Round-Up on Davos
Nothing epitomizes the global elite more than the annual meeting of business tycoons and political leaders in Davos, Switzerland.
The annual meeting held high up on the mountain resort provides a view of the world economy like none other. Even observers from afar can catch a real glimpse into the state of the world.
Today, leaders not only have to contend with a backlash against globalization at home, they also have to compete with one another to define the technologically-powered global world.
Europe Digs Deep
Last year, Chinese President Xi Jinping took the stage to assert that China would guide and adapt to economic globalization, even if others retreat from it. This year, Xi sent an underling, leaving the stage open primarily to Western leaders. (Members may access Mr. Xi’s speech here.)
In Europe, France and Germany are strengthening their ties in an ambitious effort to deepen and strengthen European Union. As the United Kingdom leaves the EU, French President Emmanuel Macron is fast filling the vacuum it is leaving in European politics.
“France is back at the core of Europe. Because we will never have any French successes without a European success,” Macron announced.
In an effort to make the French economy more business-friendly, France is realigning itself with Germany and Northern Europe. Changes include corporate tax cuts, labor market reforms and deregulation. France aims to have “less rules defined by law, and more rules defined by consensus,” Macron said.
Also, many European leaders are looking to strengthen the EU with a capital market union and banking union as well as a more unified foreign policy. That includes diplomacy on issues like trade and climate change and on military defense.
“We need a stronger Europe. It’s absolutely key,” Macron said.
German Chancellor Angela Merkel echoed that call, saying that Europe needs a common foreign policy and defense especially now that America has turned inward.
“We need to take our destiny in our own hands,” Merkel said.
Tech Change Drives ‘Unstoppable’ Globalization
Even as political alliances evolve, the greater impetus driving change today is technological innovation.
“I think globalization cannot be stopped,” said Jack Ma, founder and executive chairman of the Chinese tech giant Alibaba. “If we don’t align together, human beings are going to fight each other, because each technology revolution makes the world unbalanced.”
A Race to Define the Digital World
European leaders say they need to act now to ensure the digital economy does not trample over individual rights. Merkel said Europe is “under great pressure” to define policies for the digital economy before it is too late.
As Chinese and American companies acquire vast amounts of data, it is almost a race against time for Europe to have a say over how that data would be used. In China, the technological firms that are collecting the data are closely cooperating with the state. And in the United States, tech firms have greater reign to collect data and use it for private enterprise.
“Data will be the raw material of the 21st Century,” Merkel said. “The danger is we will lag behind and be overtaken by events as we hold those philosophical debates.”
The EU is pushing back against both models by emphasizing a right to privacy.
“In this current environment, Europe has a responsibility and a role to play vis-a-vis China and the U.S.,” Macron said, emphasizing it is in the European DNA to promote “freedom, justice, fairness and individual rights.”
U.K. and U.S. Models
Meanwhile, the United States and the United Kingdom are seen as being in retreat from multilateral cooperation to pursue their own agendas. Still, leaders from both countries stressed they are open for business and interested in bilateral trade negotiations.
On the digital economy, U.K. Prime Minister Theresa May said she is focused on innovation-friendly regulation. “Regulation that will make the UK the best place to start and grow a digital business – but also the safest place to be online.” She added, however, that the United Kingdom is cautious about technological innovation. “The status quo is increasingly unsustainable as it becomes clear these platforms are no longer just passive hosts.”
A ‘Resurgent’ American Economy
For his part, U.S. President Donald Trump highlighted the strong American economy, which has benefited from deregulation, employment growth and a $7 trillion surge in the stock market.
“The world is witnessing the resurgence of a strong and prosperous America,” Trump said.
On trade, Trump said the United States would promote free and fair trade. “We support free trade but it needs to be fair and it needs to be reciprocal because, in the end, unfair trade undermines us all. The United States will no longer turn a blind eye to unfair economic practices including massive intellectual property theft, industrial subsidies, and pervasive state-led economic planning.”