25 novembre 2018

International Finance Forum 2018 Annual Conference

Intervento di Massimo D’Alema – "New globalisation: a path to the future", Guangzhou, China

Five years have now passed since President Xi Jinping launched the Belt and Road Initiative (BRI) in 2013. It is estimated that the project has mobilised resources (including direct and indirect investments) of over 700 billion dollars, to fund more than 1000 projects. The project involves 76 countries and, by now, a large number of aspects: mobility of people, culture, tourism, education, performing arts, financial cooperation, technology and knowledge transfer. However, at least for now, most of the investments are concentrated in the areas of infrastructure, transport, logistics and energy: railways, roads, harbours and power plants and networks, mainly in Asia and Africa but – especially with regard to harbour development – in Europe as well. 
All the signs show that this initiative is changing the global status quo, and also fuelling the economic recovery and development of the countries involved. The Belt and Road Forum for International Cooperation in May 2017 was attended by high-ranking representatives of 140 countries and 80 international organisations; China signed agreements with 80 governments and organisations. It is obvious that this initiative’s importance extends far beyond the economic dimension, and may significantly shift geopolitical equilibriums. It is therefore understandable that the BRI has encountered not only supporters and beneficiaries, but also suspicion and determined opponents. This certainly applies to the open hostility of the American administration and President Trump, who view China as an adversary and are aiming to block Chinese expansion by means of a customs war. But it must be remembered that Japan and, in a different way, India, are also expressing unease and trying to launch initiatives alternative to the Chinese project, although more limited in scope and breadth. 
Europe is apparently divided and while, undoubtedly, for several European countries the Chinese initiative offers an opportunity for attracting investments and encouraging growth and job creation, at the same time there is also the concern that China may reinforce its position in Europe and gradually modify the balance of economic and political power in its favour. “Seen from Beijing, Europe looks like an Asian peninsula”, German Chancellor Angela Merkel has stated, expressing her concern. A few months ago a very problematical document, critical of the new Silk Road, circulated amongst European ambassadors in Beijing. It described the project as “in conflict with the European agenda of free trade, and capable of shifting the balance of power in favour of Chinese companies supported by State subsidies”. In other words, Europe worries that cooperation with China may mainly benefit the Chinese, also because of the imbalance deriving from the difference in approaches to regulation and degree of market openness. 
Luckily, due to American pressure, which is hostile not only to China but also to Europe, the China-EU Summit last July brought an improvement in China-Europe relations. 
If we wish to take a deeper look at the concerns and fears growing deep down in our western societies and understand the origin of not only the obstacles to international cooperation but also the real resurgence of nationalism and protectionism, I believe we have to reach beyond the mere reporting of events to understand the roots of the crisis of globalisation which we have been witnessing, in more and more acute forms, ever since 2008.
The process of the easing of restrictions to the movement of goods and people, which, in the first twenty years of the XXI Century, has expanded to involve every part of the planet, has generated an acceleration in global growth. 
Worldwide gross domestic product (current prices) has almost tripled, from 50,104 billion dollars in 2000 to 135,235 billion in 2018, and according to IMF data it will rise to 177,424 billion in 2023. However, this dizzying rate of economic growth has not been reflected in a parallel growth in prosperity for all.
In some economies, which have successfully exploited all the potential of this process, economic growth has been accompanied by social development, and in some cases by a dramatic process of emancipation, escape from poverty, and expansion of the middle class.
At the same time, in many advanced western economies the effects of globalisation have been ambivalent. For a minority of the population, who belong to the financial and educational elite, globalisation has offered an excellent opportunity, which they have been quick to embrace, as the data on the increase in the share of overall income received by the wealthiest segment of the population reveal. In the United States, the share of total gross income received by the top 1% in 2012 was more than twice that of 1980. As Anthony Atkinson maintains in his classic study “Inequality”: “Today the top 1%’s share [of income] is back at the levels of a hundred years ago. The top 1% in the United States now receive just under one fifth of total income; this means that, on average, they have twenty times their fair share”. The 1% of the 1%, meaning the top 0.01%, receive one twenty-fifth of total income. 
However, for the majority of the population the process has been one of expropriation. It is interesting to read the data about the increase in the number of people living below the poverty threshold. According to Eurostat data, in 2016 the proportion of the population at risk of poverty or social exclusion was 23.5% in the European Union and 23.1% in the Euro area: in absolute terms, this means that 118.0 million people in the EU live in households at risk of poverty or social exclusion. Also in 2016, 7.5% of the population in the EU lived in conditions of serious material deprivation. In the United States, in 2010, as a result of the 2008 crisis, the number of poor people was more than 45 million.
