Source of the article: China Financial 40 Forum. The original title is “Martin Wolf Attends CF40 International Exchange and Talks about China's Strategy against Trump's ‘Populist’ Trick”, and the link is: https://mp.weixin.qq.com/s?src=3×tamp=1489730187&ver=1&signature=swq3t2MqSz7Px3UYk*q8tV-KQqZCh9eF7fBnl9f5*AObcPCIYNUvSeIpzrOdJWNiEvOvB1SrlbGWQMcXWh6drzrq2LDKS8tuXPOokwiLiNbUrmR4Qd*6k-eiffrPF8BeH4awTYLvJ5f9gpH3Nw9GpHZfexWA8GEMvNN-TOxglRU=

Looking back at the political landscape of Europe and the U.S. over the past year, we could say shock came one after another. Donald Trump became the surprise winner of the U.S. presidential election; the British voted to leave the European Union; the Deutschlands Christlich-Demokratische Union (CDU), led by the German Chancellor Angela Merkel, suffered stringing loss to far-right parties in several regional elections; far-right parties rose in France's presidential election... Populism has risen in the world.

Judging from historical experience, when populism becomes the mainstream of society and its representatives are elected political leaders, the long-term implementation of populist policy will lead to economic stagnation and social unrest. Besides, their trade protectionist measures will lead to the shrinking of transnational trade and investment activities, slowing down economic growth and reducing efficiency.

How is the rise of populism connected to the globalization of trade? How will the American protectionism advocated by populist Donald Trump harm the global trade? How should China respond to the challenges? On March 15, 2017, the China Finance 40 Forum (CF40) invited Martin Wolf, the associate editor and chief economics commentator at the Financial Times, to attend the international exchange luncheon and deliver a keynote speech titled "Populism: Globalization and Anti-globalization" on the above problems.

Martin Wolf made a keynote speech.

Wolf was an honorable judge and a member of the International Media Council at the annual meeting of the World Economic Forum in Davos. In recognition of his outstanding contribution to financial news, he was awarded the CBE (Commander of the Order of the British Empire) in 2000. He is also a visiting fellow of Nuffield College, Oxford and an honorary fellow of the Corpus Christi College, Cambridge and the Oxford Institute for Economic Policy.

In his speech, Wolf said there is evidence that the process of globalization of trade is slowing. This is due to the rise of trade protectionism, on the other hand is due to the opportunities for the collapse of the global value chain are gradually running out. However, according to the IMF report, the slowdown in globalization of trade is largely due to a slowdown in demand.

When it came to why populism is rising in high-income countries, Wolf elaborated from both economic and political perspectives. From the economic point of view, the exacerbating inequality, the growing number of immigrants and the financial crisis has all led to the rise of populism. The globalization of capitalism, the role of supranational institutions and the transformation of the media are the political factors that cause the rise of populism.

Wolfe argued that populists do not trust the existing system. The right-wing populists, including Trump, are also nationalists. Trump's policy may mean that the U.S. will have a severer fiscal deficit, higher interest rates, strong dollar and severer trade deficits, which will lead to a vicious cycle of protectionism. Under the new U.S. government led by Trump, the protectionism of the U.S. could attack countries with bilateral trade surpluses by declaring that these countries are currency manipulators and ignoring the WTO to implement high tariffs and discriminatory tariff policies, which will destroy the global trading system.

Obviously, China is one of the target countries. This has brought many challenges to China. How should China respond to the challenges? Wolfe said that for China, the main interest is to maintain an open world economy, which is essential for its own sustained prosperity. In the current situation, this means that China must make timely adjustments at home and become a leader in the international arena.

Wolf believed that China needs to consider the following points first in its domestic policy.

1. It needs to re-balance demand without increasing the trade surplus and get rid of the dependence on domestic ultra-high investment.

2. It needs to be open to imports unilaterally, so that China will become the most dynamic source of global demand.

3. It needs to control exchange rate to avoid a substantial depreciation of RMB.

4. It needs to reform and liberalize its domestic financial system.

5. It needs to liberalize capital inflows and capital outflows to avoid huge net capital outflows, a weakened real exchange rate and greater current account surpluses.

In terms of global policy, Wolf believed that China needs to promote discussions on rebalancing of global demand, strengthen the IMF's ability to manage global financial and monetary crises, strengthen the system facilitates capital flows to emerging and developing countries and promote multilateral global trade liberalization.

At the end of the speech, Wolf said that the current world has reached a dangerous point of political and economic instability. The West is falling apart, and nationalism and protectionism in the U.S. is also rising. This trend will not change in the near future. In this context, China needs to be the leader in the global economy, which requires China to take real actions at home and abroad to make substantial changes.

Zhu Min, Academic Adviser at CF40 and Chair of the National Finance Research Institute (NFRI), Tsinghua University, commented on Wolf's speech.

Wang Jisi, President of the Institute of International & Strategic Studies (IISS), Peking University (PKU), commented on Wolf's speech.

After Wolf's speech, Zhu Min, Academic Adviser at CF40 and Chair of the NFRI, Tsinghua University, made comments on Wolf's speech. He discussed issues like whether the de-globalization has really happened, the current situation and prospects of populism in the West, and the "Washington Consensus" and capital flow management. Wang Jisi, President of the IISS, PKU, expressed his views on issues such as populism and nationalism and new international political order. Participants at the exchange luncheon also had in-depth discussions on the prospects of the development of Western democracy, American elite group's reflection on Trump's victory and other topics.