HSBC：Globalisation：Past, Present and Future
Globalisation is ultimately a process by which economic exchange can take place unimpeded by borders. Those borders are not only physical: they include, inter alia, those related to geography, language, politics, culture, conflict, religion, regulation and technology.
A perfectly ‘globalised’ world would be one in which borders simply didn’t exist. There would be a common set of laws, a single currency, a sole central bank and a uniform regulatory environment.
In the real world, however, there has always been tension between the interests of nation states and local communities on the one hand and, on the other hand, the economic benefits of globalisation. Recent developments, including the UK’s vote in favour of Brexit and President Trump’s ‘America First’ inauguration message, are consistent with this historic ‘tug of war’.Yet today’s anxiety about globalisation has appeared only after many decades in which greater economic interconnectedness helped deliver huge and sustained increases in living standards and a remarkable reduction in poverty.
Indeed, it may be that globalisation’s future lies in its past. Before Europe’s discovery of the New World, globalisation was mostly a story about connections between Asia, the Middle East and Africa. From the Persian Empire to the rise of Islam, from the economic dynamism of 12th Century Baghdad to the Silk Roads, economic connections flourished across the Eurasian land mass and between the ports that surrounded the Indian Ocean.
China is already creating 21st Century institutions that may help rekindle these linkages from antiquity. The Regional Comprehensive Economic Partnership promises to intensify trade flows within the Asian region. The Shanghai Cooperation Organization offers an energy and security platform upon which economic linkages through central Asia may flourish. The Asia Infrastructure Investment Bank may help China extend its economic reach westwards across both land and sea, helping to turn Belt and Road into a reality.
All of this may, in turn, lead to the creation of what might best be termed a ‘Southern Silk Road’ a network of trade and financial connections that, in time, will reduce the economic borders that, to date, have limited trade flows between Asia, the Middle East, sub-Saharan Africa and Latin America. For China, these connections are important, helping safeguard supplies of commodities and raw materials while nurturing new markets for Chinese exports in decades to come. And, as Belt and Road is established, economic development in China itself should begin to spread from the already-dynamic coastal provinces to poorer inland regions.
Yet, while China has an opportunity to help shape the forces of globalisation, it is important to recognise that there will be risks along the way. Political resistance to the established institutional order is growing in Europe: in addition to Brexit, populist anti-globalisation movements are in the ascendancy elsewhere in the EU, fuelled in part by increasing anxiety regarding immigration. And, at the time of writing, it is unclear how President Trump’s ‘America First’ policy will sit with the policies of economic openness more commonly associated with globalisation’s advance.