China calls for global unity amid Western exodus | DW Business Special

China calls for global unity amid Western exodus | DW Business Special

Beijing is calling for global economic unity and an end to trade Wars so is that an expression of a sincere belief or a response to the economic impact of European and US moves to decouple from China well to answer that question and many more I’m joined by Alicia Garcia

Herrero Chief Economist for Asia Pacific at French Investment Bank nxis thank you so much for joining us you’re joining us from Hong Kong um are we seeing a shift though in tone from Beijing when it comes to its trade relations with the West well I would say that Beijing is

Increasingly aware of how costly it is to for the for the West to for China if the West the risks uh and and I think this is prompting Beijing to basically come up with uh a more consiliary er um approach to to the West at least in the narrative uh at the same

Time exactly as you you mentioned this conciliatory words been um pronounced we also heard that China has just started an investigation anti-dumping investigation on a number of liquor companies uh from Europe U Quanto and Remy I believe so you know uh narrative and and facts are two different issues

Yeah indeed they haven’t exactly called a ceasefire have they well just stay with us Alicia I just want to play The Sound by that spurred this conversation it comes from the spokesman for China’s foreign Ministry wangan bin what the world needs most is unity and what should be prevented most is

Division a trade War a science and technology War exercises in decoupling or drisking are in essence the politization of Economic and trade issues they’re an attempt to monopolize advant vages and impede the development and progress of the vast number of Emerging Markets they deprive the world’s 7 billion people of the right to

Pursue a happy life this is immoral and unsustainable immoral and unsustainable Alicia Garcia Herrero from nxis this statement could hardly have been firmer really but it does seem to imply that Beijing isn’t in some way responsible for the deterioration of trade relations with the West is that a a fair erization

Of the situation though yeah well I mean this statement might um raise our eyebrows in the west but it is a very a smart uh statement when it comes to rest of the world because it’s everybody against the West if you read it carefully I mean 7 billion people to

Be precise and I think this is really China leading This Global South yeah at least trying to too I mean India might not agree but at the end of the day for India to do the same they have to raise also our eyebrows meaning they have to

Use the same language so at the end of the day as far as the West is concerned this is very dangerous because it sounds yes we’re fully responsible for these um for these actions that may indeed be uh you know to some extent one could argue that they are protectionist the what is

Not being said though is that China’s own prot protectionism is hurting not only us but certainly the rest of the seven billion people because it hurts the emerging world as well so you know this this is I think um we we should not underestimate really how um how uh

Effective this message is with the rest of the world with the global sou and actually Beijing is by no means the only organization that is calling for greater Global Unity wangan bin was actually responding to comments made by the man managing director of the international monetary fund which is obviously isn’t

An organization that normally necessarily sees eye to eye with China China would point out that it is dominated by the US and Europe somewhat christalina goreva warned against the world fragmenting further into economic blocks just have a look at this quote she pointed out that the IMF had done

The maths and uh that the result was quite dramatic she said she said further division could wipe up to 7% off Global GDP and that that would be like France Germany going missing from the map of the world so Alicia Garcia Herrero both the IMF and China singing from the same

Song sheet it seems here and saying that the world only loses out if the global economy does fragment so I mean are they both therefore right well I put it this way it’s very um I would say very often and Chinese uh policy makers officials diplomats use words uh pronounced by Western officials

Uh International organizations ER in in a different reading but seemingly having the same meaning and I think this is the case you uh pointed out very clearly yes because I’m sure the IMF would would include would includes China in in that sort of warning that people the countries do

Need to come together where was obviously saying it’s for everyone else to come and join us exactly what the MF is saying is that fragmentation no matter who starts it and to some extent China has started it uh in many many areas if you think about the collapse of Chinese Imports yeah uh

China’s vertical integration China’s industrial policy all of that could be as easily criticized by the IMF as our own industrial policy which has come much later and which M much smaller funds uh much smaller subsidies at least in the case of Europe so you know this

Is the thing who is the IMF referring to that’s the question that I think makes a big difference uh when when reading that compared to the Chinese statement but the IMF in this case chrystalino gor I mean she probably is referring to the fact that European countries and the US

Have decoupled actively from China in recent years and particularly since the pandemic as they’ve tried to protect their supply chains I me they’ve obviously come to the conclusion that decoupling is the right thing to do and the smart thing to do so I mean where is

The logic that that’s being used by the US and and Europe for doing that well I I have uh a strong uh believe that uh the the global ization that we had prior to the pandemic prior to the uh trade war was unsustainable uh I don’t know how the

IMF uh I mean put it this way the IMF calculates uh losses out of uh status quo that does not exist anymore because that globalization was bringing enormous amount of inequalities also in the west uh part of the reason why we have that is technology not China but you know the

Question is how do we deal with that so I think the the imf’s calculations are a bit naive because they compare the future to today’s reality at the same time that reality does not exist anymore so you know I I would argue that the the world had to move on from the massive

Centralization of Supply chains in a single country that’s very risky and I’m not sure that’s uh optimal by all means and purposes so so first thing is why would we keep something that we’ve suffered from uh not only the west by the way but the whole world uh so so

That that would be the beginning of a discussion I mean what type of globalization do we need maybe not the fragmentation we’re getting into but then what what do we need what are the changes we need to make and I I think all of that is is not been really

Discussed which is the key issue yeah I suppose China was the big winner from the globalization having had Decades of unbroken uninterrupted growth uh underneath that system let’s talk about the impact that decoupling is having on the Chinese economy because uh the West’s drisking in another way that is

