Tuesday, June 6, 2017

GLOBALIZATION HAS A NEW CEO: PEOPLES REPUBLIC OF CHINA

After Donald Trump played the proverbial bull in the China shop, wrecked the Paris Climate Agreement and proclaimed that he was elected to serve the people of Pittsburgh and not Paris, all hell broke loose. Till then, US leadership was almost taken for granted in all international initiatives either through the UN or other multilateral forums. President Obama after prolonged negotiations with all countries was able to hammer out the contentious principle of countries preventing the rise in the surface temperature sea within a ceiling of 2° centigrade. Trump with his slogan of “America First” and preference for coal and fossil fuels, openly declared that global warming was a hoax and he was dumping the Paris agreement. 

This created grater uncertainties in the world financial and commodity markets. In the context of the prevailing volatility because of Brexit, the EU countries got together fast and decided to stick with the Paris agreement as well as all other international trade arrangements. In a jiffy, the Prime Minister of China, Li Keqiang, may be in his capacity as the representative of the world’s number two economy, flew into Europe and virtually took his due position at the high table of advanced countries, which was foolishly vacated by Donald Trump. Please remember that when the US was around, China was considered as the leader of the only developing countries. The two important European leaders Merkel and Macron of Germany and France jelled swiftly with Li Keqiang and a new global collective leadership seems to have emerged – all thanks to the abdication of the number one slot by Donald Trump.

In terms of its economic and financial clout – it has 10% of the world market share in exports and imports - you can say that China has for all practical purposes become the spokesperson for the globalization on the back of its One Belt One Road transcontinental project. Moreover, China also is the undisputed leader in the 10 – nation trading block of Asean. But for India’s own reluctance to play a prominent role either in the Asean or in the wider modern world and its miniscule share of 1% of the world trade, China has become the undisputed CEO of globalization.

It would be a long haul for India with active ‘Look East’ policy (which is only in name now)  to make its presence felt as a leading Asian trading nation and subsequently as a prominent world trading nation. This could call for decisive, quick international trade and commerce steps and execution on the part of India.

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Prof. K. K. Krishnan
Chairperson - CCR &
Prof. Centre for Insurance & Risk Management
Birla Institute of Management Technology

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