US-China cold war and rising protectionism could split world order

Key Points
  • "Countries in the region should just follow their instincts and ... do what is right, rather than just reacting to outside pressures," Peking University's Jia Qingguo said at the Singapore Summit. "This is also China's advice to other countries."
  • Protectionism is rising, with the "America First" stance under the Trump administration and the Brexit crisis in Britain.
  • The world could increasingly get more divided as blocs form, if the U.S.-China dispute drags on and turn into a cold war, experts say.
President Donald Trump (L) and China's President Xi Jinping shake hands at a press conference following their meeting at the Great Hall of the People in Beijing.
Artyom Ivanov | TASS | Getty Images

While protectionism is on the rise among some nations, most countries should "do what is right" rather than succumb to external forces, a professor from a top Beijing university said.

In fact, only a few countries subscribe to the concept of protectionism, while most prefer cooperation — whether it's in trade, tech or security, Peking University's Jia Qingguo said on Saturday.

"Countries in the region should just follow their instincts and ... do what is right, rather than just reacting to outside pressures," he said at the Singapore Summit. "This is also China's advice to other countries."

The United States under the Trump administration has taken an "America First" stance, with President Donald Trump vowing to put American jobs and workers first.

America's protracted trade war with China has already led to several rounds of tariffs being slapped on billions of dollars worth of each other's goods. Trump has urged American companies to return home.

Britain, on the other hand, is still mired in its Brexit crisis, which started when the nation voted to leave the European Union amid the rise of nationalistic sentiment and the immigration crisis in Europe.

But Jia said: "I don't think (decoupling is) reasonable and ... going to serve our interest."

In fact, China has been successful partly because it hasn't been "dogmatic" in following the models of others, he said. He called on countries to follow their own paths, taking into account individual domestic conditions.

"People in Washington would say: this is China trying to set up another alternative model of development for developing countries. This is wrong. China is saying that every country should form their path ... in consideration of their own national situation," he said.

"A lot of people in Washington are ... trying to demonize China and develop policies on that basis. I think the world should get over that," Jia told the conference.

A new cold war could split the world

If the U.S.-China dispute drags on, the world could become more divided as blocs form, experts said at the conference.

The world "may face a protracted, multi-dimensional cold war, not just a trade, nor even economic conflict," Ho Kwon Ping, executive chairman of leisure group Banyan Tree Holdings, said. "Nations are increasingly pressured to take sides as a U.S.-China cold war polarizes issues."

India's former national security advisor Shivshankar Menon said "there's a real risk" of the world being split into two separate geopolitical orders. Such a future would impact the "conditions that make fantastic growth in Asia possible in the past few decades," he said, pointing to areas like freedom of navigation, dispute resolution and crisis management.

Menon said, however, one solution would be "coalitions of the willing" that come forth to deal with such issues.

"It's going to get harder ... The alternative is terrible, the alternative is every little crisis somewhere ... actually leads to direct conflict," he said. "We can't expect the world order to (deal with) these issues anymore."

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But the U.S. and China are not the only players on the world stage — Europe and India are also "part of the game," Jean Lemierre, chairman of France's largest lender, BNP Paribas, said at the summit. He also stressed that despite the looming risk of a cold war and potential splitting of the world order, "there will be cooperation."

"I do not believe cooperation will disappear. So we need to adapt to this ... My guess is Europe will do its best to avoid that situation," he told CNBC at the Singapore Summit.

Jia of Peking University, speaking in a separate panel, urged countries to develop "some kind of risk tolerance in dealing with each other."

"As long as we're trading, we depend on each other ... We need this risk tolerance, otherwise the world will become a disaster," he said, adding that Washington should be "more pragmatic" in policy making.