(Source: China Macroeconomic Forum 2025-11-27)

Tu Xinquan

1. The political foundation of economic globalization is dissolving. Regarding the future development of globalization, I very much agree with everyone’s judgment. One point I want to emphasize in particular is that one very important aspect of the current difficulties or anti-globalization trends facing economic globalization is that its political foundation is disappearing or has already disappeared. Just as there have been twists and turns in Sino-Japanese relations recently, even economic globalization has a political basis. Because globalization is essentially the marketization of the world economy, and the market needs institutional support, or power support. After World War II, the development of economic globalization was actually led by the United States, which formulated a set of corresponding multilateral economic systems and institutions, including the IMF, the World Bank, the General Agreement on Tariffs and w88 (GATT), and later the WTO. The main reason why such a system can be established, or that countries are willing to accept the leadership of the United States to establish a system, is that all countries believe that within this group led by the United States, each other will not threaten each other's national security, and will not become enemies or rivals. On the one hand, it is because the United States, as the "boss", is maintaining order; on the other hand, although we often call the United States imperialism, this imperialism is quite different from the past. At least it has no territorial ambitions and does not want to occupy any country. This is a very big difference. Therefore, when the GATT system was first established after World War II, there were actually no countries in the Soviet system and no socialist countries participated. Because countries in the Soviet system considered the United States a national security threat and were unwilling to join, the United States did not invite it. Therefore, the establishment of the General Agreement on Tariffs and w88 after World War II and the establishment of the WTO after the Cold War both had an implicit "national security" consensus, that is, there was mutual security trust among members. As the saying goes, "people with different paths do not work together." There are like-minded countries within the system. When China and the United States entered into WTO accession negotiations in 1999, this assumption was actually made. At that time, the United States was still an unshakable unipolar hegemony with a very strong economy and the lingering power of the Gulf War. No one was worried that China would challenge the United States. China has neither the idea nor the ability to do so, and the United States has no such concerns. Therefore, during the negotiations to join the WTO, the biggest goal of the United States was to open up the Chinese market. The then U.S. w88 negotiator Barshefsky often said: "I will lead this negotiation as a purely commercial negotiation; my purpose is to create the greatest commercial benefits for American companies." She did not take national security issues or national competition issues into consideration. If the United States really considered this issue at that time, it would not have allowed China to join the WTO. This is a very basic premise. But now, this consensus has "disappeared". Major players in economic globalization and the international economic system no longer trust each other, and view some countries as security threats or geopolitical rivals. I understand three main reasons: First, the Russia-Ukraine conflict is a huge "black swan" event. It has made the West, especially European countries, realize that economic globalization cannot really eliminate differences in the underlying logic of countries, whether it is national security, ideology or cultural identity. Therefore, they believe that globalization or integration should be carried out among like-minded countries, and some countries are destined to be excluded. Second, the impact of the new coronavirus epidemic. This has implications at both the micro and macro policy levels, creating a situation in which “everyone flies away when a disaster strikes”, with countries thinking of themselves first in times of crisis. Globalization is far from eliminating the barriers and mistrust between nation-states. The most critical thing is that the competition in comprehensive national strength between China and the United States has become explicit and intensified. Especially after 2018, this issue has become the key to determining the global economic order in the future.

