As US president Donald Trump and senior White House officials stayed away from the World Economic Forum (WEF) this week due to a partial government shutdown, China grasped an opportunity to woo the Davos crowd as it vies for global supremacy.
Chinese vice-president Wang Qishan used a keynote speech on Wednesday to take a thinly-veiled swipe at Trump's protectionist impulses. He said "economic globalisation represents an inevitable trend of history" even as many countries were "currently looking inward" when making policies. He claimed "unilateralism, protectionism and populism are spreading in the world".
Wang didn’t mention Trump by name, but he didn’t need to. “We reject the practices of the strong bullying the weak and self-claimed supremacy,” the vice-president said, possibly seeking to cast his country as something of an underdog as it remains locked in a months-long trade war with Trump’s administration.
While official data released by Beijing on Monday showed that economic growth in the world’s most populous country slowed in 2018 to 6.6 per cent – the weakest in 28 years – few among the 3,000 or so delegates at the WEF question the view that China is the next global superpower-in-waiting.
"This century's financial history may well be written by China," said Jin Keyu, an economics professor at the London School of Economics, on a Davos panel this week on global financial risk, noting that Chinese imports exceeded exports early last year for the first time in decades.
“China will serve as a main source of aggregate demand, which is lacking in the rest of the world. So, pushing for a divorce with China is not necessarily a great idea.”
Wang’s strong defence of globalisation may have played well at WEF given that it is the central dogma of the entire jamboree, now in its 49th year. But the Davos elite remain concerned about the nature of China’s ascent.
Technology
Trump has been vocal in accusing China of intellectual property theft and the forcing of US companies to share technology when they do business.
Company leaders reportedly raised their worries privately over dinner on Tuesday on the fringes of the WEF with senior Chinese officials and CEOs about the country’s IP treatment, ownership structure of state-owned companies, and a Made in China 2025 policy to lead the globe in artificial intelligence and robotics.
The discussions took place against the backdrop of Chinese group Huawei, the world's biggest telecoms equipment-maker, being under the scrutiny of the US and several western governments amid fears that its products could be used for spying. Speaking at WEF this week, Huawei's chairman Liang Hua, denied the allegations, and put it to such critics to "prove it".
Meanwhile, the absence of top US officials from Davos this week dashed hopes of a breakthrough in the US-Sino trade standoff as the clock ticks down on a 90-day ceasefire, agreed in early December, against further tariffs on goods by either side.
While hedge fund billionaire Ray Dalio of Bridgewater Associates highlighted that China, centred around the collective identity, was in something of "a culture clash" with the individualistic West, a senior Chinese official elected to deliver some home truths on another discussion about the changing world order.
"In the western countries you're experiencing tremendous difficulties, and democracy…is not working very well – and you need to realise that," said Fang Xinghai, vice-chair of China's Securities Regulatory Commission. "You need political reforms in your own countries. I say that with all sincerity."
Stay at home
Aside from the Washington shutdown thwarting Trump’s visit to the Swiss alpine village this year, various other crises have kept other world leaders away from Davos.
French president Emmanuel Macron – the self-styled defender-in-chief of Davos values at the 2018 gathering – opted to stay at home to deal with the "yellow vest" uprising, which has morphed from a general fuel-tax protest late last year to a broader anti-government movement.
Canadian prime minister Justin Trudeau decided it was best to skip Davos having come under fire at home over the cost of his team's Swiss stay last year, which came to a reported 700,000 Canadian dollars (€459,927).
Meanwhile, UK prime minister Theresa May has been holed up in London trying to navigate Brexit, having failed to get her EU withdrawal agreement, finalised in December, over the line in Westminster last week.
Taoiseach Leo Varadkar is visiting Davos for a second year, while Minister for Finance Paschal Donohoe has used the trip as an opportunity to drive home to political leaders why Ireland is insisting on the Northern Ireland backstop to prevent a hard border – the main source of contention in the UK with May's withdrawal agreement.
Speaking to reporters on Thursday afternoon, Varadkar said while the prospects of a hard Brexit, with the UK crashing out of the EU at the end of March, may result in a “period of chaos”, both sides would most likely end up having to sit down and hammer out a similar accord to the one currently on the table to preserve the Good Friday agreement and ensure there was no hard boarder on the island of Ireland.
