Neighborhood coordination response to protectionism

Editor's note: Globalization is facing several headwinds. In a recent interview with China Economic Times, Zhao Jinping, vice-president of the China Association of Trade in Services, said that despite the challenges faced by globalization, there are opportunities for cooperation between countries committed to multilateralism. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

Globalization is undergoing structural shifts, with regionalization and nearshoring picking up pace. Asia has emerged as the new driver of globalization. The global economy has remained relatively stable because of Asia's growth. In the next phase, Asia may become a key source of momentum for a new form of globalization.

Regionalization should not be seen simply as a continuation of traditional globalization. On the contrary, it is a risk-averse measure that many countries have adopted as geopolitical conflicts intensify and the global economic environment deteriorates. As globalization faces headwinds, companies are prioritizing the resilience of industry chains over efficiency.

In the era of rapid globalization, enterprises deployed resources globally to maximize efficiency. However, changing geopolitical conditions have necessitated a shift in priorities. Today, safeguarding the resilience of industry and supply chains against trade protectionism has become paramount.

In the past, many developing countries relied heavily on the United States and other Western countries as export destinations and sources of foreign investment. But these channels have become increasingly restrictive. Developing countries therefore have turned to large developing economies that have robust capital and trade capacity.

Capital from major developing economies has emerged as a pillar of the global capital market. This capital tends to flow into developing countries with stable growth prospects and sound business environments. Also, in recent years, developing countries have accelerated efforts to sign free trade agreements with one another, reflecting the strategic resolve of emerging economies to reshape the global trade and investment landscape.

The global economy has therefore continued to grow despite the extreme protectionism imposed by some Western countries. The steady growth is largely due to the trade growth among Global South countries, especially in East Asia, and between China and the Association of Southeast Asian Nations and other Global South countries. Without these positive factors, globalization would face far more severe setbacks.

To evolve from mere "rule-takers" to "comakers of rules" for globalization, countries of the Global South need to accelerate their institutional cooperation with one another, such as signing free trade deals. They also need to actively participate in reforming multilateral mechanisms.

Additionally, there is significant potential for cooperation between the Global South and developed economies that uphold multilateralism, as demonstrated by the signing of a free trade agreement between the European Union and Mercosur in January.

In the current climate of protectionism, the Belt and Road Initiative has gained strategic importance. More than a development initiative, the BRI offers solutions to counter global economic shifts and address major challenges. It is becoming a key global public good amid the restructuring of globalization.

Chinese enterprises continue to expand their outbound investments, bringing capital, technology, management expertise and standards to host countries. These contributions help those countries integrate into global industry chains and upgrade their technologies.