2. The evolution and nature of Sino-US competition: the systematic game of comprehensive national power. I have sorted out the process and history of Sino-US competition. The focus of competition is constantly evolving: early stage (from 1979): w88 conflicts began as early as 1979 when the United States launched its first anti-dumping against China. At first it was local competition for individual products, but then it expanded to a broad industry level, mainly labor-intensive industries. In the 1980s and 1990s, the United States was the country that initiated the most anti-dumping measures against China. Because with the increase in China's exports to the United States, some competition at the product level and industry level has begun to emerge between China and the United States. Mid-to-late 1990s: Mainly around policy issues. At that time, the United States believed that the w88 deficit was due to China's lack of openness, the so-called "unequal openness." When China was negotiating its accession to the WTO, the core issue that the United States was most concerned about was opening up the Chinese market. The result was that China accepted almost all the conditions proposed by the United States, whether it was tariffs or the opening of services. After the 2008 crisis: The United States attributed the so-called global imbalance problem to China's exchange rate issue, and then expanded it to institutional and systemic issues. During the Obama administration, China began to pay attention to the so-called "state capitalism" or "state intervention" issues. From the Trump era to the present: More issues have risen to the national level, namely comprehensive national power competition, geopolitics and national security. From a time point of view, before joining the WTO, competition was about specific products and industries; after joining the WTO, it involves deep-seated institutional issues as well as national competition and national security issues. Therefore, since Trump took office in his first term and launched a w88 war with China, I have always had a point of view: the problem between China and the United States is not a matter of industrial competition. In fact, there are very few industries in which China and the United States truly compete. The decline of the U.S. manufacturing industry began long before China joined the WTO or even entered the world market. For example, the shipbuilding industry often mentioned in the United States has basically disappeared in the 1980s, defeated by Europe, Japan and South Korea; the decline of the U.S. steel industry has nothing to do with China. After China's accession to the WTO, China and the United States established a vertical division of labor and complementary industrial chain relationship, not a horizontal industrial competition relationship. American scholars have proposed that the so-called "China shock" hits the United States' remaining labor-intensive industries such as furniture and textiles, and does not threaten its core manufacturing industries (such as automobiles and chip manufacturing). Before Trump came to power, U.S. chip manufacturing was much stronger than China; by the time the Biden administration introduced the chip bill, China was still inferior to the U.S. in chip manufacturing itself and was only slightly stronger in the packaging field. In addition, during Trump's first term, the United States blocked Huawei because Huawei was leading in the 5G field. In fact, the United States does not have a 5G industry of its own. Most of its telecommunications equipment manufacturing industries were acquired by Nokia and Ericsson of the European Union. Precisely because the competition between China and the United States is not an industrial competition, but a systematic and comprehensive competition in comprehensive national strength, this kind of competition is "unsolvable." Industrial interests can make certain concessions and transfers. For example, Japan has moved some automobile manufacturing and other industries to the United States to ease U.S.-Japanese relations. However, China cannot make concessions to the competition in comprehensive national power. As an independent sovereign country, China has the right to pursue its own development and make its comprehensive national power stronger and stronger. It is impossible to stop development on its own initiative just because the United States is dissatisfied. Of course, unresolved competition does not mean that it will inevitably deteriorate into serious confrontation, conflict or even war. Both sides have the need to manage risks, as evidenced by the recent easing of the w88 war. I compare Sino-US relations to the sum of the relations between the United States, Japan and the United States and the Soviet Union during the Cold War. Although China is indeed a huge challenge to the United States and an unprecedented competitor, China and the United States are closely interdependent and have the ability to ensure mutual destruction (whether economic or military). This makes confrontation have boundaries and thresholds. I think the possibility of a real major conflict or confrontation is still small. Both sides may find a comfortable "landing zone" in future games. As Teacher Liu Qing said, everyone has a psychological adjustment process to the rise of China. China itself did not expect to rise so quickly, just as it did not expect to develop so well when it joined the WTO. If this adjustment is completed under peaceful conditions, even if there are some economic frictions and w88 conflicts, there will be nothing to fear.

3. The future of the international w88 order: fragmentation, grouping and “marathon” competition. Regarding how the international w88 order or system will evolve in the future, I have the following understanding. 1. System characteristics: It will not return to the "two worlds", but will become a fragmented system nested in each other. The current international w88 system is undergoing differentiation due to national security or geopolitical games, and this differentiation will inevitably occur along geopolitical boundaries. In 2022, I participated in an internal expert discussion organized by a ministry. At that time, we discussed whether "two worlds" or "two markets" will reappear? Judging from the current situation, there are indeed signs of this. But I personally believe that there will not be "two worlds" as sharply divided as during the Cold War. The future system will be more complex, fragmented, and group-based, but also nested in each other. On the one hand, the rapid development of globalization in the past 30 years has led to the formation of a division of labor system based on mutual investment and vertical industrial chains among countries. Although a certain degree of decoupling is inevitable, it is very difficult to completely decouple and cut them into two systems that "will never interact with each other until death." On the other hand, although geopolitical relations are now tense and mutual trust is no longer the same, it is unlikely that the "life-and-death and tense situation" that existed during World War II and the Cold War will occur. This is unlikely. The Cold War was mainly a struggle for ideology and spheres of influence, while World War II was mainly a struggle for territorial resources. From now on, very few countries, including China, are still interested in these issues. We have no interest in expanding our ideology. The Chinese model is the Chinese model, and Chinese-style modernization is Chinese-style modernization. We do not allow other countries to engage in Chinese-style modernization. Countries can engage in their own modernization. 2. Nature of competition: It is a "marathon" rather than a "boxing match." I have an analogy: the current international competition or comprehensive national strength competition is more like a marathon. It mainly depends on who can run faster and who can run longer. Countries running behind will not really be destroyed or wiped out. Although people sometimes say that industrial competition is cruel, a country will not really collapse because of the failure of industrial competition. This is not like a "boxing match" where the opponent has to be knocked down to stop. Therefore, the possibility of countries taking extreme measures is relatively small, although populism and public opinion may exaggerate such sentiments. 3. Development trend: Mainly internal circulation and "trust deficit" among allies. At the same time, various countries, especially major powers, will strive to increase the proportion of internal circulation or rely on the internal market and reduce their dependence on other countries. This is indeed a guide. This happens not only among countries with different ideologies or political systems, but also among countries that are similar to each other. Trust levels are now also low. Brexit, for example, is a good example of Britain not trusting the continent. After Trump launched a global w88 war, America's allies also found the United States unreliable, but they were more distrustful of China. For a while, the WTO talked about "WTO minus 1", and now it starts to talk about "WTO minus 2". However, countries also know that complete decoupling from China and the United States is unrealistic, so the EU has proposed the concept of "risk de-risking", and the so-called middle countries and intermediate countries are "hugging together to keep each other warm". The EU is also discussing with the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) to explore the possibility of the EU merging with or joining it. 4. Philosophical thinking: Maintaining a "sense of borders" is not necessarily a bad thing. This change is definitely a bad thing from the perspective of globalization because it is fragmented; but from the perspective of international relations and relations between countries, maintaining a certain distance is not necessarily a bad thing. I always believe that nothing is better, and the same is true for economic globalization and integration. Deeper integration is not better. Just as interpersonal communication emphasizes the "sense of boundaries," no matter how close a relationship is, there must be boundaries, and the same is true between countries. The current worries and discomforts in the United States largely stem from over-reliance on another country, which can create insecurity from a psychological perspective. So there's nothing wrong with keeping some distance.

