. The steam power was widely applied to railway and shipping, which greatly improved the conditions of international transportation; overseas investment and the spread of technology facilitated the industrialization process in other countries outside the United Kingdom and the competition in international market; the demand for raw materials also skyrocketed due to industrialization. By 1913, 155 countries and regions had participated in international trade; the figure in the early 19th century was less than its half.6Ibid., pp.217-218.The gold standard system established in the 1870s ensured the stability of the international payment system. The world trade volume grew at an average annual rate of about 3.5 percent between 1870 and 1914, while the world output grew by about 2.7 percent annually on average. Kuznets had once estimated that the value of world exportswould account for 16 to 17 percent of global income on the eve of WWI. It is worth mentioning that the significant increase in trade intensity during this period was not only reflected in developed countries, but also in many developing economies. For example, exports from Latin America rose sharply to 18 percent from nearly 10 percent of GDP between 1860 and 1900; the figure for Asian economies even jumped from about 1 percent to 5 percent; the growth of trade in African economies was in between. Although there was no such institutionalized international trade system like today, the expanding trade had created the need to unify relevant standards and rules. With the concerted efforts of governments and civil institutions, common trade standards and practices were developed internationally through a series of bilateral agreements.7David Held, et al., Global Transformations: Politics, Economics & Culture, pp.218-220.Even with the standards today, many of the indicators had reached a fairly high level in that round of globalization which lasted from the 19th century to the eve of WWI. It was precisely due to the ever-increasing interdependence of the world, in particular among the major European countries, that many believed a war was unlikely to break out among the powers.

However, globalization failed to prevent the outbreak of WWI. Since the contradictions arising from uneven economic and political development in the world were not effectively solved, globalization had shown signs of slowing down even before the war. Discriminatory trade protectionism had resurfaced at the time, and the tariff rates in many countries in 1914 were higher than the 1878 level. After WWI, the rebuilding of a global trade system and the international payment system were delayed. The gold standard regime that collapsed in WWI was replaced by mutually exclusive currency blocs, such as the pound sterling, the dollar and the mark. Globalization stalled and regressed. During the period of 1913-1929, the world trade grew at a rate of only 2.2 percent, roughly in line with the growth of output, but far below the level of the 19th century. After the Great Depression broke out in 1929, protectionism swept the world; countriesabandoned the principle of most-favored-nation treatment, set up barriers once again and pursued discriminatory beggar-thy-neighbor policies, leading to the sharp decline of global trade. The world trade growth fell to 0.4 percent annually between 1929 and 1937, and at the same period the world output also grew at a slow rate of 0.8 percent annually on average.8David Held, et al., Global Transformations: Politics, Economics & Culture, p.221.It was not until the end of WWII that globalization rose again with the reconstruction of the global trade system.

History has shown that globalization is a major historical trend; though it reflects the objective requirements of the world economic development since the industrial revolution and the inception of the global market, the gradual process of globalization is always rough and tortuous, and “reversibility is an inherent attribute of globalization.”9Xu Xiujun, “Governance Deficit Worsens Distributional Inequality.”Why is globalization reversible? In essence, it lies in the fact that globalization has been flawed and imperfect so far, and inevitably there will be myriad imbalances in its development, which leads to contradictions and conflicts in the distribution of interests. If the contradictions are not resolved in time and accumulated to a certain level, they will erupt in various forms, hindering and damaging the globalization process. The current trend of reverse globalization reflects exactly the contradictions of this nature. The famous American futurologists, Alvin and Heidi Toffler, pointed out 20 years ago that there were five myths about globalization that obscured and distorted our comprehensive understanding of globalization. These five myths are: globalization equals liberalization; globalization is inevitable; globalization will develop in a balanced way and create an “equal platform”; globalization will stifle nationalism; and globalization benefits (or harms) all.”10Alvin Toffler & Heidi Toffler, “The Pitfalls of the Myth of Globalization,” Yomiuri Shimbun, November 2, 1998, quoted from David Held, et al., Global Transformations: Politics, Economics & Culture, p.25.These five so-called “myths” came mainly from the United States, which was playing a leading role in globalization and had a positiveattitude towards it. What is intriguing, “economic globalization was once viewed as the treasure cave found by Ali Baba in The Arabian Nights, but now it has become the Pandora’ s Box in the eyes of many.”11Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth: Keynote Speech at the Opening Session of the World Economic Forum Annual Meeting 2017.”It is also ironic that as some of the “myths” of globalization, such as its irreversibility and the universality of its benefits, fade away in the West, they become popular in some emerging countries. Currently emerging countries have, to a large extent, become the major force in supporting and safeguarding globalization, and have spared no effort to emphasize its positive effects. As there remains uncertainty in how to deal with the problems arising from globalization, if we simply take a utilitarian approach to the globalization theory and hastily inherit the “myths” of globalization that have been dashed in Western countries, it will mislead the understanding and development of globalization.

