China | History will prove China, not Trump, right on globalization

History will prove China, not Trump, right on globalization

Nigel Green November 21, 2016 10:49 PM (UTC+8)
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China is on the right side of history when it comes to globalization and investors should back Beijing’s stance on this issue rather than that of Donald Trump.

The Chinese President Xi Jinping told an audience at the Asia-Pacific Economic Cooperation (APEC) summit in Lima, Peru, in recent days that his country will not be turning its back on globalization.

He commented: “Sealing off and excluding others is not the correct choice…China will not shut the door to the outside world but open more…We’re going to ensure the fruits of development are shared.”

This message flies in the face of the approach that has been taken by the US president-elect.  Throughout his campaign, Trump has flagged up protectionist policies, threatened to scrap free trade deals and impose tariffs on Asia’s most influential powerhouse economy.

Perhaps unsurprisingly, such posturing from the future CEO of the world’s largest economy about his penchant for anti-globalization has had many global investors in a tailspin in recent weeks

However, I would argue that they should not obsess about this wave of anti-globalization projected by many politicians across the western world.

Populism is an increasingly important force in global politics.  Understandably, people are worrying about their jobs, their wages, and stagnating economic growth.  As a result, they are seeking alternatives on the more radical left and the more radical right of the political spectrum.

This phenomenon is evidenced by two high profiles populists – Boris Johnson who successfully led the UK’s Brexit campaign and Donald Trump, the new US president-elect – having won the two key popular votes in the western world of 2016.

But despite the growing noise of anti-globalization rhetoric, the politicians’ bold talk may fail to come into effect to the extent that is causing concern to so many investors.

Indeed, the more radical approaches will probably give way to pragmatism and geopolitical and economic realities. Whether they like it or not, the world is becoming increasingly interdependent and globalization is happening right here, right now.

However, that said, there is something of a sea change within large parts of the electorate in many Western countries and sentiments are perhaps changing. This is being reflected in what we’re seeing now across politics in the West – and, of course, some politicians will jump on the bandwagon.

As such, there will be winners and losers in this new shaken-up era.

For instance in America, should Trump hold true to his election pledges, the banking sector is likely to do well due to the lifting of regulations, mining and oil will get a boost due to the repeal of some environmental laws, and pharma stocks will rally should Obama’s Affordable Healthcare Act be scrapped or modified.

Therefore, investors should perhaps adapt and be vigilant, but they should not overly panic about the anti-globalization voices. Instead, they should seek out good fund managers who select investments that aim at the rising sectors, taking care to be diversified in their overall structures.

Any changing sentiment in the West will take time to play out, but investors who are prepared are likely to be able to seriously grow and protect their wealth.

And for all the protectionist grandstanding by some Western politicians, globalization in the world of trade and commerce is here to stay and will, if anything, only gain momentum.

I’m confident history will prove this to be the case.

Nigel Green
Nigel Green founded deVere Group in 2002 from a single office in Hong Kong after discovering a niche market for expats in the financial services sector. Since then, it has grown to become one of the largest independent financial advisory organisations in the world with offices and clients across the globe.
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