(Yicai) July 1 -- China needs re-globalization, which refers to increased international co-operation, reduction of trade barriers and trade diversification, to create a new globalization that is beneficial to China and other nations through rebuilding supply chains to leverage comparative strengths and remain competitive.

Re-globalization can help China and the rest of the world mitigate geopolitical risks as much as possible and ensure the sustainable development of their economies.

Western developed countries advocating for globalization have become the group that questions globalization most. For example, the United States has said it will levy additional tariffs on USD18 billion worth of Chinese imports from May 14, becoming a big globalization barrier.

Why has the US done such a thing? This is not a simple question of good or bad, or of right or wrong but a contradiction deeply embedded in the DNA of the old globalization.

Transportation improved greatly after the industrial revolution. This enabled the worldwide allocation of production factors so that local production could gradually upgrade to serve the global market. Globalization increased productivity significantly and people’s living standards, thanks to the division of labor and comparative advantages of each country. China benefited from globalization and developed quickly.

But China is facing multiple challenges amid the current globalization for several reasons. First, globalization improves countries' overall situation but doesn’t benefit all the people. In fact, it even harms the interests of some. For example, with the rise of the Chinese steel industry, the US imported a lot of steel from China, causing many US steel workers to lose their jobs. The US should have used taxation and other policies to make up for these people’s losses, but it didn't. As a result, US steel workers are targeting economically priced and high-quality steel from China. And public opinion has provided the foundation for slapping additional tariffs on Chinese steel.

The second reason is the increased size of the Chinese economy and its conflict with the outside world. As China becomes increasingly powerful, external relationships that were once friendly begin to worsen. Examples are the two US presidents who levied additional tariffs on China-made products.

The third is fear. Developed countries didn't see China as a threat when the country was feeble. But after China became strong, they began to fear it and started to limit China's development with measures such as curbing exports of high-end chips and photoetching machinery.

This change has greatly impacted China's supply chains, forcing the country to consider re-building supply chains, including enhancing chip research and development and setting up factories in low-cost countries to remain competitive.

We shouldn't forget that globalization is a historic trend though, no matter the challenges we encounter. We can walk slower, have a rest or even take two steps forward and one step back. But we should not deny the huge significance of globalization in any way, let alone try to reverse it. What we need is re-globalization instead.

(The author is professor of economics, associate dean for Asia and Oceania, director of the Case Center and director of the Big Data Economic Research Center at the Cheung Kong Graduate School of Business)

Editors: Zhang Yushuo, Kim Taylor