Lessons from Boao

April 29,2018

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The Boao Forum for Asia, also known as the ‘Asian Davos’, was formally inaugurated in 2001. Hosting government officials, business leaders and academics from across the continent in the town of Boao in China, the forum has been a venue for discussions on challenges that pertain to Asia. These include economic integration; cooperation; the environment; and bringing countries closer to their development goals through bilateral engagement.

This year’s Boao Forum was significant in several ways. First, 2018 marks the 40th anniversary of China’s economic reforms introduced by Deng Xiaoping in 1978. The iconic leader is credited for putting China on the path of the market economy after a traumatic decade of the Cultural Revolution, which left the country broken. In what could be described as a mission to expand China’s economy, Deng presided over ‘four modernisations’ – agriculture; the economy; scientific and technological advancements; and national defence.

The second significant factor was the context of rising tensions between China and the US on the issue of bilateral trade. In a tweet, US President Trump threatened to impose a high tariff on China’s exports of $150 billion a few days before the Boao Forum, which raised the political temperature. The third factor was a relentless campaign initiated by certain quarters against the Belt and Road Initiative, terming it as China’s attempt to expand its sphere of influence. Since various countries have signed on to the Belt and Road Initiative and expressed their desire to benefit from the connectivity that it offers, the entire enterprise has come into question, with some elements going to the extent of calling it a new form of colonialism.

The main highlight of the 2018 forum was the keynote address by Chinese President Xi Jinping. The entire world, especially the global business community, waited eagerly as the Chinese leader prepared what many termed as a likely tit-for-tat response to Trump’s provocation on the trade front.

What drew immense global attention was the fact that this was a major speech by the leader after the incorporation of Xi Jinping’s Thought on Socialism with Chinese Characteristics for New Era into the country’s constitution, which gave him a status that is at par with Chairman Mao. This was also Xi Jinping’s first speech after the removal of a two-term ban on holding the office of the president at a meeting of the National People’s Congress held in March.

In what could be described as a measured and positive response, the Chinese leader stated unequivocally that “China’s opening up will definitely enter a whole new phase”. He added that: “I want to clearly tell everyone that China’s open door will not be closed, it will only be opened wider”.

Without naming names directly, China’s president used his speech to address several concerns raised by Washington in a bid to lower the political temperature. While promising greater liberalisation of the economy and reforms, Xi Jinping made a commitment towards strengthening intellectual property rights protection; easing market access to foreign investors; and lowering tariffs in key sectors, such as automobiles.

Although the receding US leadership from the arena of globalisation has been replaced by an increasingly assertive China, Xi Jinping clarified that any tug of war between the two largest economies of the world would further undermine the multilateral trading system. He essentially reiterated that a complete divorce on the trade front is to no one’s benefit. China’s president insisted that collaboration was the only way to achieve shared prosperity.

In other words, Xi Jinping – in his hour of glory as a paramount Chinese leader – put up a strong defence of economic globalisation and made a solid case for an international order with the UN at its core. If one analyses the speeches that he has delivered at major forums – whether it is the World Economic Forum at Davos; the SCO; or the Brics summits – he has relentlessly positioned China as a champion of free trade and open markets, and a proponent of connectivity by citing the Belt and Road Initiative as an instrument that distributes the fruits of shared prosperity.

At Boao, Xi declared that “we live at a time with an overwhelming trend towards peace and cooperation as well as openness and connectivity”. He also said that China would promote global collaboration to build a “world of shared benefits”.

In a blatant reference to the concerns expressed by China’s rivals on the Belt and Road Initiative being an arrangement to spread the country’s power, Xi Jinping stated assertively that: “we will never threaten anyone, nor overthrow the existing international system, no matter how rich or powerful China becomes”. He further went on to state that: “we will not seek to build …spheres of influence – China will always be a builder for world peace, a contributor to global development and a defender of international order”.

Though some business leaders responded cautiously to Xi’s promises of more opening-up and market reforms by saying that they would wait for the intent to be translated into a workable policy, Trump was quick to express his thanks to his Chinese counterpart. He tweeted: “Very thankful for President Xi of China’s kind words on tariffs and automobile barriers...also, his enlightenment on intellectual property and technology transfers. We will make great progress together!”.

What is the key lesson from the Boao Forum for developing countries? The first is that economic integration is a reality that any nation can ignore at its own peril. While the trend of popular nationalism, characterised by shunning globalisation under the influence of far-right politics, is sweeping North America and Europe, there is a discernible anxiety on the vacuum left by the withdrawal of the US. However, the peaceful rise of China as a voice of reason and a defender of economic globalisation has been reassuring.

Countries like India can subordinate their economic interests, which are to emanate from regional connectivity via CPEC, to seek a regional, geo-strategic dominance. But in doing so, they will be going against the current of time.

The civil and military leadership in Pakistan has been vocal about the need for regional countries to benefit from CPEC, citing the project as a game-changer that is capable of creating a ‘Greater South Asia’ and building a peace constituency.

The second message is aligned with this goal: the imperative of economic progress and development has to take precedence over all other matters of statecraft. As the Chinese example shows, sustained economic progress over a protracted period of time, with GDP growing above seven percent, is essential to overcome poverty and reduce unemployment.

The third key message is that even if your rivals use provocative language and try to suck you into a tit-for-tat situation, it is your own long-term interests and the strategy used to achieve them that should determine your response. Despite vast differences and hostilities, there is always a space for a meaningful engagement. The era of a zero-sum approach in inter-state relations is over while the age of cooperation, not cut-throat competition, is here to stay.

The Boao Forum ended on a hopeful note earlier this month. Pakistan used this opportunity to reiterate its support for the Belt and Road Initiative, projecting it as a means to create a community of shared interests in a world that continues to be threatened by the forces of division.

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