4. China’s Impact and Response: Return to Normality and Progressive Change China is the biggest beneficiary of the last wave of globalization. This relies not only on our own correct policy choices and scale advantages, but also on the opportunities brought by the external open system, which gives us the opportunity to take advantage of two markets and two resources. Now that globalization is retreating, China is also one of the biggest bearers of negative impacts. But this impact did not happen overnight. China has been gradually preparing for it over the years. China's w88 dependence has dropped significantly since 2006, which is the result of both passive and active factors. At that time, China had been criticized for having too large a w88 surplus, which accounted for as much as 7% of GDP. During the financial crisis, China was accused of causing global imbalances and had to make adjustments. On the other hand, this is also a manifestation of the role of economic laws. Germany and South Korea have high w88 dependence, but Japan and the United States have relatively low w88 dependence, and the EU as a whole is not high either. The economic entities of all major countries are internal circulation, and external circulation is auxiliary. China's high reliance on external circulation from the 1990s to the early 21st century was an exception, not the norm. Now it is returning to the norm. Although external circulation does not seem to be important to big countries in proportion, this does not mean that w88 does not need to be paid attention to. In the 1940s and 1950s, the w88 dependence of the United States was only 10%, but the United States spent a lot of effort to lead the establishment of the post-war multilateral trading system. Because external circulation is to a certain extent an important way for big countries to transfer internal conflicts or make up for the shortcomings of domestic circulation. No matter how large a country is, it is impossible to establish a perfect internal circulation. There will always be a shortage of supply or demand. The current main problem of the United States is not its international economic strategy. On the contrary, the United States has gained great benefits through its dominant international financial system and international economic system. The United States' problems are mainly domestic issues, including income distribution and investment distribution. How does China respond to changes in the international economic order? First, we must be more proactive in maintaining the stability of the international economic system and maintaining the basic operation of basic frameworks such as the WTO and IMF. Although the United States has significantly increased tariffs, more than 70% of world w88 is still conducted under the most-favored-nation tariffs stipulated by the WTO. For China, maintaining the current system is the cheapest way. Second, we must promote changes in the existing system. The main purpose is still to maintain the current system, because if we don't advance, we will retreat. Without a continuous push forward, more countries will retreat. Third, China must exert leadership and "build groups," that is, establish groups led by China itself. This group does not necessarily have to be inclusive. It can be like the United States did in the early days of establishing the General Agreement on Tariffs and w88 (GATT). It can only choose to establish a "small group" of countries that share the same goals with itself. The "Belt and Road" initiative has established a good foundation, but the "Belt and Road" initiative network is very broad and may not be suitable for establishing closer relationships. Some countries should be organized according to specific topics to establish a more institutionalized system, while maintaining openness to the outside world and attracting more countries to gradually join in the future. Fourth, we must make use of existing platforms. For example, RCEP already has a good foundation. We must make full use of it to accelerate upgrading and expansion to include more issues and new members. In short, China must always adhere to a long-term strategy and a gradualist approach to respond to future changes in the international system.

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