What direction will globalization take in 2023? The international community is in urgent need of an answer as the reconstruction of the world order accelerates amid the pandemic and the Ukraine crisis. According to a report released on January 8 by the Center for China and Globalization (CCG), a Beijing-based non-governmental think tank, the nature of globalization is undergoing in-depth re-adjustment.

CCG delegations visited the U.S., Germany, Singapore and other nations in June and November 2022, sitting down with leaders and experts from local think tanks, academia and business circles at a time when people-to-people and cultural exchanges between China and the rest of the world had been stagnant. It also hosted hundreds of virtual and face-to-face talks with its overseas counterparts in 2022.

Based on these first-hand sources, the CCG compiled and released the 2023 China and Globalization Report, summarizing and forecasting the trends and prospects of the China-U.S. relationship, China's integration into the world economy, cooperation under the Belt and Road Initiative and other issues in the coming year.

China-U.S. relations

"China-U.S. relations should not be a zero-sum game in which one side out-competes the other or one nation thrives at the expense of the other. The world is wide enough for China and the U.S. to both develop and prosper," Chinese Foreign Minister Qin Gang said in an opinion piece published by The Washington Post on January 4.

Forty-plus years after the establishment of diplomatic ties between China and the U.S., the bilateral relationship took a nosedive after former U.S. President Donald Trump began a trade war against China in 2018 and the relationship has remained in a downward spiral as President Joe Biden inherited most of Trump's China policy, according to the CCG report.

The meeting between Chinese President Xi Jinping and U.S. President Biden in Bali, Indonesia, in November 2022 laid the groundwork for resuming a routinized dialogue mechanism to stabilize bilateral ties. In 2023, the China-U.S. relationship will be centered on managing risks, sustaining benign competition and leveraging the overlap of their interests, it added.

The report pointed out it is possible that the two sides can work together to boost trade and global governance. The U.S. needs interaction with China within frameworks such as the World Trade Organization (WTO), International Monetary Fund and World Bank, to maintain the stability of the global governance system. The report also underlined the indispensable role of global cooperation with China on climate change.

The level of China-U.S. trade is telling, standing at $541.5, $586.9 and $755.7 billion from 2019 to 2021, respectively, according to China's customs data. As the U.S. remains one of China's most important trading partners, the two are by no means fully decoupling from one another, according to the report.

However, this will not reduce the U.S. intention to contain China. The U.S. has been deepening its military and security alliances, such as the AUKUS trilateral security partnership between Australia, the UK and the U.S., the Indo-Pacific Quadrilateral Security Dialogue (QUAD) between the U.S., Japan, India and Australia, and the Five Eyes intelligence alliance grouping Australia, Britain, Canada, New Zealand and the U.S. Washington's focus will also shift to tightening control of semiconductor and digital technology exports to China to prevent related Chinese industries from taking off.

China is able to offset the effects of U.S. containment efforts by increasing integration with the world economy. It can do this by driving forward cooperation under the Belt and Road Initiative and the Regional Comprehensive Economic Partnership (RCEP), applying for membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and strengthening economic and trade ties with the EU and Africa, the report stated.

It is already clear where the China-U.S. relationship is heading, the report said. The two sides will continue to cautiously interact with each other in years to come, with the trade staying stable. But in geopolitics, they will continue to navigate differences although it is hard to seek common ground.

Economic interdependence

"China's foreign trade and exports showed strong resilience in the face of many difficulties and challenges," Lu Dalian, a spokesperson for the General Administration of Customs of China, said at a news conference on January 13.

Its total import and export volume grew 7.7 percent year on year to a record high of $6.28 trillion in 2022, despite the unabated spread of the virus around the world. Trade between China and the Association of Southeast Asian Nations witnessed a year-on-year increase of 15 percent in the corresponding period, the first year the RCEP went into effect, with the region remaining China's top trading partner, Chinese customs data showed.

Bilateral trade between China and Russia has, for the first time, surpassed the 1-trillion-yuan threshold to 1.28 trillion yuan ($190 billion) in 2022. Last year China's exports to the U.S. edged up 1.2 percent over 2021 to $581.8 billion despite heavy tariffs from the Trump administration still being in place on many goods.

"The lifting of most [COVID-19] restrictions will inject vitality into the economy as people return to regular work and life patterns," CCG President Wang Huiyao said in an opinion piece published in the South China Morning Post on January 10. "The positive outlook is reinforced by Beijing's shift to a more pragmatic pro-growth economic policy, as signaled at the recent central economic work conference [in December 2022]."

Morgan Stanley raised its forecasts for China's GDP growth rate in 2023 to 5.4 percent from its previous outlook of 5 percent, predicting a rebound in activity will come earlier and be sharper than expected, according to a research note led by the global financial services firm's chief Asia economist Chetan Ahya that was released on December 13, 2022. Jing Liu, chief economist for Greater China at HSBC, shared a similar prediction in her research, indicating China's economy will grow by 5.2 percent this year.

The CCG report reviewed China's efforts to further engage in the regional and global economies—it has officially applied to join the CPTPP, a high-standard free trade agreement covering 11 Asia-Pacific economies that took effect at the end of 2018, and the Digital Economy Partnership Agreement, an international agreement established between Singapore, Chile and New Zealand in May 2019 on approaches and collaboration in digital trade issues; and continued to implement the outcomes approved at the WTO's 12th Ministerial Conference. It is committed to promoting other regional cooperation mechanisms including BRICS, Shanghai Cooperation Organization and the Belt and Road Initiative.

After a decade in operation, the Belt and Road Initiative, which China proposed in 2013 to build a trade and infrastructure network connecting Asia with Europe and Africa along and beyond the ancient Silk Road trade routes, already fits into the bigger picture of globalization. In 2022, China operated 16,000 China-Europe freight trains, up 9 percent year on year; the China-Laos Railway recorded 9 million passenger trips; more than 1 million vehicles have traveled on the Chinese-invested Phnom Penh-Sihanoukville Expressway, Cambodia's first expressway; and the Jakarta-Bandung High-Speed Railway in Indonesia, the first of its kind to be built by China in Southeast Asia, was successfully put into trial operation.

"These examples show that the Belt and Road Initiative meets the needs of market demand and the expectations of the international community with better prospects for development," Wang Wenbin, a spokesperson for China's Foreign Ministry, said on January 10.

Globalization never ends

The future direction of globalization raises concerns on all sides. While the world has been undergoing the process of globalization for decades, some argue it has now come to an end.

The CCG report noted this is not the case. What is ending is an era in which globalization of a neo-liberal model is led by the U.S. But in the transition to a new phase, disputes and vagueness emerge because social media disproportionately spreads information all around the world, resulting in information mismatch. The different ideologies and values between countries make it more difficult to reach a consensus.

China has doubled down on its commitment to globalization, but, more importantly, it needs to come up with an ideal the world is hungry for—an order that is widely acceptable and consistent, and that not only doesn't make other participants worse off, but that also delivers real benefits to them, according to the report.

Moving forward, as China optimizes its pandemic controls and inbound and outbound travel policies, bilateral trade and people-to-people exchanges, including overseas studies and tourism, are getting back on their feet. A post-pandemic landscape is unfolding. It's time to frame globalization with more equality, inclusiveness, sustainability and good faith, the report concluded. 

(Print Edition Title: Back on the Mend)

Copyedited by G.P. Wilson

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