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The Age of Interconnectivity
A new era that will require more collaboration and shared benefits
By Michael Zakkour | NO. 14 APRIL 5, 2018
Business, trade, culture and technology have been globalized over a steady course of change and connection for the past 70 years. China has an important role to play in building the next stage of globalization and in promoting free trade, managing geopolitical affairs and furthering cultural exchange. It is critical for China's future and the global economy that it takes up this role.

There have been times in our shared history when China has chosen not to participate in or drive globalization. That is not a mistake that the Middle Kingdom should or can afford to make again.

Actually, globalization has been taking place for over 3,000 years. Defining its history and path is critical to charting its future and China's key role in ensuring its survival because with noted exceptions and downsides, globalization has been a net positive for China and the world.

However, globalization has not been a purely linear development. It has taken shape in many forms, in many ways and in many parts of the globe with several detours and interruptions along the way.

For the sake of simplicity, we will break it down into three eras: Globalization 1.0, 2.0 and 3.0.

Globalization 1.0

It's hard to say exactly when cultures and peoples from different regions of the world began to make contact with each other for small-scale local trade, cultural exchange and the cross pollination of ideas, technologies and people. The first stirrings of globalization can be more accurately described as "regionalization" whereby countries, kingdoms and cultures in the same regional sphere began interacting.

In the Mediterranean, the Phoenicians from what is today Lebanon set up a trading empire from 1550 B.C. to A.D. 300. The Greeks did the same from 700 B.C. onward, with Alexander the Great traveling as far east as India. The Romans further "globalized" from approximately 400 B.C. to A.D. 500.

But, perhaps the most important of all in the ancient context was the bridge between regionalization and globalization established by the Silk Road, a series of land and sea routes that connected China with the Middle East and Europe. Products, ideas, technologies and cultures moved from east to west and vice versa. The Silk Road was the apex of ancient globalization. Buddhism and Islam entered China through the Silk Road, while silk, porcelain, tea and gunpowder traveled west from China.

This process of regionalization morphing into globalization took place all over the world. India, Oceania, the Egyptians, the Aztecs, the Mayans and the pre-colonial civilizations of Africa like the Ghanan Empire and the Ashanti Empire, all to some degree, regionalized and built empires that extended their cultures, languages, trade and technologies to near and slightly further afield places.

Globalization 2.0

The first true globalization began in the 15th century. One key figure was China's great Admiral Zheng He who led voyages of exploration and trade around the world. Between 1405 and 1433, fleets of thousands of ships and tens of thousands of men traveled to India, Southeast Asia, East Africa and West Asia. Zheng established relationships for China with dozens of countries, created new trade routes and accords, and gave China a reach beyond its "regional" scope.

Christopher Columbus sailed in 1492 from Europe, seeking a faster route to India for trade, gold and riches. But Columbus instead found his way blocked by North and South America, a fact he didn't understand at the time.

This marked the beginning of the "Age of Discovery," and over the next 200 years, voyages from England, Spain, the Netherlands, Portugal and other European powers, through colonization, connected Europe, North America and South America, and later, through the slave trade, Africa. An exchange of foods, diseases, cultures, peoples and ways of life resulted. The world suddenly shrank, for good and ill, and the bridge from regionalization to globalization was crossed.

It was also at this time that China largely retreated from globalization and turned inward, thinking that there was nothing beneficial that the outside world could offer except tribute. China was satisfied with regionalization and its influence in Northeast and Southeast Asia.

The two key opportunities for China to participate in and lead globalization that were missed were, first, the sinking of Zheng He's fleet after his last voyage and the burning of his records; and second, in 1793, Beijing's decision to send the English emissary, Lord Macartney, back to King George with a message that boiled down to, "China has no need for the hundreds of items you brought to show us and will not trade with you or anyone else, except on our terms. Please do not come back."

This was especially egregious as Europe and America were at the peak of the "Age of Enlightenment," a time of scientific breakthroughs and new ways of viewing the world with the likes of Isaac Newton and Thomas Jefferson. This period led directly to the Industrial Revolution. In some ways, China missed both these world-altering changes after Lord Macartney was sent packing.

