The Changing of the Global Economic Guard

In January 2017 the global economy changed guard. The venue was Davos, the annual gathering of the world’s wealthiest recyclers of conventional wisdom—and consistently one of the last places to anticipate what is going to happen next. This time was different. The assembled hedge-fund tycoons, Silicon Valley data executives, management gurus, and government officials were treated to a preview of how rapidly the world is about to change. Xi Jinping, the president of China, had come to the Swiss Alpine resort to defend the global trade system against the attacks of the U.S. president-elect, Donald Trump. With minimal fanfare, the leader of the world’s largest developing economy took over the role of defending the global trading system in the teeth of protectionist war cries from the world’s most developed nation. It portended a new era in which China would apparently play the role of the responsible global citizen. The bad guys were swapping places with the good. “Some people blame economic globalization for the chaos in our world,” Xi told Davos. “We should not retreat into the harbor whenever we encounter a storm or we will never reach the other shore. … No one will emerge as a winner from a trade war.”

After more than 70 years of U.S.-led globalization, Xi’s declaration of global stewardship in the spiritual home of capitalism was an Alice in Wonderland moment. A few days later President Trump gave his by now notorious “American carnage” inaugural address. Much has changed since then. For the time being at least, Trump has dialed back his more outlandish protectionist rhetoric. A U.S.-China trade war looks less likely than it did in January. But things can change fast in Trumpland. In the space of half a day this week, Trump was reported to be considering