G20 Must Guard Against "Creeping Protectionism"
What's happening in London today? Well, Jamie Oliver is in town cooking a three-course meal at Downing Street for about oh twenty or so of the world's most important leaders. Yes, it's G20 day.
The summit takes place at a time when the global economy is in disarray and disagreement between China, Europe and the United States on a path forward, appears in greater focus than ever before.
(For the full Victor Fung interview, please click on the left)
Protesters took the streets Wednesday and whether you're an American or Chinese citizen, one can certainly understand a lot of the issues the people in the streets are talking about.
"For a long time now, we have been talking about how in the process of globalization we really need to think about inclusive growth -- worry about climate change and worry about the distribution of income -- but I think in the longer term, the most important thing that everybody should be worried about, is the rise of protectionism," said Victor Fung, chairman of the International Chamber of Commerce and chairman of Li & Fung, one of Asia's biggest export trading houses.
Fung calls this creeping protectionism. He told CNBC that though stimulus packages are welcomed and necessary, they should be looked at with caution as well. "Every time that comes in, there will be some aspects of it that is protectionist -– and in the long run, if that really hurts the whole growth of the economic pie, that is not going to be helping anybody," Fung said.
It's quite obvious that any kind of protectionist policy will result in an immediate loss of jobs for the whole economy. But recent rhetoric with regards to the U.S. stimulus package would seem to contradict this sentiment.
"You can say that if you protect the steel industry, you may save a thousand jobs. But I will guarantee you, immediately, tens of thousands of jobs in the other parts of the economy will be lost ... in the long run, what we really need to do is to think about how to restart growth," Fung adds.
An old Chinese proverb goes: 'History not forgotten is a guide for the future'. During the Great Depression, protectionism led the world to disastrous consequences. It's something G20 leaders should keep in mind.