Andy Xie: The Return of Protectionism

Andy Xie, renowned Chinese economist, opined that the WTO’s Golden Era has come to an end, and protectionism is returning…

Globalization has been on the rise for two decades. Almost every country believed that rising trade would increase prosperity. Prosperity did occur. When the going was good, no one questioned faith in free trade.

Unfortunately, when trade is large relative to GDP and growing fast, the theory doesn’t hold. Displaced workers may take huge pay cuts to find jobs. The reduction in labor income could be bigger than the gain in business profit.

London seems cutting taxes to attract business headquarters from Switzerland. Most highly paid financial professionals that serve China live in Hong Kong. In a globalized world, it is difficult to tax capital or mobile professionals. They happen to gain most from globalization. Hence, redistribution to spread the upside from globalization is difficult to accomplish.

 

Andy’s insights on the return of protectionism is published at his Caixin column this week.

Want more insights from Andy?  Contact us today to engage him to share his views at your next conference.