Davos agenda aims to reset global economic relations
By Helmo Preuss
The 51st World Economic Forum (WEF) starting on 25 January has as its theme “A crucial year to rebuild trust”. This builds on the “Great Reset” that WEF founder Klaus Schwab and Prince Charles launched in 2021. It crucially starts a week after a new US administration has taken office, even as many of its policy directions still need to be articulated.
This year’s event will take place virtually because of the pandemic and not at the normal venue of the Davos ski resort in Switzerland. It nevertheless will remain a forum for global leaders from business, government and civil society to exchange ideas and plot a way forward from the apocalyptic events of 2020. The event will be accompanied by virtual events in 430 cities across the world, to emphasise the fact that we are in this together as the word faces global challenges that require global solutions and action.
One of those global leaders will be Chinese President Xi Jinping who will deliver a speech via video link on 25 January. This will be the first major diplomatic event of the new year for the Chinese president. He last spoke at Davos in January 2017 at which time he pushed back against rising anti-globalization and protectionism.
"Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war," Xi said in 2017.
This year Xi's speech is likely to focus on sharing China’s experience in swift lockdowns for Covid-19 hotspots and extensive testing to contain the pandemic. He is likely to call for more global efforts in overcoming the unprecedented public health crisis by strengthening the World Health Organisation (WHO), while also reiterating China's continued commitment to an inclusive multilateral approach to addressing a wide range of pressing global issues such as climate change and economic recovery.
China was probably the only major economy to show a positive economic growth rate in 2020. It grew by 2.3% in 2020 and is likely to grow by more than 6% in 2021. In December 2020, its imports increased by 6.5% from a year ago. This was the fourth consecutive month of growth as the recovery of its industrial production sucks in imports from around the world. In the case of South Africa, China was our largest export destination in November 2020, taking 11.6% of our exports.
In addition to Xi, around 19 heads of state and government will attend the meeting, including Indian Prime Minister Narendra Modi, French President Emmanuel Macron and German Chancellor Angela Merkel. The WEF said other world leaders are expected to attend as well, but they were awaiting confirmation.
The “Great Reset” is aimed at getting global inclusive growth back on track as the Covid-19 pandemic has killed over two million people, with the associated national lockdowns having a devasting effect on economic activity. The global economy is expected to have contracted by 4.3% in 2020 with South Africa’s contraction forecast by the South African Reserve Bank at 7.1%.
A recovery in 2021 depends crucially on a global vaccine distribution effort that has been described by the WHO as facing the risk of a "catastrophic moral failure," as rich countries secure the vaccine for their citizens, which means poorer countries may have to wait longer to achieve herd immunity so that countries can return to “normal” economic activity.
Xi is also likely to reiterate China's commitment to coordinate epidemic control efforts, including pledges to make vaccines and rapid testing kits accessible and affordable to developing nations, repair damaged global supply chains by removing trade barriers and other measures and pursue inclusive growth by providing debt relief to poor African countries. This agenda was enunciated by Chinese Foreign Minister Wang Yi on his official visits to Nigeria, the Democratic Republic of the Congo (DRC), Tanzania, Botswana and Seychelles from 4 to 9 January.
The WEF’s vision of a “Great Reset” recognises that what is needed to tackle global crises is a coordinated concerted global response that needs to be underpinned by a mission to change society so as to make it more equitable, inclusive and cohesive. It also means that environmental sustainability must be married to social sustainability by addressing gender issues.
* Helmo Preuss is an economist at Forecaster Ecosa.
** The views expressed here are not necessarily those of IOL.