Modern globalization began in the aftermath of World War II. As Europe and Asia began to rebuild from near total destruction, the United States became a dominant world power and along with the Soviet Union competed for global influence. The modern era of consumption, finance, travel and global governance took shape and the liberal globalized order became the settled norm for the developed nations of the world. The founding of the People's Republic of China in 1949 was a milestone event which would have immediate and long-term effects on China's current and future role in globalization.

The first era of modern globalization encompassed the years between 1950 and 1969. The world started to shrink through new technologies of mass communication (global penetration rates for phones, faxes and satellites skyrocketed); modern aviation meant any place in the world was accessible in a matter of hours, or at most a couple of days; global institutions for dialogue and collaboration emerged (the UN, the World Bank and the IMF); and most critically, the soft power products of the United States (English language, movies, music, TV and blue jeans) created something of a foundation for a global world. Notably, not every country was on board with or happy about this order, especially developing countries.

But this era also saw emerging countries starting to compete and contribute on the world stage. For example, Japan became dominant in auto and consumer electronics. Perhaps most dramatically at the end of this era, humankind landed on the moon and the first pictures of the whole Earth emerged. For the first time, everyone in the world could see that we were a beautiful blue marble, floating through space, and that all of us were merely passengers.

The second part of modern globalization is the most recent, well-known, well-documented and impactful to the world's citizens, countries and economies. It began in the early 1970s and concluded sometime between 2010 and 2015. This era was the culmination and the most fully realized version of globalization in history.

The list of technologies, ideas, products and economic and cultural trends that emerged from this era would require a lengthy appendix attached to this article. Here we will list a few of the most impactful:

• Massive computing power for business

• The personal computer

• The Internet and world wide web

• Global supply chain and logistics

• The introduction and evolution of e-commerce and the digital world

• Formerly emerging countries maturing into global economic powers

• The end of the Cold War

• The emergence and impact of free trade and trade pacts

• Brands and retailers embracing globalization, going global and adapting to new markets

• China reemerging as a global economic, technological, political and cultural power, poised to soon become the world's largest economy

We feel the effects of globalization in almost every aspect of our lives today, no matter where we live. In Thomas Friedman's The World Is Flat, published in 2005, he tried to make sense of the massive changes taking place in people's lives that could be felt but not named. He proposed that the eras of globalization could be tracked by the globalization of countries, the globalization of companies and the globalization of individuals. While this is somewhat reductive, the chain does fit into a larger narrative of globalization as all three groups are indeed globalized.

Globalization 3.0

Today, we are in the early stages of Globalization 3.0: the latest era where the world is connected by technology, finance, cultural exchange and politics. We are now wired together, literally and figuratively. Every human on Earth has the opportunity and ability to connect with anyone else via a smartphone. Companies are global and in many ways simulate state actors on the world stage.

Our finances and financial institutions are wired, as are our production and consumption of goods and services. Perhaps more than at any other time in history, the progress and prosperity of the human race depend on how we use and react to everything and everybody being wired together.

There is no doubt that globalization has been a net good for most countries, companies and people over the last 50 years, but we also need to admit that it has its downsides, including disruptions to ways of living, thinking and working; income inequality; and the need to find new ways to employ people and capital for the general good.

In many ways, because technology has become the very feature of life and not an addition to it, the risks for small-scale and large-scale breakdowns in systems are high. The pros of continued evolution in globalization far outweigh the negatives, but it will require greater collaboration between countries, companies and people to ensure that systems—financial, trade and environmental—are enhanced and not degraded. New approaches to problem solving, scalability and the maintenance of the fragile balances of power in Globalization 3.0 will be critical.

We no longer live in a bilateral or unilateral world. We live in a multilateral world, where no one country can lead alone. Each needs to contribute in the best way it can. In the short term, the biggest economies, companies and visionary people must collaborate to midwife us all into a wired Globalization 3.0.

As China transitions to a new era, it will, and must, play a critical role in this process. The world, including China, can no longer sink trade fleets or send emissaries home.

As our exploration of space has gone far beyond the moon, we see ever more clearly that we are unique among planets. We only have this one, and rethinking the picture of the floating blue marble, we must consider how we can further ensure that we are all healthy, happy and prosperous passengers on this planet. Globalization 3.0 will largely determine how we fare in the coming centuries.

The author is vice president of China/Asia Pacific and Global eCommerce Practices at Tompkins International

Copyedited by Rebeca Toledo

Comments to yanwei@bjreview.com

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