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China's philosophy of mutual benefits coherent with Davos

By Sun Baohong and Cao Huining (China Daily Europe) Updated: 2017-01-22 15:51

President Xi Jinping calls for open and inclusive growth in the World Economic Forum

The world is now at a crucial juncture, facing either progress with globalization or retreat into protectionism, and Chinese President Xi Jinping's call for open and inclusive growth in Davos this week came like a breath of fresh air, injecting new confidence into global economic relations.

One can really feel the power of his messages in Davos, where his words remained a hot talking point throughout the week of the forum. President Xi spoke about market-driven growth, free trade, environmental sustainability and fostering win-win partnerships globally. With those messages, China is stepping into its newfound role as a global leader, filling in a vacuum once occupied by the US.

Despite leading the world's largest economy, President Donald Trump and his administration have shown protectionist tendencies, driven by voters who feel left out of the benefits of globalization.

Under this context, President Xi's advocacy for free trade became more important, and is yet another reflection of the Chinese ancient philosophy of mutual benefit and win-win partnerships, which have shaped the country's way of thinking for thousands of years.

Philosophy aside, China's development is itself an apt reflection of the benefits of globalization. When China joined the World Trade Organization in 2001, it felt worried that multinationals' entrance into China would lead to severe unemployment. But this fear was soon appeased, as many Chinese firms became more vibrant and competitive due to globalization.

Industries with few trade barriers, like technology, benefited the most from globalization, while those receiving government protection still experienced great inefficiencies, such as the energy sector.

Over the years, China has not only benefited from globalization but also contributed to other countries' wealth and prosperity. As China's manufacturing sector grew and it became the world's factory, consumers in Western countries enjoyed more wealth and consumption. More importantly, manufacturing jobs' shift to China freed up the labor market in advanced economies like the US, allowing them to focus more on high-end services for which profit margins are much higher.

Meanwhile, China's economic growth has created an expanding middle class whose consumption power is now having a huge influence on the world. Consider the record number of Chinese tourists and students going abroad to advanced economies like the US, allowing them to export products without physically shipping them overseas.

But the story does not end here, because globalization is not just about trade, it is also the exchange of ideas and building of platforms.

When Facebook founder Mark Zuckerberg visited China's technology giant Tencent for learning and inspiration, Tencent welcomed him with open doors.

Many Chinese firms expanding overseas are bringing Western businesses into their existing ecosystems, helping them to access the Chinese market. E-commerce giant Alibaba is now helping many US brands to sell to Chinese buyers through its cost-effective e-commerce logistics channels.

Through this integration of ideas, channels and platforms in our increasingly connected global economy, Chinese businesses are becoming more globally-oriented and creating jobs in international markets. Just this month, Alibaba's founder Jack Ma promised one million jobs to the US when he met with President Trump. Home appliance manufacturer Hisense, which has built a factory in Mexico, now conducts much of its research and development in international markets.

Chinese firms are becoming increasingly global, and Chinese business leaders' presence at Davos is rapidly expanding. China is the focus of discussions across a diverse range of sessions at the forum.

Chinese CEOs are increasingly confident and articulate. Dalian Wanda's founder Wang Jianlin grabbed media headlines when he urged the US to keep its market open and refrain from protectionist tendencies. China's business leaders, like Wang, are becoming increasingly unafraid to voice their views.

As the world is trying to get back on its feet and find new sources of growth and new directions for development, China's advocacy for globalization seems to have offered a version of a solution. But China also needs to realize that actions speak louder than words, and the world is watching to see how China translates President Xi's commitments into concrete policies. China needs to strengthen its credibility by further opening up its borders to international trade and investment partners, according to the president's promise, and perhaps inspire other global leaders to follow its lead in building a more inclusive world.

Sun Baohong is distinguished chair professor of Marketing, Associate Dean of CKGSB Americas, and Cao Huining is professor of Finance and Chair of the Finance Department at CKGSB. The views do not necessarily reflect those of China Daily.

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