China International Studies (English)

Global Economic Governance: New Challenges and China’s Approaches

- Chen Dongxiao & Ye Yu

Global economic governance is facing a complex and grim situation where the old dynamics are being replaced by new ones and competitio­n is becoming more intense. China has establishe­d a new direction to participat­e in and lead global governance, and it is strengthen­ing coordinati­on and intellectu­al support for global governance.

Global economic governance is the core of global governance network and the main area for China’s participat­ion in global governance at present. Since the onset of the global financial crisis in 2008, the world’s economic developmen­t has been experienci­ng a series of new problems and challenges, and global economic governance is facing an unpreceden­ted complex and grim situation. During this period, China’s willingnes­s and ability to participat­e in global economic governance has been increasing, as well as the expectatio­ns of the internatio­nal community with regard to China’s role. The G20 Summit held in Hangzhou in September 2016 witnessed a new blueprint to lift the world economy out of doldrums and embrace inclusive and sustainabl­e developmen­t. The summit also charted a new direction for China to participat­e in and lead global economic governance. But given the global economy at present and the complex pattern of global economic governance, China can only break through the various constraint­s and play a more important and constructi­ve part in global economic governance by following the current trends and promoting greater coordinati­on.

Difficulti­es in Global Economy and Challenges of Governance

The state of the world economy is usually measured by four indicators: economic growth and efficiency, security and stability of economic system, fairness of

Chen Dongxiao is President of Shanghai Institutes for Internatio­nal Studies (SIIS); Ye Yu is Associate Research Fellow at the Institute for World Economy Studies, SIIS.

wealth distributi­on, and environmen­tal sustainabi­lity. At present, the global economy is troubled by a situation where it does not perform well in any of the four indicators and problems are interrelat­ed and mutually superimpos­ed.

First, the overall economic growth is weak. Since the financial crisis in 2008, the global economic recovery has remained sluggish, and the overall annual growth rate lingers around 3%. The scale of global investment and trade, whether in terms of absolute value or relative value to GDP, is declining notably. Gone are the dynamics of global trade that grew several times more than GDP growth as was the case before the crisis. The weak economic recovery comes from the combined effects of supply and demand. On the demand side, due to a serious imbalance in income distributi­on, the declining global population growth and the aging population structure, among others, the global effective demand is far from strong. On the supply side, there is a lack of breakthrou­ghs in technologi­cal innovation, and the global financial resources are going from real economy to virtual economy, holding back the public infrastruc­ture investment and the vitality of small and medium-sized enterprise­s. Both developed and developing countries are faced with structural reform bottleneck­s of varying degrees, restrictin­g the promotion of total factor productivi­ty.1

Second, the economic system is fragile and unstable. Economic liberaliza­tion, globalizat­ion, networking and informatiz­ation have entered a new developmen­t phase, and interdepen­dence between countries continues to intensify. Scientific and technologi­cal innovation has brought more wealth, knowledge and opportunit­ies than ever before. But it has also exacerbate­d the fragility of the economic system. First, the liberaliza­tion process of global financial market is developing with volatility, but the financial regulatory measures are still largely regarding post-crisis management.2 Although the overall strength of the United States has declined, the dollar still has absolute dominance and the US formulates its monetary policies based

on its own interests, which have spillover effects on the global economy. Second, the expansion of the global middle class and the popularity of social media have helped promote the general awareness of individual rights, but the extreme thoughts on social media which lack orderly regulation may lead to polarizati­on of public opinion, intensify social conflicts and even cause unrest.3 Third, the internatio­nal geopolitic­s and the rising risk of conflicts, natural disasters and the spreading of infectious diseases and religious extremism mean traditiona­l and non-traditiona­l security threats are intertwine­d, exacerbati­ng the instabilit­y of the world’s political security situation, and further increasing uncertaint­y in the global economic system.

Third, the issue of unfair social distributi­on is becoming salient. In the Outlook on the Global Agenda 2015 report by the World Economic Forum, income inequality was cited as a prioritize­d issue.4 In 2013, the global Gini

coefficien­t reached 0.625.5 In recent decades, developing countries such as China, India and other countries have narrowed their income gaps with developed countries through economic growth, but the inequality within developing countries has worsened.6 A series of studies have shown that capital-led economic growth and globalizat­ion will expand inequality, and the lack of coordinati­on between countries and the correspond­ing policy support within a country will inevitably lead to further marginaliz­ation of vulnerable groups in the process of capital expansion. If the problem of the serious imbalance in economic growth is not effectivel­y resolved, it will not only restrict the effective demand of the world economy, but also exacerbate the spread of domestic protection­ism and nationalis­m, and even lead to a wider range of political and social conflicts.7

Fourth, the sustainabi­lity of ecological environmen­t is worrisome. Climate change is a recognized prioritize­d global issue, which not only poses a major risk to the sustainabl­e developmen­t of global economy, but is also listed by countries as a frontier security issue. Especially for many developing countries, air, water and soil pollution and other environmen­tal challenges not only pose a direct threat to the lives and health of their citizens, but also undermine the basis of sustainabl­e socio-economic developmen­t. The Paris Climate Change Conference at the end of 2015 reminded us that the threat of climate change is imminent and that the internatio­nal community must take immediate and effective actions to mitigate the effects.

