How business leaders of the world can unite to end the trade war if the US and China are not up to the task
- David Beier and Christopher Caine say the business community has stepped up where governments have failed to protect the global economy in the past
- Speeding up Chinese reform, enhancing cooperation on crucial technology initiatives and establishing joint business standards could be good starting points
In the financial crisis of 1907, JP Morgan helped set a course for economic recovery. After the first world war, business leaders from many countries stepped up to establish the International Chamber of Commerce when governments were unwilling or unable to lead the world economy into a new era of global trade and rules-based commerce.
History has shown that when countries cooperate economically, good things can happen. For example, emerging nations have long benefited from – and built on – the advances of more established economies. US industrialisation accelerated when it used Britain’s cutting-edge technologies in textiles and steam power.
Japan fundamentally reinvented whole industries, applying miniaturisation to electronics and developing more fuel-efficient cars made to high-quality standards at lower cost, by exploiting science and management principles from the US. Despite fears of Japanese economic dominance in the 1980s, that scenario never came to pass.
This is the time for constructive dialogue about finding win-win outcomes for both sides and less “gotcha” behaviour. We hope that Xi and Trump, using their own diplomatic styles, have a sound plan based on properly understood mutual economic self-interest.
But if not, then perhaps it is time for commercial diplomacy and the practical interests of the business community to be given a chance. With this in mind, the following could underpin the business community’s engagement.
First, accelerating Chinese economic reform can dramatically alter the global economic and innovation landscape with largely positive consequences. Lifting tens of millions of Chinese into the middle class would create a vast new global market.
Second, business leaders must find ways to enable cooperation on new science and technology initiatives that can improve the human condition, instead of being subjected to trade barriers that stifle innovation. These results must be secured by building stronger public-private partnerships on artificial intelligence to address broadly applicable societal needs and on energy efficiency to lower air and water pollution.
Third, areas where business standards can be jointly established must be identified to fortify mechanisms that protect a firm’s interests, such as proprietary technologies and enterprise cybersecurity.
A business-led initiative identifying and pursuing areas of future and current common economic interest can create a more productive environment, and go far to blunt protectionist excesses.
The specific solutions are secondary to the urgent need for engagement. Both sides have shared interests and will benefit from focusing on those, and adding to them. Let’s hope both governments would see the advantage of this leadership from their businesses, and say so.
Farsighted business leadership brought nations together around new rules-based economic behaviour in the past. Let’s do so again – and quickly – before it is too late for these two great economies and the rest of the world. Not doing so runs a high risk that an avoidable and harmful economic condition is allowed to metastasise.
David Beier is managing director of Bay City Capital and Christopher Caine is president of The Centre for Global Enterprise