Being phrased from China is starting to show up in beijing’s economic figures notably in the third quarter of last year China posted its very first ever quarterly deficit in foreign direct investment FDI as it is sometimes known came to a negative 11.8 billion ion dollar during that quarter that means

That foreign firms basically took more money out of China than they invested in now some of that money went into Building Product building production sites at home but some of it also went to emerging markets that are considered more friendly to the West including countries like Thailand and

India so Alysia Garcia herero is this a peaceloving tone from Beijing is it an attempt to rescue its own economy and and get it fired up again let me let me answer this question with some figures I’ve uh worked on just yesterday uh which is Taiwanese investment foreign direct investment

Into the mainland because it is very telling um Taiwanese foreign investment into mland has collapsed from 65% of total Taiwanese foreign direct investment to 35 is this do risky not really meaning a lot is economically driven it’s simp simply because Taiwanese manufacturers find that costs in China

Are increasingly high that um the market is not growing as much as say India for that matter soon India will grow literally double China into so already like 40% above but soon it will be double so you know I think we need to realize that beyond the Der risking

Story that governments are pushing companies to move out of China a lot is just economically driven Market driven and this is very simple the reason is that China is growing less and that the market is is um much more competitive with local players so fore foreign manufacturers can’t make the the money

They used to so it is much more natural than we think and this is why I think trying to avoid this trend trying to stop this Str is is is is not it’s not going to work from beIN side um but you know you know that would disagree with

You on this and and and you know and and has has said as much yeah that Supply chains are being politicized and when we talk about the reasons why the likes of European countries and the United States are localizing their supply chains it is because they are concerned that

Political differences with China could get in the way of them securing their supply chain so that is politicized to an extent isn’t it uh I would say that if you talk to and I do U many uh manufacturers Japanese South Korean say take Samsung Samsung left partially and then fully uh

A few years later but partially China in 2008 even before China started playing with you know Lotte and because of the um installation of tat the anti missile uh us device in in in South Korea well before why did they do it when when China was growing more than any anybody else in

2008 because they had other reasons and these were mostly economic reasons so I I actually think that we should not buy into that story and no matter how much Beijing shouts because it’s not good for us why because our governance may be pushing for the risking without a need

Meaning companies may actually think through this and realize that the markets might be elsewhere both for sourcing but also basically for selling for you know for for demand and that would be much healthier for us and in a way much less of U I mean it would deserve much less criticism from Beijing

So I think we need to realize that many companies are actually moving for reasons unrelated to geopolitics and that’s something that that that is going to continue to happen as China’s growth rate comes down even further so does that mean that the this Schism that that

That that has taken form that this split between the west and China cannot be closed even by political statements like we’ve heard from from Beijing no it cannot because H for companies the private sector but even you know uh foreign governments but let’s focus on the companies they need

To see the the the real intentions they need to see see the country is going to grow they need to see that you know there won’t be cracked down on the private sector even private u Chinese companies let alone foreign so you know all of that needs to be seen it’s not

Enough to make these big statements it it they seem to be talking to the officials to the leaders in the west but you know you you also need to convince uh corporations corporations May smile at you when you are in San Francisco at a dinner but the minute they need to

Take a decision Deion they may diversify because they just don’t want to put all of their eggs in the same basket that’s it so are we to expector in the course of 2024 and we’ve heard it from the IMF we’ve heard it from Beijing are we to

Expect to see more pressure on the west to try and uh mend relations and and reinvest in China absolutely because not not only invest in China so I think what China needs is not so much our investment anymore it needs obviously our technology but most importantly it needs us to accept its

Products this is the key so China will put pressure on us for us to keep our markets open that’s the key and also to keep if if if we decide you know counterveiling duties on electric vehicles you name it at least allow Chinese electric vehicles to to to talk

About you know a very obvious case to be to establish to to St to to basically invest Green Field in Europe to produce in Europe and I think that’s the key uh they need that they need standards they need their you know comak 191 9919 to be uh approved by the

European commission so that that commercial uh airpl can be sold to the world yes so so that’s what they need from us it’s not only investment it’s it’s more our markets H our standards um that’s what they need from us because does that does that mean we

Should expect we should the key we should expect a more conciliatory tone from Beijing throughout the next year yes yes abolutely is is a charm offensive charm offensive to continue not only to bring investment most importantly to keep our markets open yeah but presumably Western countries do stand to benefit from a a

More friendly China though well it depends on what you give away by doing that the US is not going to uh keep its markets open because the more we hear even Biden is more tariffs so what does this mean that yes we may H feel better by having a cons consolatory

China charm offensive but what really is going to mean there is that our markets are going to be flooded by Chinese products because they can’t go to the US so for Europe this is a big deal because you know it’s going to mean that China is going to gain market share in many

More products in Europe in our own Market uh and and that that charm off offensive is really to achieve that goal so shall we what shall we do about it that that’s a big big question for for Europe indeed it is and this question people will be asking themselves in Brussels and capitals

Across the continent Elicia Garcia Herrero from nxis thank you so much for talking us through all of this Y and thanks to you for watching at home there is plenty more from us here on the DW news YouTube channel so please click on the next one and we’ll see you over there

China is calling for global unity and an end to trade wars. It has warned that the whole world stands to lose out from a fragmenting global economy. Is this a sincere attempt by Beijing to mend relations with the West, or part of a strategy to boost its own economy? We put that question and more to Alicia Garcia Herrero from French investment bank Natixis.

#China #GlobalEconomy #Unity

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