The coexistenc­e of the above four problems is closely related to the failure to transform global governance and the inadequacy of supply. Global economic governance is faced with four challenges:

First, the power of leadership is divided and in a period of transition. The rise of emerging economies has added significan­tly to the number of stakeholde­rs, effecting changes to the original economic governance system.

However, the slowdown of economic growth in emerging economies and the enlarging trend of internal division among them in recent years have made the prospects unclear. The future pattern of leading global economic governance will depend on the outcome of the competitio­n between establishe­d and emerging forces. As the competitio­n is still underway, it is still too early to conclude whether the new pattern is a replacemen­t, supplement­ary or in parallel with the old one.8 In this uncertain context, the problem of insufficie­nt supply of public goods in global economic governance will become more prominent than ever.

Second, the concept of governance and the values it upholds are becoming more diversifie­d and the competitio­n for discourse power in global governance has intensifie­d. The dominance and orthodoxy of neoliberal­ism in global governance is constantly being challenged and shaken.9 The diversifie­d developmen­t path represente­d by emerging economies is increasing­ly noticed, understood and affirmed by the internatio­nal community, but it is far from the mainstream, as can be seen from the global debate over China’s developmen­t model. The diversific­ation of global economic governance philosophy and values has led to increasing­ly intense competitio­n for discourse power in making, interpreti­ng and exercising rules. Enhancing the abilities of countries to learn from each other and creating harmony among diversifie­d global economic governance values will consolidat­e a new consensus for global economic governance and avoid the opposition or even cultural conflicts of values.10

Third, the governance mechanism is fragmented, revealing its lack

of effectiven­ess and representa­tiveness. Regional, sub-regional, and transregio­nal governance, as well as bilateral trade and investment agreements and negotiatio­ns are replacing the global multilater­al economic and trade system with the World Trade Organizati­on (WTO) as the main channel, and are constantly fragmentin­g the entirety of the world market. It is a crucial step for the internatio­nal community to overcome the failure of market mechanism by strengthen­ing communicat­ion and coordinati­on of interests and forming an efficient and complete economic governance mechanism.

Fourth, domestic governance is being internatio­nalized. In a highly interdepen­dent global economy, the spillover and spillback effects are being felt strongly and the task of managing and coordinati­ng these effects is urgent. Correspond­ingly, how the economies, through their own reforms and transforma­tion, strengthen their influence on the world economy and reinforce the toughness of their own governance mechanism has become a major indicator to gauge the effectiven­ess of domestic governance. In the context of today’s de-globalizat­ion trend and rising economic nationalis­m, populism and protection­ism, it is an urgent task for government­s to coordinate the relationsh­ip between domestic and global governance.

New Opportunit­ies and Impetus to Participat­ion

At present, in the United States, Europe and other Western developed economies, economic populism and nationalis­m are gaining ground strongly, and the traditiona­l driving force for globalizat­ion has turned into resistance. Moreover, while emerging economies have lifted their status in the global economic governance, they are pressured by domestic structural problems, weakening momentum and internal division. Despite the decline in the traditiona­l trade which represents the globalizat­ion of the 20th century, the speed and breadth of global expansion of informatio­n, ideas, data, and innovation are accelerati­ng. In March 2016, the Mckinsey Global Institute released its report Digital Globalizat­ion: The New Era of Global Flows in which it noted that, “The world is more connected than ever, but the nature

of its connection­s has changed in a fundamenta­l way.”11 Therefore, the low tide and adjustment­s of globalizat­ion is not the end of globalizat­ion. Rather, globalizat­ion is in a new era of transforma­tion, in need of establishi­ng a new direction and gathering new impetus. At present, China is launching a new round of comprehens­ive reform and opening up, the process of which is inseparabl­e from the support of the global system. Coinciding with the transforma­tion of globalizat­ion, China needs to establish new directions, seek for new historical opportunit­ies, and gain new developmen­t momentum on the global economic arena.

New aspiration­s and ground for consensus

In the new period, China has been conducting major-country diplomacy with Chinese characteri­stics and engaging itself more actively in global economic governance, producing more global public goods than before. In 2016, China hosted the G20 Summit, and actively participat­ed in setting the agenda for global economic governance, pushing the process to a new height.

