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AB 2000 studies

Alain Boublil Blog

 

Globalization is not dead

The signature of a free-trade agreement between the ten countries members of ASEAN and China, South Korea, Japan, Australia and New Zeeland brings a spectacular proof that negotiations gathering many countries to go through new steps regarding goods and services liberalization exchanges can be successful. So a stunning denial is brought to these who forecast the end of globalization. Yet, deep political disagreements are remaining between the signatory countries. China and Japan are reproaching themselves for wanting to annex territories they are not the owners, in this case, islands. South Korea is accusing Japan, as also China, to never having recognized crimes committed during the past century. Southern China Sea coastal countries, which are ASEAN founding members, challenge their powerful neighbor will to annex territorial waters they think they must belong to them. And the disagreements between Australia and Beijing regarding new technologies utilization are many. But that has not impeached these countries to gather around a virtual table to negotiate and to sign a treaty which intents, as its purpose, to facilitate their exchanges.

This treaty is coming at a time when, in other parts of the world, the trend is opposite. American policy during the Trump administration was focused on the denunciation of international agreements and the retreat from multilateral organizations. In Europe, Brexit is another example of this trend but it is not the only one. Permanent divisions between the supposed to be spending countries in the south of the continent and the frugal ones around Northern Sea are weakening the European project. Poland and Hungry attitude, trying to block the rebound plan dedicated to cope with the economic consequences of the sanitary crisis is illustrating this new mind spirit. Many political leaders even have, sometimes with success, tried to convince their people that the difficulties they are confronted with, were coming from outside, i.e. from globalization or that this one was living its final days and that it was better to withdraw into themselves. The Donald Trump failure shows that it is not always efficient but the trend is still there.

Globalization, according to these who are denouncing it, has a well defined origin: it is China expansion since the reform achieved during the Eighties, which reflects the country new will for power. So it would have become the main winner of a phenomenon which would be the source of all our evils. We must recognize that this point is not shared with its neighbors which would have been the first victims and who have just signed a treaty precisely dedicated to more facilitate their exchanges. But it is mainly ignoring that if China has developed itself to the point of being the “world factory”, it is precisely due to major American, Japanese and German companies which implanted there their factories to reduce their costs thanks to an abundant and well qualified workforce. That has allowed them to supplying their own countries, to more exporting and, now to supplying the huge local Chinese market. So globalization is not the consequence of China will to dominate the world but the result of the strategy of major international groups.

Globalization has also resulted from technical progress which has not only regarded the exceptional development of the treatment and the transmission of information and data. Sea transport costs reduction due to containers development has made possible and has accompanied the creation of global supply chains. Innovation has also concerned fossil fuels through offering the possibility, for example, to transport natural gas thanks to liquefaction. These phenomenon are irreversible even if, regarding data transmission, rules must be adopted to respect security norms and the protection of privacy.

In any major mutation, there are winners and losers. One of the losers argument, or of these who believe they are, is that the only winner would be China which so would satisfy its will for power in becoming the first world economy, stealing this position from the United States. American leaders believe they found there the justification of their action against multilateralism and of their new “cold war” launched against Beijing. But the world economy is not the Premier League in the French soccer championship and positions have not the same signification. China GDP will one day overpass the U.S. one. But China has a four times bigger population. Chinese people aspiration to a higher life level can hardly be reproached to it  and its government action, to reach it, whatever are its authoritarian practices, are not less legitimate than these of other countries, as today India one or yesterday South Korea.

This rise has, during a long time, been tolerated if not unnoticed, because it was mainly resulting from Western or Japanese firm strategies. But with the time and the emergence of a large and highly qualified population, Chinese economy growth has made possible the birth of major public and private companies, able to get their place on the world market in front of their competitors. That new situation has not aroused in Asia the same worry or even hostility than in Western countries, mainly in the U.S., because during the past, countries like Japan and South Korea did followed the same way. There are, on the world market new and powerful players which give to globalization a larger extent and make it irreversible.

Instead of remaining in the refusal or of staying in a hostile attitude, we must look for adapting ourself to this change of the world. Germany, for instance, has understood it. Its enterprises have, for a long time, taken a benefit from this situation. What has allowed to its car industry to overpass the crisis and the Diesel-gate scandals is their success in China where they produce and sale millions of cars every year. Their cumulated market capitalization is 135 billion euro compared to Renault and PSA total one which is hardly around 25 billion. What will allow Airbus to go through the current crisis are its Chinese clients and partners. At last, the fight against the pandemic makes necessary the perfecting of vaccines. The effort is global and we see a competition between public authorities to get the first deliveries. It was the same during spring about masks. There too, international cooperation and exchanges will be determining.

Globalization is not going to die. But it will increase the divide between winners and losers. The winners will be these who will have recognized it, these whose enterprises would have been able to create partnerships which reflect the world economy change and these whose consumers would have understood that it is their shopping behaviors which determine their employment and their life level. The losers will be these who will try to isolate themselves, the States which will show their selfishness and which will refuse to see the world as it is. Stakes are high enough for in Europe and even in France we start to understand what is the real world situation.                 

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