New World Bank chief defends globalization, warns against protectionism

BEIJING - Reuters

REUTERS photo

The World Bank’s newly appointed chief executive gave a spirited defense of globalization during her first official visit to China, saying it had helped richer and poorer countries, and economic integration made it hard for any nation to walk away.

Kristalina Georgieva, a Bulgarian who took up her post at the multilateral development lender at the start of this year, also praised China for its commitment to economic reforms and open markets.

“Open markets, trade, division of labor has worked extremely well for the poorer countries,” she told Reuters in an interview late on March 20.

But wealthier countries also have benefited from rising middle classes, which are demanding more exports from advanced economies, said Georgieva, a former vice president of the European Commission.

In Germany over the weekend, finance ministers and central bankers from 20 rich nations dropped a former pledge in their communique to keep global trade free and open, acquiescing to an increasingly protectionist U.S. administration.

Georgieva called for an “intelligent, calm conversation” about sharing the benefits of globalization more broadly.

Warning against protectionist policies, she said every country would be hurt if decades of integration and interdependence were unraveled.

“It’s impossible to say, now we are in this boat, but it is only your end of the boat that is sinking,” said Georgieva.

Rather than erect trade barriers, economies should encourage competition which boosts innovation and raises productivity, she said.

Georgieva called for China’s government to continue opening up the domestic market to competition, and move forward with reforms to create “a more dynamic economy”.

“In 2016, 35 percent of growth in the world came from China,” she said. “While this contribution is going to gradually decline somewhat, it is very significant.”

China has said it is targeting economic growth of about 6.5 percent, after it reported growth of 6.7 percent last year.

The World Bank, through the International Bank for Reconstruction and Development, is now providing about $2 billion annually in lending to China, and is involved in projects ranging from pollution controls to urban and rural development. Georgieva said the biggest challenges facing the World Bank remain in those countries torn apart by conflict and facing famine.

“It is horrible to have the shadow of famine in the 21st century,” she said, pointing to situations in South Sudan, Somalia, Yemen and northern Nigeria.

“Our biggest fear is related to that kind of devastation combining the force of nature with the evil of men.”