China’s aggressive push to build itself as the main proponent of globalization following US protectionism by the Trump administration may be a boon for capital markets which stand to benefit from more intra-Asian investments led by the mainland.
The strong push by China towards economic globalization was very evident on the final day of the Boao Forum for Asia on Sunday in Hainan Province. This is the second time in recent months that China has pinned its colours to the mast and affirmed its commitment to globalization since Xi Jinping won the applause of schmoozing foreign officials at the World Economic Forum in Davos in January, serendipitously-timed with President Trump’s inauguration.
The theme of this year’s Boao Forum for Asia was “Globalization and Free Trade: The Asian Perspectives,” which reflects the attention paid to economic globalization by the international community, said Chinese President Xi Jinping in a congratulatory letter to the conference’s opening session.
The potential benefit to Asian capital markets was clearly stated by HSBC Group chief executive Stuart Gulliver in a conference in Dusseldorf last month where he said: “As Chinese companies in particular set their sights on new markets, increasingly the flow of Chinese capital is already starting to travel from east to west. Where once Chinese overseas investment focused almost exclusively on the commodities and infrastructure it needed to build its economy, it is becoming much more diverse – reflecting China’s ‘going out’ policy and its need to boost private sector investment, turbo-charge consumer spending and accelerate innovation.”
The Boao Globalization Initiative calls on various governments, organizations, and authorities to make commitments to globalization: Asian countries to stay committed to open markets, inclusive growth and economic cooperation; governments to utilize cross-border PPPs to facilitate technological innovation and cross-border movement of knowledge and information; international and regional organizations such as the WTO and APEC to work toward more inclusive and equitable trade systems; and multilateral lenders including the IMF and World Bank to improve supervision of global finance, and to support cross-border capital flows.
Various conference attendees backed the globalization sentiment, with former French Prime Minister Jean-Pierre Raffarin stating that multilateralism should increase the inclusiveness of globalization, warning against bilateral interactions that could cause trade imbalances.
“If we want to ensure the inclusiveness of globalization, we need multilateral arrangements and all participants sitting at the table,” says Raffarin.
“As we go forward, with tension and protectionist measures rising, we need to continue to open up and to encourage the fair exchange of goods and services as President Xi also mentioned ... and to make sure it is win-win,” agrees Han-Paul Burkner, chairman of Boston Consulting Group.
The Boao clarion call comes after the recent announcement that the China-Hong Kong bond connect will be launched before the end of 2017, giving offshore investors access to China’s burgeoning bond market.
