Davos: What Trump and Xi have in common

Nobody is as good as Donald Trump at making the Davos audience nervous. This Friday (20.1.2017), before the World Economic Forum (WEF) is over, he will be sworn in as the 45th US president.

Trump is a billionaire entrepreneur, but his public speeches and tweets seem to suggest that he's against everything the Forum represents: open borders, free trade, globalization, lower tariffs. And, especially, a refined and polite discourse.

In Trump's view, free trade agreements like the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP) are "terrible" and "a disaster." He threatened to pull out of the World Trade Organization (WTO) and the Paris climate agreement, and said the "the concept of global warming was created by and for the Chinese."

He told car makers via Twitter: "Build plant in US or pay big border tax!" Predicting the end of the EU and calling NATO "obsolete" did not help to endear him to attendees at the Forum.

A communist in Davos

Chinese president Xi Jinping, on the other hand, is officially a communist, and he has not been democratically elected. And yet, it was Xi who won the hearts in Davos. In his opening speech, he gave the audience everything they wanted to hear.

WEF founder and president Klaus Schwab called Xi's speech "historic" and praised him for his "responsive and responsible leadership" - which happens to be this year's motto in Davos.

The audience applauded when Xi said countries should "stick to the Paris agreement to combat climate change, not walk away from it." They applauded when he defended globalization, adding it should be "more inclusive and sustainable." They applauded when he warned of protectionism and trade wars, and praised free trade and cooperation: "Let's work together for a bright future."

In short, the Chinese president said all the things the crowd in Davos would have liked to hear from the next American president.

With Trump being absent, it fell to Anthony Scaramucci to translate the rants and Twitter tantrums of "The Donald" into a Davos-friendly form. The hedge fund manager has been on Trump's transition team to prepare the presidency, and will serve as his director of public liaison and intergovernmental affairs.

Free, but not fair to Americans

"We want to have a phenomenal relationship with the Chinese," Scaramucci said in Davos. "The new administration does not want a trade war. We would like to have a process of free and fair trade."

But global trade, as Trump sees it, has not been fair to American workers, Scaramucci said. "It has hollowed out American manufacturing, it has hurt the American middle class, and it has crippled the American working class."

Scaramucci gave his own father as an example. Without a college degree, he was solidly middle class in the 1970s. "Today, my dad's wages would be down by 45 percent in real terms" - the effect of globalization, a large labor supply, and excess factory capacity.

"In the last 10 years, 8 million more Americans have gone from the working class to the working poor," Scaramucci said. "We have to come up with policies to change that."

"All we are asking for is to create more symmetry in these trade agreements," Scaramucci added. And if China really believed in globalism, they would have to allow Americans to create that symmetry, "because the path to globalism for the world is through the American worker and the American middle class."

Since the US still controls almost a quarter of the world's economic output, rising wages there would mean "more purchasing power and a virtuous circle of consumption." This, in turn, would lead to more global trade, prosperity and peace, Scaramucci said. "At the end of the day, President Trump could be one of the last great hopes for globalism."

The similarities between Trump und Xi

Trump still has to deliver on his promise to "make America great again." But his claim to focus on the problems of the American middle and working class is not so different from what Xi said in Davos.

China has been able to become the world's second-biggest economy, Xi said, "because we followed a path, under leadership of the communist party, that suits China's conditions."

"When it comes to development, China has put people first," Xi said. "We want development of the people, by the people, for the people. And we have lifted 700 million out of poverty."

What Xi did not say is that China has been highly selective in opening its economy to global competition. For western companies, large parts of the financial services industry in China still remain off-limits, and so do acquisitions of majority stakes in Chinese companies.

It remains to be seen if Donald Trump will be able to achieve a similar form of cherry-picking for the US. His promises have won him the presidency, but Philip Jennings, general secretary of the UNI Global Union federation, does not believe that Trump will bring a change for the better.

"We have a populist revolution where we cannot see a happy destination for our democracies," Jennings said. "Will Davos face the facts that the economics, politics and business practices of globalization have failed to bring prosperity to all?"