World order reverses back 120 years

Business | Andrew Wong 14 Sep 2020

In an interview with the BBC earlier this month, former World Bank President Robert Zoellick said that the world could look like 1900 again, with nations abandoning globalization and pursuing nationalist interests.

Last week, I had pointed out that the health of the financial markets may depend on the monetary policies of central banks across the world.

So, if countries are not willing to accept each other's cultural and political differences, once there's a financial crisis which triggers a global recession, these problems can easily light the fuse for a global war.

But if there's a real threat of a war, why does Zoellick believe that the world today - with its current barriers - is headed back to how it was in 1900, when he could compare it to the time before the First and Second World Wars?

Zoellick said co-operation was the only way the world will emerge from the recession and his biggest concern was the escalating tensions between America and China.

He also very critical of US President Donald Trump and his policies.

A former senior official, Zoellick has served six US presidents including two Republican ones - George H W Bush and his son George W Bush. Therefore his criticism of Trump has naturally raised a lot of eyebrows.

Of course, Zoellick's statements that Trump has character flaws, and that his skepticism of America's allies and protectionist policies have had added to fears in Asia, are indeed points worth noting.

But even if Trump was not in the picture, would countries stop erecting barriers, or would the west and China bury the hatchet and once again live in harmony?

First of all, even if Democratic contender Joe Biden wins the US presidential elections, we must remember that the Speaker of the House of Representatives, Nancy Pelosi, a Democrat, is fiercely anti-China.

Therefore, it is unlikely that Biden would immediately offer an olive branch to China if he took charge.

Also, China's Foreign Minister Wang Yi's recent five-nation European tour did not go off as well as expected.

The minister, who visited Italy, the Netherlands, Norway, France and Germany, found European views on China have hardened.

This means that China's relations with Europe will not be smooth. And we should note that whoever becomes Germany's prime minister in next year's general elections will have a bearing on China's relations not just with Berlin but the whole of Europe.

Zoellick's warning that history might be repeating itself - with the world today looking more like it did during the turn of the 20th century - is not without good reason.

In 1899 and 1900, the United States initiated an "Open Door" policy over trade with China but in the summer of 1900, the Yihetuan Movement broke out in China to "support the Qing government and clear out the foreigners."

The uprising provided an excuse for an eight-nation foreign alliance to invade China and put down the fighters, who were labeled as the "Boxers."

Following this, the Qing government was forced to sign the Boxer Peace Protocol of 1901 with the alliance which included huge reparations on the part of China.

Of course, China today is an economic and military superpower and it's impossible that Beijing could ever be forced to sign agreements such as the 1901 protocol.

But if America and Europe cannot mend fences with China, there will be more political and economic friction and the risk of a hot war cannot be ruled out.

Andrew Wong is chairman and CEO of Anli Securities

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