• Monday, July 15, 2024
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The third wave of globalisation has started (3)

The third wave of globalisation has started (3)

I spoke on a rich panel aptly titled “International politics and trade influx” at the Yenching Global Symposium at Peking University in Beijing, China, on April 8, 2022. Much of what I said are in the previous two columns and more to come.

Did I travel to Beijing? Well, somewhat, from my living room in Lagos, Nigeria. Held every year, it was done online this time in light of the Covid-19 pandemic. Thankfully, I had visited Beijing before, and Shanghai, in about mid-2012, and as I recall, I toured those ancient cities to my heart’s content. I did not make it to the top of the Great Wall, just in case you were wondering, a feat better suited to braver souls.

But I did climb high enough to get a decent view on an unbelievably clear-skies day. In fact, when people talk about the notorious Beijing smog, I still wonder whether I travelled to that city of many lores in the metaverse or in person: clear skies all through.

 

Then there is the trouble you’d go through at the airports. And if you are Nigerian, you are probably going to get extra scrutiny at each point of the very long trip. My drift is palpable

So yes, I didn’t feel like I missed much by speaking at the symposium via Zoom, another simple but hugely useful video conferencing innovation by an American company founded by a Chinese immigrant, with most of its development team unsurprisingly based in China – Was Skype asleep? Were the venue otherwise, at a place yet surveyed, I might have felt a little short-changed.

But it does make the point about increased globalisation, not less, doesn’t it? The global exchange of ideas is becoming easier, not harder. This type of exchange had to be compulsorily done in-person hitherto, which as an African, you couldn’t be sure to participate in. A travel visa interview might be delayed, rescheduled or upon the meeting, simply denied. Then there is the trouble you’d go through at the airports.

And if you are Nigerian, you are probably going to get extra scrutiny at each point of the very long trip. My drift is palpable. We will interact more. We will trade more. We will invent more. We will invest more. But we will do all these in new ways. Whether these new ways will be better for our humanity and happiness is up for debate; in-person interactions have their benefits, for instance. But yes, we will do more of more. And globalisation, no less.

Global value chains account for about 70% of global trade. In 2021, amid the Covid-19 pandemic, and on the heels of Trump’s tariffs onslaught, international trade grew by 25% to $28.5 trillion. The KOF globalisation index for the world is up more than 9 points to 61.59 in 2019 from 51.86 in 2000. Clearly, the narrative of de-globalisation is misleading, as the data show quite the contrary is the case. And while intuitively, the de-globalisation narrative draws strength from the ongoing trend of protectionism, some of which are forced owing to the Covid-19 pandemic and would probably be entrenched the longer the ongoing Russia-Ukraine war endures, the higher trade interactions in 2021 were principally because of the global pandemic, as countries sought supplies of critical life-saving goods.

And China was right at the centre of it all, as it accounts for 30% of global manufacturing, ahead of the United States. Ironically, the Russia-Ukraine war is forcing affected countries to look for new trade partners, as the Western world reduces economic interactions with Russia to curb its belligerence. Europe needs to find alternative suppliers of gas, for instance, so do many others for wheat and crude oil.

New capacities will have to be built across a wider breadth of the world, with new investment in tandem. These global black swan events that some thinkers are attributing for de-globalisation are actually becoming triggers for wider, more diverse global trade and investment. Surely, that is globalisation on steroids.

Merchandise trade in agricultural goods account for 12% of global trade. North Americans, who constitute about 5% of the world’s population, are already well-fed. About half of China’s global trade of about $6trn is with Asia, the continent with the most population, about 60% of the world total in fact. Europe is China’s second largest trade partner at about 20%, then North America at 13%, according to 2021 data by China’s General Adminstration of Customs.

Intra-Asian trade is already high at about 58% in 2019 (North America is 41%, European Union is 63%), based on data by the Asian Development Bank. So where will agricultural trade growth be found? A fifth of Africans do not eat well. And even as China is already Africa’s largest trade partner, with bilateral trade up by 35% year-on-year to $254bn in 2021, it is barely scratching the surface. Africa, which is about 20% of the global population of circa 8bn and only accounts for 4% of China’s total global trade, is a growth opportunity for China, one which the west took for granted hitherto.

The world has been here before. But years are fleeting in history. When you are living through the years yourself, however, they are a sum of very long days. And unless, you take a bird’s eye-view of events, revert to history, it may be difficult to have an accurate reading of events. The de-globalisation narrative is alarmist and not data-dependent. We are in a transition. Towards the end of each wave of globalisation, protectionism becomes ascendant as those at the losing end quite literally seek revenge, thus steering domestic politics towards nationalism.

But this soon becomes overly costly, forcing political sentiment back to reason, with capital in tandem. The Smoot-Hawley tariff fiasco of early 20th Century America remains a cautionary tale about the folly and fickleness of protectionism. Thankfully, something better tends to happen after such folly: more groundbreaking technological innovation, greater prosperity and a relatively longer world peace; well, at least before all hell breaks loose again, as it inevitably does.