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ECONOMY

Ex-U.S. Treasury Secretary Repeats Call for ‘Responsible Nationalism’

By Wang Liwei and Fran Wang

(Beijing) — Countries should prioritize the economic welfare of their own people, but they shouldn’t harm citizens of other nations with their decisions, former U.S. Treasury Secretary Lawrence Summers said Monday, reiterating his prescription to treat rising anti-globalization sentiment in the West.

Summers has coined the phrase “responsible nationalism” for what he thinks is a new approach to tackle rising populism and trade protectionism, exemplified by last year’s Brexit vote for the U.K. to leave the European Union, and Donald Trump’s election as U.S. president.

“Surly nationalism and anger” in the politics of the United States and countries in Europe is adding to global economic woes, while sustainable and rapid expansion are becoming more difficult to achieve for emerging economies like China as they mature and as imbalances develop, Summers said in an exclusive interview with Caixin.

“It’s going to require great creativity and new approaches if we are to maintain and enhance the momentum of growth, and if we are going to create a situation where everybody has a chance to share in that growth,” he said.

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Former U.S. Treasury Secretary Lawrence Summers told Caixin on Monday that "responsible nationalism" could help defuse rising anti-globalization sentiment in the West. Photo: Visual China

He called for the adoption of “responsible nationalism” to address public concerns in different countries. In the meantime, he embraces internationalism in a “managed” way.

“I hope that responsible nationalism can become a common doctrine, and that as each country pursues a responsible nationalism, we can have a managed internationalism,” said Summers, who is also president emeritus of Harvard University.

“People need to feel that their governments are looking out for them rather than looking out for an abstraction of a common humanity or a common international system,” he said, urging world leaders to give up setting aspirations ahead of what is politically feasible and sustainable.

Countries need to be more respectful of national sovereignty and prerogatives, he said.

Bucking the anti-globalization trend, China has repeatedly advocated free trade and economic opening.

Since 2013, China has pushed the “One Belt, One Road” initiative, which aims to strengthen economic ties with countries in Asia and Europe, primarily through infrastructure investment and construction.

Summers called the One Belt, One Road project “hugely visionary and important.” It not only allows China to play a constructive and active role on the global stage, but also responds to domestic imperatives, such as putting to use the country’s substantial excess capacity, he said.

But the initiative will be carefully watched internationally because some countries remain skeptical about whether Beijing will use it as a tool to wield influence and power, he added.

Within the country, the Chinese government is facing a daunting task to strike a balance between bolstering growth and tackling persistent economic ills, with bubbles in its property market a particularly serious problem, Summers said.

“China faces quite possibly a very real set of trade-offs between, on the one hand, maintaining growth by supporting continuing investment, and on the other hand, allowing unsustainable imbalances to develop, which will lead to even greater interruptions of growth down the road,” he said.

“I look at some aspects of the valuation of real estate in China, and I look at some signs suggesting a substantial commitment to building real estate even in settings where it’s not obvious who’s going to buy the real estate,” he said.

“I look at that with considerable concern.”

He added that appropriately managed property taxes could be an important force for stability, dampening speculation and cooling an investment frenzy.

Contact reporter Fran Wang (fangwang@caixin.com)

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