Brexit is a much needed wake up call for globalization enthusiasts

In a context where integration is king, concerns about the effects Brexit will have on the global economy dominated conversations at the World Economic Forum held this week in Tianjin, China.

Corporate captains, start-up stars, and creators from around the globe who gathered for the 10th Annual Meeting of the Champions were shocked by Britain’s decision to leave the European Union. Even the event organizers had to scramble to include a last minute panel discussion on the topic that was already dominating every back-of-the-room conversation and group huddle around coffee stands throughout the Tianjin convention center.

All the carefully curated sessions about sustainable consumption, the digital transformation and emerging technologies took a back seat to the issue of a more insular and fearful world order emerging at a time of volatility in financial markets around the world, a security and humanitarian crisis expanding from northern Africa across Europe, and the unprecedented polarization of U.S. politics.

Amid the chaos, Chinese officials insisted on a keep-calm-and-trust-the-politburo type of message in Tianjin. China’s Premier Li Keqiang, a man of few public appearances and even fewer words, gave his annual address at the forum on Monday.

The economic brain of the Chinese hierarchy briefly stated that Great Britain’s eventual exit from the European Union was adding to uncertainty in the world economy, and hinted that financial authorities in China would intervene to prevent any further post-Brexit market panic.

“It’s hard to avoid short-term volatility in China’s capital markets, but we won’t allow rollercoaster rides and drastic changes in the capital markets,” warned Li.

As expected, the Chinese delegation rolled out their positive macro-economic fundamentals and suggested China was less exposed to the potential fallout of Britain’s referendum than most developed nations.

That’s partially true. While sectors of the Chinese economy and some consumers may benefit in the short term from the weakening pound, uncertainty in the markets has been driving down the value of currencies around Asia, including the yuan.

There are also increasing concerns about mounting debt reaching 250% of GDP, while easy money keeps flowing into the economy to boost liquidity and make domestic consumption a strong driver of Chinese growth.

Despite all this, there seemed to be a sense of relief among those in charge of running the world’s second largest economy as global attention shifted from talk of an economic hard landing in China to a post-Brexit world.

This was evident at the Forum in Tianjin, where there was even talk of reverse globalization and the end of capitalism as we know it.

But, what power brokers fail to recognize in China is that widespread dissatisfaction with globalization and free trade in rich countries is a reaction to its uneven results.

Large sectors of the middle class in Europe and the U.S. were sandwiched between the rich becoming uber rich, and the poor, especially in countries like China, being able to climb into a growing middle class.

Globalization has clearly worked in reducing inequality around the world. The challenge, therefore, is not to reverse it, but to expand its effect on inequality. Scientific, social political and technological leaders at the WEF should focus their energy more on using innovation as a tool achieve that goal.

The United Kingdom’s vote to leave the European Union has been widely criticized by political pundits and world leaders alike. A good chunk of the criticism has focused on the anti-immigration sentiments that lead to Brexit and a population that supposedly voted against itself.

But few have recognized the fact that globalization and free trade are not working for everyone. For many of those voting to leave or supporting the idea of a Trump presidency, globalization is inherently unequal. They are right.