Adapting to the volatility of the world order
Recent news reports have pointed to the change in dynamics of the world economic order. While many democracies assert their believe that their system of governance is inseparable from the market economy, their relationship with the populated countries is somewhat principally subject to economic pragmatism, which often forces choices that lead to the greatest good for the greatest number.
China’s admission into the World Trade Organisation in 2001 was met with calls for economic reform, particularly from the United States. While Washington has historically demonstrated strong support for the open international economy, one of the world’s fastest growing economies with a population of close to two billion people was an opportunity too big to ignore.
Fast forward to today, the military rivalry during the Cold War between the US and Soviet Union has now evolved into an economic competition between the United States and China -holding the top two ranking spots in the world by gross domestic product (GDP).
Interestingly, economic pragmatism has prevailed, but with what seems like a twist. The world is looking at an apparent role reversal.
China is engaging in economic activities with more countries than ever, seen particularly in the One Belt One Road (OBOR) Initiative. On the other hand, the President Trump has taken a more inward looking “America First” approach to address the US economy.
Washington withdrew itself from the Trans-Pacific Partnership (TPP) Agreement, and recently imposed tariffs on steel and aluminium imported into the US. If we add in Britain’s impending exit from the European Union, the world’s two most influential economies are shedding their doctrine of the fully liberalised market.
Technology, the global population and economic diversity make the world too big to live in isolation, and our civilisation has come to a point where norms will self-regulate as trends and time pass by.
This article is not meant to pass judgement on economic doctrine, but rather to highlight that economic principles are subject to massive shifts, and requires our sensitivity to re-examine, restructure and upgrade policies based on holistic strategy, information and data.
It is this reason that for an economy like Malaysia, it is best that we keep ourselves open to change, and move towards competitiveness in a careful, gradually liberalised market. The shocks of the current uncertainties are absorbed through carefully, yet progressively crafted economic policy.
For example, media reports indicate that even analysts are divided on the state of the US dollar as the global trading currency. With as much data and knowledge as possible, we must play our roles in ensuring our policy decisions are made with the best information, interpretation and wisdom, as they have deep impacts to our imports and export traditions.
Economic pragmatism, however, should never be untethered pragmatism. There are certain principles, like eternal protectionism, that would never find its way to be accepted by global markets. Not only are they harmful to global consumer choices, but equally destructive to holistic development of industry and the larger national economic scale.
Thus, the government has taken a well balanced approach in its economic policies. Many of these policies have been discussed in detail through this column. We will continue to be an active participant in the global economy – we have welcomed the OBOR and played an important role in the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
For us, each corner of the globe is a blue ocean of opportunity, including our own. While we welcome foreign investments into our country, our own entrepreneurs also are given equal opportunities to compete on the global stage. At the same time, the government is fully committed to facilitate the development of our local businesses.