Guarantee
“A deal that doesn’t give us a legally-binding working guarantee that there won’t be a hard border between Northern Ireland and Ireland is a deal in name only, and that’s not something we can accept,” Varadkar said. “But we’ll keep working on this over the next couple of weeks, and at the same time prepare for a no-deal scenario should that arise.”
The mood at Davos this year is in marked contrast to January 2018, when global financial markets were riding high and economists were outdoing each other with upbeat projections. On the eve of this year's forum the International Monetary Fund (IMF) downgraded its global growth forecast for the second time in three months, citing heightened trade tensions and rising interest rates.
The fund warned that its number crunchers may have to take out their red pens again if the UK crashes out of the EU without an exit deal or China falls into a deeper-than-expected slowdown.
"I think there's probably a more subdued atmosphere this year," said IDA Ireland chief executive Martin Shanahan, comparing the Davos temperature with 2018 as he met a series of executives at the ski resort in recent days. "There's a raft of geopolitical uncertainty around, and companies are looking at that, trying to make sense of it."
Before the conference got under way a WEF Global Risks Report, based on a survey of about 1,000 respondents, highlighted that fraught international relations were making it more difficult to address global challenges, from protecting the environment to responding to ethical challenges of the so-called fourth industrial revolution or fusion of the digital and physical worlds.
“Global risks are intensifying, but the collective will to tackle them appears to be lacking,” said the report. “Instead divisions are hardening.”
Climate change
For the third year in a row climate change has dominated the global risks list, accounting for five of the top 10 by both likelihood and impact.
British naturalist and veteran broadcaster Sir David Attenborough warned a packed Davos hall on Tuesday that humans risked damaging the natural world "beyond repair" if efforts were not taken to tackle climate change.
“Right now we are facing a man-made disaster of global scale – our greatest threat in thousands of years,” said Attenborough. “The continuation of our civilisations and the natural world upon which we depend is in your hands.”
The address received a warm reception from the audience, many of whom had arrived in Switzerland on the estimated 1,500 fuel-guzzling private planes to have made the journey to Davos.
Meanwhile, handwringing by card-carrying members of the 1 per cent club on various conference panels over issues like economic equality, food security, and how the advance of artificial intelligence and robotics threatens many low- and mid-skilled jobs globally may be hard for outsiders to swallow.
In a nod to the current social media craze that is the #10YearChallenge, where people are posting photos of themselves today and a decade ago, Bloomberg this week published a timely where-are-they-now snapshot of some of the luminaries at Davos in 2009.
The media and financial data organisation estimates that the fortunes of a dozen 2009 WEF attendees have jumped by a combined $175 billion even as the median US household wealth stagnated.
Returning Davos delegate Marc Benioff, founder and co-chief executive of technology giant Salesforce, saw his wealth soar more than 800 per cent to $5.8 billion over the period, while that of Dell Technologies chairman Michael Dell increased by almost 200 per cent to $17.2 billion. JP Morgan boss Jamie Dimon, the last surviving pre-crisis boss on Wall Street, enjoyed a 275 per cent surge in his wealth, to $1.1 billion.
Oxfam published a report on Monday, ahead of the WEF, highlighting how the world's 26 richest people now hold the same wealth, at a combined $1.4 trillion, as the poorest half of humanity – or 3.8 billion people.
Topping the list are Bill Gates, the Microsoft founder, philanthropist and Davos grandee; Berkshire Hathaway's Warren Buffett; and Facebook chief Mark Zuckerberg, who are collectively worth $357 billion, according to the report, which used Forbes estimates.
‘So much wealth’
"It is obscene for so much wealth to be held in the hands of so few when one in 10 people survive on less than $2 a day," said Winnie Byanyima, executive director of Oxfam International.
“Across the world people are being left behind. Their wages are stagnating, yet corporate bosses take home million-dollar bonuses; their health and education services are cut while corporation and the super-rich dodge their taxes; their voices are ignored as governments sing to the tune of big business and the wealthy elite.”
U2 frontman Bono came to the defence of capitalism as he sought to enlist political and business leaders to turn the tide on a losing battle against HIV/Aids as western governments are more preoccupied these days with problems in their own countries.
“Capitalism is not immoral – it’s amoral. It requires our instruction,” said the co-founder of One, a global campaign and advocacy organisation seeking to end extreme poverty. “Capitalism has taken more people out of poverty than any other ‘ism’. But it is a wild beast that, if not tamed, can chew up a lot of people along the way.”
