Illustration: Xia Qing/GT

Even the name of China's post-1978 reform and opening-up makes it clear that orientation toward the international economy and support for globalization are central to China's policies. This MKsportaligns with both China's national interests and those of the international economy.

Globalization, as developed after World War II, has been a tremendous success. From 1978 to 2022, world per capita GDP increased by 313 percent with an approximately equal rise in average living standards. China's per capita GDP went up by 3,033 percent. Other large Global South economies - India, Indonesia, Vietnam, Turkey, the entire ASEAN region and others - are also experiencing rapid growth.

Globalization saw history's greatest reduction in poverty. Since China launched reform and opening-up, 1.2 billion people have been lifted from World Bank globally defined poverty - led initially by over 800 million people in China, later by 240 million in India, 30 million in Vietnam and nearly 200 million in other countries.

These results demonstrate that the claims from some Western media outlets that "China is turning in on itself, seeking decoupling with the US and Europe," are absurd. When opening-up has brought China such success, turning inward would be equivalent to China taking out a gun and shooting itself in the foot. In line with the overwhelming majority of Global South countries, China wants to pursue globalization because of its success. 

In contrast, the US and Europe, are turning inward - introducing increasing tariffs, international technology sanctions, and so on. Donald Trump, during his presidential campaign this year, has proposed a universal 10 percent tariff on all US imports.

The world is, therefore, developing a pattern in which China and other Global South economies grow rapidly and pursue globalization, while the US and Europe are relatively stagnant - the US growing an average of slightly over two percent a year and Europe one percent - and turning in on themselves.

The reason opening-up, or globalization, has been such a success in China and the Global South, while the US and Europe have failed to benefit in comparison, is that China has acted in line with the process of globalization, whereas the US and Europe have not.

Globalization vindicates the fundamental issues in economics that have been at its core since its founding work - Adam Smith's The Wealth of Nations. Smith demonstrated that a country that focuses solely on  domestic development, relatively cut off from international trade, will not grow as rapidly as possible because it will inevitably develop huge inefficient economic sectors.

No country can be the most efficient at producing everything. If it attempts to be protectionist or self-contained, it wastes resources producing things which could be bought more cheaply from abroad. Consequently, to be most successful, an economy should specialize in producing those things in which it is most efficient and engage in the international division of labor by exchanging these for products other countries are more efficient at producing.

But there is nothing magical about national borders. International trade is one aspect of the advantages of specialization and division of labor. For a country to succeed in international trade, it has to pursue these other advantages. Specifically, it must make possible a developed domestic division of labor by investing in transport, communications and other infrastructure. It must allocate increasing resources to specialized research and development. It must have increasingly educated and skilled its workforce. It must look for the cheapest energy suppliers. It needs peaceful surroundings so that trade can develop, which means pursuing a foreign policy aimed at peaceful development. Domestic and international policies therefore have to be integrated.

This is what China in particular, but also other successful Global South economies, have done. China and ASEAN illustrate this graphically. These countries turned East Asia into an area of simultaneously intense international trade and investment and peace, thereby becoming the world's most rapidly growing economic region. They pursued domestic policies going with the grain of globalization.

The US and Europe took the opposite direction. US infrastructure became run down while it spent a huge proportion of its economy on the military and a grotesquely inefficient health system which costs a higher percentage of GDP and delivers a lower life expectancy than any other advanced economy. Europe, instead of pursuing peaceful development, allowed a provocative eastward NATO expansion which caused in Ukraine the largest war in the continent since 1945 and cut Western Europe off from its cheapest source of energy - Russia.

China and the Global South are successful in globalization because they pursue domestic and foreign policies in line with it. The US and Europe pursued policies against the logic of globalization and therefore suffered failures.

Hopefully, the US and Europe will change their policies. But until they do, it is China which is committed to globalization and success, while they are turning inward.

The author is a Senior Fellow at the Chongyang Institute for Financial Studies, Renmin University of China. [email protected]