The process of globalization is reversible because its development has so far been biased in one way or another. Due to these biases, globalization does not necessarily benefit every country. In fact, globalization in history has always in varying degrees been conducive to some countries while relatively unfavorable and even detrimental to some others. The debate at home and abroad about who is the biggest beneficiary of globalization indicates the imbalance of the benefits or risks that globalization brings to different countries. Since the 19th century, globalization has taken on different forms in different periods. The round of globalization before WWI occurred in the era of colonialism. It was a kind of predatory globalization which blazed the trail through gunboats.12Feng Weijiang, “Infusing New Impetus and Strengthening Implementation,” People’s Daily, April 14, 2017, p.23.The globalization was dominated by Western powers, so developed economies were its main beneficiaries while the colonial and semi-colonial developing economies in Asia, Africa and Latin America were largely passive participants under the coercion of their suzerains or other great powers and mainly served as sources of raw materialsand markets of industrial products for industrialized countries. Even though some developing countries could benefit from globalization, the benefits were very limited compared to those of the great powers. At that time the risks and costs of developing economies participating in globalization far outweighed the benefits.

From the end of WWII to the 1970s and 1980s, globalization was one that is dominated by the United States and benefits the rich. Although the post-war national independence and liberation movements made the colonial system fall apart, there is no substantial change to the system of international division of labor formed in the colonial era. The developing countries were mostly cautious and skeptical about participating in globalization, and remained subordinate or marginalized in the globalization process. Countries in the socialist camp were excluded from Western markets because of the Cold War and the ideology. Therefore, prior to the 1980s, globalization was basically a game for the club of rich countries such as the US, European countries and later Japan. Developed countries had dominated the postwar international trade until the 1990s. They accounted for 64 percent of world exports in 1950, 75 percent in 1970, and 70 percent in 1996.13David Held et al., Global Transformations: Politics, Economics & Culture, p.240.Except the oil exporters, the share of developing countries in world trade generally declined between the 1950s and the 1970s. It was not until the mid-1980s that these developing countries, largely under the influence of the rise of East Asian Tigers, began to expand their share. That is why the vast majority of developing countries on the periphery have more criticisms than praise for globalization.

Since the later period of the Cold War, with the participation of more and more developing countries as well as the countries where the originally planned economic system was transitioning to market economy, globalization has transformed again with increasing inclusiveness, openness and impartiality. Especially since the beginning of the 21st century, the pro-rich feature of globalization has further weakened with more favorablefactors for developing countries, the emerging countries in particular. It should be emphasized that the adjustment of attitudes towards globalization in developing countries and the transformation of globalization are two mutually reinforcing processes. In the early days of the transition, China took a cautious approach to globalization, as President Xi said, “There was a time when China also had doubts about economic globalization, and was not sure whether it should join the World Trade Organization.”14Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth: Keynote Speech at the Opening Session of the World Economic Forum Annual Meeting 2017.”At that time, the attitudes of China and many other developing countries towards globalization were similar in many ways to the current trend of reverse globalization in the West. Up to China’s accession to the WTO, there were still many Chinese that worried that globalization meant “Americanization.” Compared to that time, the attitudes of developed and developing countries towards globalization have switched. However, as mentioned earlier, the participation of developing countries in globalization has injected new impetus to globalization and also created new contradictions and imbalances of globalization. After the international financial crisis, these contradictions and problems further develop and form the current trend of reverse globalization.

