(Yicai) March 10 -- Despite protectionism concerns rising after United States President Donald Trump's introduction of reciprocal tariffs on US trading partners, globalization is still active, according to the 11th president of the World Bank Group.

Trade is a dynamic system, and it will adapt to new rules, Robert Zoellick, who was also a former US deputy secretary of State and trade representative, told Yicai in a recent interview. He criticized Trump for using tariffs as a policy tool rather than an economic tool, which could lead to lower productivity and higher inflation.

Extracts from the interview are below:

Yicai: The global economy has become fragmented in the past few years because of geopolitical tensions, the change in China-US relations, and technological shifts. Shall we worry that the global economy will become even more fragmented?

Robert Zoellick: Many people think globalization is in reverse. I think that's inaccurate because if you look at the phenomena of globalization -- climatic issues, immigration issues, narcotics issues, trade, capital flows -- globalization is still quite active, but the governance of globalization, the rules, those are breaking down.

Trade is a dynamic system. It will adapt, and we've already seen the adaptation. For example, you're seeing changing patterns of trade flows with East Asia, Southeast Asia, the Middle East, and Africa. It's an adaptive system regardless of what governments try to do, and it also shifts in nature.

If you look at trade, the growth of trade before the global financial crisis was about twice that of the world economy. After the global financial crisis of 2008, the trade growth became about the same as the growth rate of the world economy, so it slowed down. But the service sector expanded much more quickly, and so the service sector of trade would be an important part of the future pattern.

That raises the question of how one supports the services trade. I believe that services trade relies much on digital and data, so agreements on digital and data transfer will become increasingly important.

But there's no doubt that there's increased protectionism, including in the United States and other parts of the world as well. My biggest concern is that there's a creeping view in many countries that trade is a zero-sum game, or in other words, one gains and the other loses. While my view of economics is that trade is a win-win situation, both parties benefit. The zero-sum logic reverts back to a view in the 19th and 18th centuries called 'mercantilism.' I think that's not a very constructive view, but that's part of the debate now, as you see greater fragmentation and frictions in the system.

Yicai: How could we rebuild global integration and exchange despite protection being still here?

RZ: That depends on major countries and whether they can reach some terms of understanding that they consider to be fair and appropriate. There's a lot of attention, like President Trump, on the bilateral trade deficit, and as you know, for example, China has a big surplus compared to the United States. I don't think bilateral trade deficit is a very good measure, because, for example, the US has a surplus with Australia, Australia has a surplus with China, and China has a surplus with the US.

Or, the way I've sometimes explained it is that I have a bilateral trade deficit with my supermarket. In other words, I go buy groceries, but I don't work at the supermarket at night, putting stocking shelves as an offset. Instead, I get money somewhere else and pay for the supermarket. So that's the difference in bilateral trade.

I think the bigger issue is often discussed as imbalances, and this is an issue that does concern China. You saw this at other times in the 20th century and in the 1980s in particular. If a country has much greater savings than consumption, it will often have to rely on exports for domestic demand. That's what happened in China, while it is the reverse in the US. At some point, there might be ideally some discussion about how to reduce the global imbalances of the economy.

Yicai: Trump announced to impose 25 percent additional tariffs on Mexico and Canada on March 4. Then he put additional 10 percent tariffs on China. What do these moves mean for global trade?

RZ: First, President Trump looks upon tariffs as a tool. He is focusing on what he believes is the need for more cooperation on restricting fentanyl. And then, similarly with Canada and Mexico, he's concerned about fentanyl and illegal immigration. So, he's seen tariffs as a leverage, a claw to try to get greater cooperation. That's different from an economic policy, it's more of a political foreign policy line, and I don't think that's necessarily gonna be effective.

Now, reciprocal trade is tricky because it sounds appealing. In other words, if you go to the average person and say, 'if the US tariff on autos is 2.5 percent, why should China's be 15 or 20 percent or Europe's be 10 percent?'

But there are big challenges in how to implement reciprocal trade. Let's take an example. Columbia is a coffee exporter of the United States. The United States doesn't grow any coffee, but Colombia has a tariff on coffee of about 80 percent. So, should we put a tariff of 80 percent on coffee, even though we don't produce it? That doesn't make sense.

I think one way to look at this, and this is not necessarily my preference, but to understand it is that Trump welcomes the uncertainty about tariffs because the message he'd like to send is: ‘If you want to sell it in the United States, you have to produce it here.’

One way to become confident is to sell to the American consumer by having the production in the United States. But in my view of economics, this is not a sensible long term policy because it increases costs, lowers your own productivity, and will probably contribute to inflation.

For China and others, Trump sees himself as a deal-maker and negotiator, so this is a transactional system as opposed to the idea of building a systemic international order.

Editors: Dou Shicong, Futura Costaglione