Brexit tells world to change path of globalization

Updated: 2016-08-25 07:41

By Zhu Yuan(China Daily)

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Brexit tells world to change path of globalization

Many economists have lowered growth forecasts for Britain and broader EU after the referendum vote, and some predicted a recession in Britain by early 2017, as consumers and businesses might postpone spending and investment due to uncertainty, according to the Office of Financial Research in the US Department of Treasury. [Photo provided to China Daily]

The implications of Brexit, or Britain's exit from the European Union, could extend far beyond the EU. It could be an antidote to the downside of globalization. Or, it could backfire on the problematic global economy.

Even many Britons in the "leave" camp were surprised that the majority of the country's people had voted to leave the EU. With the number of people demanding another referendum on the rise, it seems most of the voters who cast their ballots to leave the EU just wanted to register a protest to remind the British government of the problems or potential problems the country could face in the near future.

Yet the fact that 57 percent of the upper class wanted to stay in the EU while the middle class was fairly divided and two-thirds of the population below them supported Brexit-which a post-election analysis published in The Times, London revealed-speaks volumes of the dissatisfaction the majority of Britons felt because of the situation created by globalization or neo-liberalism.

Thanks to globalization, integration has been the most frequently used word over the past decades, with major countries trying to integrate the world into one economic entity to facilitate free trade. The establishment of such a huge global platform for business has indeed facilitated vibrant economic activities and innovative endeavors. The living standards of a large number of people in emerging countries have improved. China, with a little less than one-fourth of the world population, is a case in point.

Yet globalization has also been widening the chasm between the haves and have-nots, and the world's wealth has been increasingly concentrating in the hands of a few elites, both in developed and developing countries. And China is no exception.

The 2008 global financial crisis was the result of the insatiable greed of bankers in Wall Street, who designed different types of derivatives to cajole clients into investing in papers whose face values were much higher than their actual worth. And the Occupy Wall Street movement in late 2011 principal slogan, "We're the 99 percent", reflected the frustration of a large number of underdogs in the world's most advanced country.

The same is true for other places in the world. In China, while a few Chinese names figure on the list of the world's wealthiest people, the gap between the haves and have-nots has been widening at an unprecedented pace.

If globalization continues to give shape to a world in which wealth continues to converge in the hands of a small group of elites and the unequal distribution of wealth continues to take its toll on an increasing number of underdogs across the world, the disintegration of economic unions such as the EU could become the rule rather than the exception.

If the increasingly serious threat from terrorism and extremism also has something to do with the side effects of globalization or is the result of some Western countries' forcible efforts to hoist their development models and values on other countries, Brexit will likely be just the beginning of the disintegration of the world economy as we know it today.

We Chinese have a saying, if integration is too long a process, disintegration is inevitable, and vice-versa.

It may be too early to conclude that Brexit is the harbinger of the disintegration of the EU or the collapse of globalization. But it would be unwise for world leaders and economists to not pay urgent attention to the problems globalization has created over the past couple of decades.

Whatever impact Brexit will have on the EU or on the British economy, it should serve as a warning that something needs to be done to at least change the way globalization has been practiced until now.

The author is a senior writer with China Daily.