The modern history of globalization has illustrated the following points. First of all, globalization comes in different forms in different periods of history, bringing uneven benefits and risks to different countries. To ignore the specific form of globalization and abstractly talk about and judge whether globalization is advantageous to every country is a pseudo proposition that deviates from the reality. It is not helpful and even misleading for solving the problems arising from globalization and guiding globalization in a healthy direction. Second, due to imbalanced distribution of benefits, the attitudes of different countries to globalization in the same period always differ, so do the attitudes of the same kind of countries to globalization in different periods.

There have been criticism, questioning and even opposition to globalization all along, but in the past, they appeared mostly in developing countries, and now they are emerging in the developed world. Every movement of reverse globalization in history is the inevitable outcome of uneven development of globalization. The rational attitude towards this trend should be to think about the underlying reasons, rather than arbitrarily label it as “populist”and criticize it. Last but not least, the globalization process with specific forms in different periods of history is not only reversible, but also possesses the potential of continued development through substantial reform. If the contradictions of a specific form of globalization remain unsolved and accumulate to a certain extent, they will lead to greater conflicts, resulting in slowdown, stagnation and even systemic collapse of globalization. On the contrary, if we can find an effective way to resolve the contradictions and bring about the transformation of globalization, globalization can not only be sustained, but will also acquire greater space for development. It is safe to say that the above observations are the development law of globalization revealed by historical experience that are independent of human will.

Translating Reverse Globalization into a Transformative Force

The development law of globalization shows that there has been not much space for the sustainable development of the current round of globalization, whose impetus is gradually diminishing. In order to regain the momentum and open up new development space, transformation is inevitable and imperative. The necessity is explicit in both the positive and negative effects the reverse globalization has on the process of globalization.

On the one hand, the worldwide wave of reverse globalization has led to increasing resistance to globalization. The current process of globalization will become more and more unsustainable without profound adjustment and reform. Global trade in goods and services has been below world economic growth for five consecutive years, indicating a significant slowdown in the globalization process. Such slowdown even surpassed the one in 1913-1929.

Even more, Brexit, the Trump administration’s withdrawal from the TPP and renegotiation of NAFTA, and a series of protectionist measures suggest that there has been partial systemic collapse in this round of globalization. While this may provide some potential opportunities for major emerging countries such as China to strengthen their international competitiveness, the impact and subsequent negative effects on the global economic and trade environment are even greater. If the protectionist trend were allowed to develop, the prospects of globalization would become bleaker as a result of the following risks.

First, the risk of slowdown and even stagnation of globalization is further heightened. Currently, the developed countries are witnessing the most robust movement of reverse globalization. Their economies, trade and market all account for more than half of the world total; they remain dominant in the field of international finance; they are the main sources of scientific and technological innovations in the world; and they boast rich experience and the advantage of soft power in steering international cooperation; therefore, they play a decisive role in globalization. While the influence of emerging economies and developing countries on the world economy and globalization has increased dramatically in recent years, it is unrealistic for them to replace developed countries completely. China’s Belt and Road and other initiatives can offset a large part of the negative impact of reverse globalization, playing an important positive role in promoting the development of globalization. But if we equate globalization with the Belt and Road and think that the future of globalization can go without the participation of developed economies and be solely underpinned by the Belt and Road, it will deviate from the reality and make China take on an unbearable burden.

