Bob Zoellick Comes to Town
Hearing Bob Zoellick speak in Washington a few years ago, I concluded that if there was a presidency of the world, he would be the ideal nominee. He believes in opening markets, lifting growth in Sub-Saharan Africa, accommodating the rise of China in the world system – and he is a good friend of Australia.
As he confirmed in his address to the Asia Society last night in Sydney.
Zoellick, of course, is the president of the World Bank, as well as a former US Deputy Secretary of State, US Trade Representative and managing director of Goldman Sachs.
It’s the convergence of events in Europe and the US that has pushed the world into a new danger zone, he said. In particular the sturm und drang in congress alarmed a world that is used to seeing America show leadership.
Underlying this is a global shift. Today, one half of global growth is represented by the developing world. In the 80s it was only 20 percent.
Zoellick focused on potentially disruptive events in China without elaborating on what form they might take: another Tiananmen? unrest in the provinces over land and environmental issues? labour uprisings and strikes?
He was specific on another challenge, and I’ve never heard it put this way before: per capita income in China now is $5000; in 2030 it could be $30 000. Said Zoellick, “That’s like having 25 new South Koreas.” Which the world could not absorb.
China already sucks in 53 percent of the world’s cement, 47 percent its iron, 45 percent of its steel, half its pigs and one quarter of its soybeans. The Chinese will have to change their resource utilisation.
He said China has 85 million low-value jobs and the World Bank is working on plans to get those jobs to Sub-Saharan Africa, where already a variety of economies have been achieving five to six percent growth.
I’ve often been asked during presentations whether the US dollar will cease to be the world’s reserve currency, the currency with which oil is purchased for example. Zoellick had an interesting formulation on this one. He said we could be moving to a system where there are multiple reserve currencies.
Asked a question by Professor Geoffrey Garrett, Zoellick yielded probably his most interesting and thoughtful answer. He was actually confident about progress in the Doha Round. He said the US will be cutting farm subsidies, winding back ethanol subsidies and doing other things. This could easily be presented as a good package. It could win the support of China. And it could revive the progress towards freer world trade. Moreover he said the American administration should see an advantage in going on the offensive in trade. Not only avoiding protectionism itself but taking this package to the world and challenging other nations to get a move on.
As in many of these kinds of discussions, Zoellick was dwelling on China and avoiding India. Asked about this by Neville Roach – who pointed out that India was Australia’s third largest export market and our biggest source of skilled migrants – he said, “In India you can visit five centuries in one country.” Which probably leaves more questions hanging.