The movement of goods, services, finance, data, and people, across borders, adds to gross domestic product (GDP) and fuels productivity growth in many developing countries. It, therefore, has created a pathway out of poverty for hundreds of millions of people.
Globalization is, however, not the sole cause of growing inequality in advanced economies. The transition to a digital economy disproportionately rewards workers with higher skills, and automates routine tasks, which has become a driving factor.
In nations where underlying growth has been lackluster, there is a growing tendency to blame globalization in all its forms for the fact that large segments have fallen behind.
A wave of wrong-headed protectionism could have damaging consequences in a world still struggling to jumpstart growth, and this scenario poses serious economic and social risks for themselves and other countries.
The world needs to direct more investment and innovation into education and training, especially with workers facing fast-moving labor market shifts – both caused by foreign competition or automation technologies. We believe China can, and should make, a distinctive contribution in all of these areas.
The world also needs to put fundamental frameworks in place, in order to secure the healthy growth of the digital economy. China can push for international cooperation on issues such as data standards, data sharing, cyber security, and artificial intelligence. Given the immensity of its own potential data sets, sharing more of China’s own information with the world could also contribute to global growth.
More broadly, China can reshape global governance. Within multilateral institutions, China is in a unique position to bridge the perspectives of developing and advanced economies. It will also be important for the nation to signal its seriousness about improving corporate governance. As Chinese companies expand, they should adopt global standards in labor, environmental and business practices, both at home and abroad.
China is deeply embedded into the global economy, and its prospects for continued growth and social stability are closely tied to the success of globalization. It is in the nation’s own interests to invest in global public goods and mitigate the risk of other nations turning inward.
Proclamations alone will not be enough. It will take tangible steps toward reform and inclusiveness to rebuild the public’s trust and backing for globalization.
The author is director of the McKinsey Global Institute, a senior partner with the McKinsey & Company
This article was written by Jonathan Woetzel and was originally published in China Daily.