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Wan Zhe: China values responsibility over leadership in global economic governance

2017-01-16

By: Wan Zhe    Source: Global Times    Published: 2017-1-6


As usual, Davos, a small Swiss town in the Alps, witnesses the annual World Economic Forum this week. The difference is, Chinese President Xi Jinping attended the meeting and delivered a keynote speech this time - the first such appearance by a Chinese head of state in history. The theme of this year`s forum is "Responsive and Responsible Leadership." Amid the emergence of anti-globalization and protectionism, China attaches more significance to responsibility than leadership in global economic governance.


The world is now standing at a crossroads. Support for trade liberalism is diminishing while trade conflicts are becoming increasingly common. The root cause of the global economic slowdown is backward structural reforms. But countries are more willing to resort to methods with instant effect, such as diluting the value of their currencies, intensifying the contention and division in international markets, which lead to a fragmented global community.


The former world order is being gradually eroded, yet the new order is not yet established. For instance, the World Trade Organization is being marginalized. Developed countries tend to change the established international rules, promote overall upgrading of regulations in trade, investment and finance, in order to maximize their own interests. Divergences between developed and emerging economies are increasing. Consensus can hardly be achieved among developed countries.


Since August last year, a number of high-level French officials, including French President Francois Hollande, have called for stopping negotiations over the free trade agreement between the US and the EU. German Vice Chancellor and Economy Minister, Sigmar Gabriel, also said that "the talks with the US [over Transatlantic Trade and Investment Partnership] have de facto failed." US President-elect Donald Trump even noted many times that Washington will withdraw from the Trans-Pacific Partnership.


Against this backdrop, Beijing raised to build a community of common destiny. Politically, China devotes itself to promoting the brand new concept of global co-governance. In accordance with its consistent aim of peaceful development, the country believes that opening-up and inclusiveness is the foundation of its own economic development as well as making progress together with the world. Thus, it proactively initiated mutual help and mutual interests in hard times.


Economically, China is promoting the flow of global investment, trade and services. It has encouraged emerging economies to raise their voting rights and shares in global financial institutions such as the IMF, supported BRICS countries to build their own banks, and initiated the establishment of the Asian Infrastructure Investment Bank to improve infrastructure constructions in countries on the continent and make up their shortfalls in funding.


In terms of environmental protection, China`s energy consumption per unit of GDP has been dropping rapidly over the years, and its green finance is quickly developing. The country has also inked quite a few joint announcements on climate change with many countries and economies.


In the face of a sluggish global economy, China is against adopting quantitative easing policy as a means to stimulate growth; instead, it has been insistent on structural reforms and deepening reforms, optimizing industrial structures, attaching importance to technological innovation and participating in complementing, improving and reforming international order.


More countries are choosing short-sighted measures to save their torpid economies and politics. However, the more they do so, the quicker their economies and politics will decline. When global trend of free trade becomes protectionism, open-door policy turns into isolationism, international collaboration changes into narrow nationalism, some countries might see an increase in employment in the short run, but will lose more markets and give rise to global imbalance in the long term.


The current crisis in international order is structural. Yet very few countries have actually faced up to it. Developed nations have lost their absolute control over global governance due to the indolent economy, while developing countries have neither the will nor the strength to take part in global co-governance, which is now falling apart.


The word "leadership" has more profound significance. What China underlined is not narrow-minded politics, but holding on to being a responsible major power in the changing world.


The author is a visiting fellow of Chongyang Institute for Financial Studies at Renmin University of China. 

Key Words: economy   global governance   China   Wan Zhe  

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