Why international cities may drive the new wave of globalisation

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Neville Lai, Vice-Curator, Hong Kong Hub, World Economic Forum, Wai-Hong Tang

• COVID-19 scaled back globalisation, but now international trade is picking up.
• Global cities play a critical role in maintaining and rebuilding networks of international economic cooperation.
• Cities that can navigate through international uncertainty, accommodate diverse talents and preserve critical networks, while building new ones, will emerge as the power hubs of the future.

The world seems to be ready for re-globalisation. Socioeconomic life is gradually returning to normal. International travel and trade are catching up to pre-COVID-19 levels and governments worldwide are unveiling new initiatives to attract foreign businesses, capital and talent.

Nevertheless, recent events continue to remind us how fragile the fabric of globalisation has become: Russia’s invasion of Ukraine and tensions in the Taiwan Strait raise the risks of great power conflicts. While trade, investment and research and development are now points of friction as countries seeking to restrict exports of semiconductors and other strategic technologies.

The seeming global decoupling has led some multinational corporations to shift their supply chains in an effort to ‘de-risk’ or ‘friend-shore.’ But wherever we are, events in one part of the world can have far-reaching ramifications in the highly interdependent global order, whether it is a stranded cargo ship in the Suez Canal or an insolvent bank in the United States.

Image: UNWTO

Such uncertainty has led some thought leaders to go as far as to proclaim that globalisation has ended. We believe, however, as much as the state-based liberal international order is in crisis, it constitutes only one dimension of a densely-interconnected world. Throughout modern history, globalisation has continued to progress amid protectionism, xenophobia and war. Both state and non-state actors have continued to build new webs of networks that cut across physical, political, civilisational and even virtual boundaries.

The growth, power and resilience of these networks are manifested the most in the world’s urban centres. However, the new wave of globalisation may no longer be commanded and controlled by cities like New York, London or Paris. Instead, we believe, it will be increasingly decentralised, driven by an emerging group of global cities in the non-Western world.

Despite the narrative about the return of bloc politics, much of the international community has chosen not to fully align with large powers. India, for instance, continues to maintain a close partnership with Russia in energy and security, while aligning itself increasingly with the West in economic and strategic terms. Likewise, during his recent visit to China, French President Emmanuel Macron stressed that Europe should pursue a strategy independent of both Washington and Beijing.

Indeed, the best strategy for states as well as non-state actors to succeed in a fragmenting world is to keep as many connections as possible. Global cities that lie in the geopolitical fault lines — from Istanbul, Dubai and Mumbai to Singapore and Hong Kong — will play an even more important role in preserving the fabric of globalisation against the threat of nationalism, ideological opposition and geostrategic competition.

Non-Western cities are now re-emerging as major political, economic and cultural centres. The China Development Forum 2023 in Beijing, for instance, brought world leaders together for the first time since the COVID-19 outbreak. Their attendance refuted the “decoupling” narrative and gave a vote of confidence to China’s economy and its global role. Meanwhile, the Beijing-headquartered Boao Forum for Asia hosts an international summit that, in the words of Chairman and former UN Secretary-General Ban Ki-moon, embodies a “multilateral approach to global partnership” in an increasingly interwoven world order. Other Asian metropolises, such as Hangzhou, Hong Kong, Singapore and Dubai, have also become favourite venues for global events, from the G20 and Web 3 Summits to the Formula 1 Grand Prix and World Expo.

Global cities play a critical role in maintaining and rebuilding networks of international economic cooperation. Shanghai, for instance, was able to recover as a top shipping hub after the city’s stringent lockdown, because of its extensive port connections in the Yangtze Delta, excellent air infrastructure and access to digital technology. Singapore, meanwhile, continues to enhance its logistical capabilities through the Tuas Port expansion project. When the four-phase project is fully completed in the 2040s, the mega port will operate with artificial intelligence and an annual handling capacity of 65 million TEUs.

Moreover, cities take advantage of their hyperconnectivity by building alliances and partnerships with one another. Hong Kong, for instance, opened its first economic and trade office in Dubai in 2021 to promote business opportunities to companies, entrepreneurs and family offices in the Gulf Cooperation Council countries. The Hong Kong Monetary Authority, meanwhile, is collaborating with the Central Bank of United Arab Emirates, the Bank of Thailand and the People’s Bank of China on Project mBridge, a digital currency project supported by the Bank for International Settlements Innovation Hub Centre in Hong Kong. These subnational connections give cities a greater agency in globalisation and enhance the resilience of a networked world against the forces of de-globalisation.

Discover

How is the World Economic Forum ensuring sustainable global markets?

The World Economic Forum’s Platform for Shaping the Future of Trade and Investment informs business and policy action on critical international trade and investment choices, driving inclusive growth and development by working with companies, governments, and civil society.

• The Global Alliance for Trade Facilitation is cutting trade costs by delivering trade facilitation projects in 30 countries in Latin America, Africa and Asia.
• The Forum piloted sustainable investment facilitation in Cambodia, Ghana and Kenya to unlock foreign direct investment for development.
• The Forum’s Digital Trade work drives coherence and interoperability in TradeTech and Digital Economy Agreements.
• The Forum’s Green Trade and Supply Chain Sustainability community identified 25 technologies to cut global emissions.

Contact us for more information on how to get involved.

Global cities also provide an ecosystem for innovation and entrepreneurship. Asian metropolises are home to some of the world’s leading research universities – from Tsinghua University, the National University of Singapore to the Indian Institute of Technology Bombay – that attract and train the best and the brightest. With the support of infrastructure, talents and preferential policies, incubators, accelerators and venture capital, firms have sprung up in Seoul, Shanghai, Singapore, Kuala Lumpur and Mumbai to promote R&D, knowledge transfer and commercial experiments. Dubai, Riyadh and Shenzhen, meanwhile, established new special economic zones to provide additional incentives to entrepreneurship and remove barriers to foreign investments.

Indeed, the world is entering an age of re-globalisation. Global cities that can navigate through international uncertainty, accommodate diverse talents and preserve critical networks while building new ones, will emerge as the power hubs.