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DAVOS, Switzerland: Imagine a world where the relationships and roles that have defined the global order for the past three quarters of a century have been turned on their head. Communist China is the world’s champion of free trade and globalization. The US has turned its back on liberal values and is cozying up to Russia. And Europe, spurned by Washington and London, is turning to Beijing to fill the void.
Welcome to the World Economic Forum (WEF) in Davos circa 2017. This is not a dream. It is, or may be, the new reality in a world shaken by economic and geopolitical tremors not seen since the fall of the Berlin Wall, or possibly World War II.
“Cautiously pessimistic” is how Robin Niblett, director of the London-based think tank Chatham House described the mood.
Federica Mogherini, EU foreign policy chief, spoke of a new paradigm in foreign policy. “We have been used to friendships, natural partnerships based mainly on values and history and probably we are entering into a phase where we will be maybe more pragmatic, transactional, some say emotionless,” she told Reuters.
Chinese President Xi Jinping stole the show in Davos with a speech that made it clear Beijing is eager to fill any vacuum in global leadership arising from the arrival of Donald Trump in the White House. His address to a vast, packed hall, in which he defended globalization, free trade and multilateralism, was both diplomatic and opportunistic. Xi took indirect digs at Trump, only days before his inauguration. And he sent an unmistakable message to a rudderless Europe: China is here for you.

Europe and China
“The Chinese have seized the opportunity,” said a senior European Commission official. “They have developed such deep knowledge about us in the last 10 years that they know exactly how to tweak a message to a Western audience that is at a loss because of Brexit and Trump.”
“Whichever way you look at it, the EU and China will have to lead on climate change,” the official said. “If we want to try to maintain a world economic model based on openness and free trade, it could be led by the EU and China if we do it smart.”
This is a new world, Niblett said, in which the Europeans see Russia as a threat and China as an opportunity, while Trump sees China as a threat and Russia as an opportunity.
But are we really there yet? Perhaps not. Much depends on Trump, who stayed away from Davos on the week of his inauguration but dominated discussions.

Dollar dilemma
On economic policy, something will also have to give. During his presidential campaign, Trump accused the Federal Reserve of keeping interest rates too low for too long.
Last month it began raising them on expectations of a pick-up in growth and inflation, spurred on by Trump’s plan to spend on infrastructure and slash taxes.
Now that is fueling expectations of a rise in the dollar, and Trump is calling dollar strength a problem, a message echoed in Davos by Anthony Scaramucci, the one member of his team who made the trek to Switzerland. Oddly, for a meeting that takes place in Europe and has traditionally lured leaders from across the EU, it was the Europeans that made the least noise, reduced to bystanders as Xi spelled out his vision and speculation swirled about Trump.
Germany’s Angela Merkel had signaled she would come but then decided against it. To make matters worse, British Prime Minister Theresa May turned up and explained to everyone why leaving Europe would make Britain stronger.