But it is not only a matter of poverty, although this is paradoxically growing even in times of economic expansion. The problem is that, while the concentration of financial wealth has been accentuated, the world of labour has become weaker and weaker. The effect of global competition, which attracts manufacturing businesses to areas where labour costs are lower and environmental protection rules are less restrictive and expensive, has led to the limitation of wages, a growth in precarious employment, and a reduction of rights and guarantees compared to the standards previously considered normal in the western world and in Europe in particular. At the same time, it has become more difficult for public budgets to support the cost of welfare and pension systems, partly because the progressive taxation systems which once allowed a significant degree of income distribution have been undermined by the free circulation of capital at the global level, which has basically freed a large proportion of financial wealth from taxation. 
It is therefore quite understandable if fear and bitterness are spreading in the most vulnerable sections of society, and we are seeing the success of political forces hostile to globalisation, which preach the closure of borders not only to immigrants but also to foreign goods. Some theorists now maintain that the European political scene, dominated for more than a century by the conflict between progressives and conservatives, is now occupied mainly by the battle between globalists and sovereignists, with the prospect of a shift in the continent’s political balances which could lead to a serious involution.
I believe we are all more or less persuaded that aggressive nationalism and protectionism are not a solution, and that, quite the contrary, they imply the risk of serious conflicts, a slowing of growth and thus a worsening of social problems. However, even those who believe, like me, that globalisation is an unstoppable trend must not underestimate the size of the crisis now brewing. In actual fact, this crisis has been under way at least since 2008 without an effective solution emerging, because ever since the financial collapse which took place in that year it has been clear that the neoliberal logic of untamed, unregulated globalisation is no longer sustainable and that political action is needed to steer the worldwide system towards what you define as a more harmonious globalisation. Because, although it is true that answers will not come from protectionism and selfish nationalism, it is also true that the need impose political guidelines on growth and not leave everything to raw market forces, and also the need to protect the weakest members of society, are real needs to which an answer must be given. The solution lies in a strengthening of international cooperation and not a heightening of conflicts. After all, it is impossible to imagine either effective environmental protection or effective regulation of the financial markets, essential to reduce inequalities and protect labour, or, to mention a topic particularly sensitive in Europe, the effective regulation of migratory flows, without stronger, tighter international cooperation. 
I understand that today setting these objectives may seem very ambitious and rather unrealistic in such a conflictual situation, in which the network of existing defence relationships may be at risk, partly due to the growing unreliability of the American administration. There is thus a need for a realistic strategy capable of realising the forms of cooperation which are truly possible, first and foremost between the most far-sighted, responsible players. I am thinking today of the possibility of an improvement in the quality of EU-China relations and the fact that the project for a new Silk Road may contribute to a higher level of cooperation on the great Eurasian continent, a cooperation which would inevitably also benefit Africa. 
How can we ensure that scepticism and hostility do not prevail? How can we enable the spirit of cooperation to prevail? 
I confess that there are many difficulties. There is a strong concern in Europe that the BRI is only a form of Chinese expansionism and not the opportunity for a win-win partnership. Critics point to the serious imbalance in trade between Europe and China, the disadvantages faced by European firms in China, unlike Chinese firms in Europe – while Chinese corporations can control European ports, Europeans are not allowed to do the same in China – and the fact that, so far, 90% of infrastructure funding has gone to Chinese firms while Europeans and the rest of the world have to fight amongst themselves for the remaining 10%. 
I am persuaded that these doubts and uncertainties can and must be overcome. The faster your country’s authorities are able to make the necessary corrections, the faster this will be achieved. The keywords are reciprocity and cooperation. The EU must finally view partnership with China as a strategic choice and not as a policy to be left to individual countries. China, on the way to becoming the world’s greatest economic power, can no longer expect to enjoy the safeguards and guarantees of a developing country. Two crucial aspects may be particularly significant. First: a strategy for Chinese investments in Europe agreed with the European authorities and tied in with the Union’s development strategies and priorities. Second: more openness of the Chinese market, especially in the area of services which may, at least partially, compensate for the trade imbalance now so strongly in China’s favour. Last but not least, greater dialogue and cooperation on the political and cultural level are also fundamental, in order to remove prejudices and misunderstandings in our public opinions.
It was in 1271 that Marco Polo set sail from Venice with his father Niccolò and his uncle Matteo. He came to Cambaluc – as the Mongols called what is now Beijing – after crossing Palestine, Turkey, Iraq, Iran, Afghanistan and Xinjiang. After meeting Kublai Khan he made his way home across Indochina, Malaysia, India, Oman, Yemen and East Africa. A long route, now dotted with fierce conflicts. Bringing peace and development along the Silk Road is a great mission, but it cannot be left to China alone. At the other end of the road there was and is Europe, which must be encouraged to rise to its responsibilities. Italy can and must play an important role. As President Xi Jinping has stated, “China and Italy represent two ancient civilisations which have known and respected each other for thousands of years”. Now, more than ever before, we must work together.