Second, the risk of globalization heading towards distortion and fragmentation is further increased. If the trend of reverse globalization cannot be gradually resolved, protectionism is likely to evolve into variousforms of barriers around the world, forming exclusive regional groups and hence repeating the vicious competition among international interest groups which was staged between the two World Wars. In this context, even if the international economic order can be free from overall collapse for a period of time, globalization will also be increasingly bent and distorted, resulting in more contradictions and problems.

Third, the uneven development of globalization causes the risk of great power conflicts to rise. For international relations, the relations between major countries in particular, the problems of uneven development of globalization will not exist in isolation, but will be intertwined with the contradictions that have emerged in international geopolitics. Once a vicious circle takes shape, the risk of conflicts between great powers will rise sharply. The international interests of great powers are made up of complex factors, and an individual single factor is generally unlikely to drive major countries into confrontation and conflict. Only when the development and security interests of major countries suffer systemic and structural contradictions, will the conflict between great powers erupt easily and frequently. Currently there are a series of structural contradictions in the security interests between some developed countries and major emerging countries, which are difficult to dissolve in a long period. If the contradictions in development interests are not reduced, it will only become more and more difficult for both sides to break the curse of the so-called “Thucydides trap.” The conflict between great powers will definitely sound the death knell for globalization.

On the other hand, the resistance to globalization brought about by the current backlash against globalization can also be turned into the impetus for the transformation and further development of globalization, because “the surge of reverse globalization is another way to promote the development of globalization towards shared benefits and win-win outcomes.”15Xu Xiujun, “Governance Deficit Worsens Distributional Inequality.”The feature of shared benefits is an inherent attribute of globalization, but it has long been biased in the history of globalization,thus affecting the sustainability and reversibility of globalization. It is positively correlated with the sustainability of globalization and negatively correlated with reversibility. With more shared benefits, the sustainability is enhanced while the reversibility is reduced, and vice versa. The current difficulties in the development of globalization are not caused by the total extinction of positive energy, but by the increase of resistance. Although there is no fundamental change in the positive factors, the original impetus for globalization becomes much weaker. If the trend of rising resistance is not reversed, globalization will eventually stagnate or even regress due to insufficient driving force. Therefore, we should take a threepronged approach of reducing resistance, maintaining original momentum and adding new impetus to improve the sustainability of globalization in all respects. To adjust the interaction among these three kinds of forces, we need to change our minds and institutions so as to transform the original form and forge a new type of globalization.

First, we need to update our perceptions. Globalization matters to world peace and development and it is an undertaking with a bearing on the fate of all humankind. With regard to the development of globalization, we should transcend the limitation of narrow nationalism and understand it with the idea of the community of shared future for mankind. In his remarks at the General Debate of the 70th session of the UN General Assembly, President Xi Jinping said: “‘The greatest ideal is to create a world truly shared by all.’ Peace, development, equity, justice, democracy and freedom are common values of all mankind and the lofty goals of the United Nations. Yet these goals are far from being achieved, and we must continue our endeavor to meet them.”16Xi Jinping, “Working Together to Forge a New Partnership of Win-win Cooperation and Create a Community of Shared Future for Mankind,” September 28, 2015, http://www.fmprc.gov.cn/mfa_eng/ wjdt_665385/zyjh_665391/t1305051.shtml.To uphold andpromote the universal values of all mankind, advance the community of shared future, and promote the common welfare of all people should be the guiding beliefs of shaping the new globalization. Globalization is the historical process participated by all mankind, involving interactions of all kinds of forces and coordination of various kinds of complex interests. Without the guidance of right values, it is difficult to guarantee its transformation in a healthy and smooth direction.

Second, we should strengthen shared benefits of globalization through adjustment of mechanisms and norms, curtailing and dissolving the resistance to globalization. First, we should continue to reduce the unjust and unreasonable factors against developing countries in the North-South relationship, especially giving more attention to and tilt towards the least developed countries on the margin of globalization. This has been a persistent weakness of globalization which hinders the promotion of human justice. In this regard, developed economies must shoulder the responsibility and obligation that they cannot shirk from, and emerging economies should also assume more responsibility commensurate with their capabilities. Second, to better balance the interests between the East and the West, the key is to resolve the contradictions in development interests between developed and emerging economies in recent years. This requires both sides to take the overall situation into account and think in each other’s shoes. Relatively speaking, emerging economies, which now possess an edge in development momentum, have much more flexibility. Although the emerging economies still carry many attributes of developing countries, they have gained a certain degree of advantages in many aspects of international competition, able to play a more active role in resolving the contradictions of globalization. To this end, emerging economies need to shift their perceptions, and refrain from indiscriminately criticizing the requests of the West on emergingeconomies as mere fussing just because they come from the developed countries bloc and thus ignoring some reasonable elements in them. Third, we should coordinate the domestic and external policies of various countries so as to better control the widening gap of income distribution caused by the imbalance between capital and other economic factors in globalization. It is the inherent weakness of the market force and is also one of the key causes that contribute to the reverse of globalization. The larger the global market is, the more prominent the problem will be. Though many of the policies managing this issue belong to the sphere of domestic politics, their spillover effects will be heightened by globalization, and strengthening international coordination is of great significance for the transformation of globalization.

Third, we need to inject new impetus into globalization through new initiatives. In this regard, China’s Belt and Road Initiative has outstanding significance. The Belt and Road mobilizes both international and domestic resources, coordinates the two civilizations of land and sea, and champions the vision of shared, mutually beneficial and balanced development, providing convenience and conditions for the people along the routes to create value and injecting new impetus into the transformation of globalization. Certainly the transformation of globalization needs more new driving forces like the Belt and Road Initiative. With concerted efforts, countries can also forge more open channels for cooperation at international, regional and bilateral levels, such as the exploration and construction of the Regional Comprehensive Economic Partnership (RCEP), the Asia-Pacific FTA (FTAAP) and the China-Japan-South Korea FTA, and the promotion of agreements in investment and other areas between China and the US, China and Europe, so as to provide more positive energy for globalization.

Finally, we should rectify the environment of globalization, improve its quality, protect and make better use of the driving forces of globalization. On the one hand, we should purify the operating environment of globalization and maintain its normal order, as regular operation is an important prerequisite for the normal functioning of globalization. There are many unregulated and disordered phenomena in the current globalization,which bring great disturbance to its further development. For example, some promising cooperation projects have suffered setbacks due to lack of effective implementation of agreements and regulations on protecting intellectual property rights and the ecological environment, following health and environmental protection standards, supporting local people’s livelihood and respecting local customs, regulations and policies. This kind of phenomena is nothing new and tends to increase. These problems involve factors like national quality, cultural traditions and management, and therefore countries should pay attention to the use of comprehensive measures to control these disordered factors and reduce their interruption to the normal operation of globalization. On the other hand, we should further improve the quality of global governance, better respond to the various global challenges, and increase confidence and capacity to jointly address common concerns. To this end, we should focus on improving global economic governance and changing the situation where “inadequate global economic governance makes it difficult to adapt to new developments in the global economy.”17Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth: Keynote Speech at the Opening Session of the World Economic Forum Annual Meeting 2017.”

The transformation of globalization in the above aspects cannot be achieved only by a small number of countries or a specific group of countries; instead it requires all countries to work together, and the major economies in particular should bear more responsibilities As a representative of major emerging countries, China should combine the profoundness of the Chinese civilization with the common values of all mankind, and make its due contribution to promote and guide the transformation of globalization, so as to build a new type of globalization that is more inclusive, more civilized, more orderly, more efficient, more vibrant and more sustainable.

Xu Jian is Vice President and Senior Research Fellow of China Institute of International Studies (CIIS). He is also Director of the CIIS Academic Council.