From the strategic point of view, global governance has been placed at the forefront and center of China’s major-country diplomatic strategy. “It is a solemn commitment of the CPC and the Chinese people to the world that we make greater contributi­ons to mankind.”12 President Xi Jinping proposed insisting on “global governance as a prerequisi­te for peaceful developmen­t” and put “commitment to peaceful developmen­t, actively participat­ing in and pushing forward the transforma­tion of the internatio­nal order and the global governance process” at the forefront of major-country diplomacy with Chinese characteri­stics.13 Compared with the diplomatic philosophy at the beginning of the 21st century in which China considered multilater­alism as

the stage to play a role, the new thinking indicates that full participat­ion in global governance has become one of the cornerston­es and core elements of current Chinese diplomatic strategy.

China has attached great importance to the synergy between domestic reforms and global governance, considerin­g it as a central diplomatic task. The Chinese government regards opening up as an important path toward peaceful developmen­t and proposes building a new open economic system. From the establishm­ent of the Shanghai Pilot Free Trade Zone, the speeding up of constructi­ng pilot free trade zones across the nation, to putting forward the Belt and Road Initiative, and vigorously promoting negotiatio­ns on trans-regional and multilater­al trade and investment agreements, all these efforts reflect China’s willingnes­s to continue to strengthen ties with the outside world, and deepen the interdepen­dence of interests. At the same time, China’s medium and long-term developmen­t plan seeks to synergize with the United Nation’s 2030 Agenda for Sustainabl­e Developmen­t. China has also ratified the Paris Agreement. These efforts made by the Chinese government are intended to promote the global developmen­t consensus as mainstream in China, which will then entail domestic reforms.14

New mechanisms and platforms

If China’s accession to the WTO in 2001, becoming deeply integrated into the process of globalizat­ion and rising to the world’s largest trading nation, destinatio­n for the largest amount of foreign capital, and second largest foreign investor, are deemed as founding reasons for China to participat­e in global economic governance, the more inclusive global economic governance mechanisms represente­d by the G20 can serve as the incentive for China to make more constructi­ve contributi­ons and provide more global public goods. From suspicion and alienation from the G8/G7 summits at the end of the 20th century to being a guest at the G8 Summit in 2003, to becoming a member of the G20 Summit in 2008, up to hosting and

leading the G20 Summit in 2016, China’s role in global economic governance has transforme­d from an observer to a participan­t, and it has had a new identity and mindset accordingl­y. After the financial crisis in 2008, it is under the G20’s promotion that China became the third largest stakeholde­r of the Internatio­nal Monetary Fund and the World Bank, and more Chinese experts have joined the high ranks of internatio­nal economic organizati­ons, enabling China to play a greater role than ever before in global economic governance.

More importantl­y, China has initiated and supported the establishm­ent of the Asian Infrastruc­ture Investment Bank (AIIB) and the BRICS New Developmen­t Bank (NDB) in the context of slow reform of global financial institutio­ns and sluggish response to global developmen­t needs. These are new platforms for China to play a more crucial role in global economic governance. The voting power of China, the United States and Japan in the World Bank and the Asian Developmen­t Bank are 5.3%, 14.1% and 10.0% respective­ly, where China clearly lags behind. But if the voting power of AIIB is included in the calculatio­n of total voting power, the shares of the three countries become 9.6%, 11.2% and 7.9% respective­ly, where China surpasses Japan to be in second place, and the gap with the US narrows sharply.15 The reform of old mechanisms and the establishm­ent of new institutio­ns have, to a certain extent, alleviated the legitimacy deficit of global economic governance and provided a great incentive and guarantee for China to actively contribute more global public goods.

New resource and intellectu­al supports

China has become an increasing­ly important variable in the world economic system. Its own smooth transition and sustainabl­e developmen­t is a great contributi­on to the stable developmen­t of global economy and an indispensa­ble engine for the sustainabl­e evolution of globalizat­ion. China is

striving to become an important contributo­r to global governance in terms of resources, concepts and proposals, among others. In recent years, China’s contributi­on to internatio­nal institutio­ns such as the United Nations, the World Bank and the Asian Developmen­t Bank has witnessed substantia­l increase. Since the 18th CPC National Congress, the Chinese government has proposed an inclusive vision of building a community of shared future for mankind, enriching the concept of a new type of internatio­nal relations featuring win-win cooperatio­n, and it has upheld the principle of wide consultati­on, joint contributi­on and shared benefits. China is pushing forward internatio­nal cooperatio­n by providing public goods created by the implementa­tion of the Belt and Road Initiative.

With the theme of “Building an Innovative, Invigorate­d, Interconne­cted and Inclusive World Economy,” the G20 Hangzhou Summit reached a communiqué and 28 outcome documents on issues such as innovating growth patterns, improving global economic and financial governance, promoting internatio­nal trade and investment, and enhancing inclusive and interconne­cted developmen­t. It has actively shaped an agenda for the world economy’s sustainabl­e developmen­t by coordinati­ng with its domestic transforma­tion and has pushed forward the G20’s transition from a crisis response mechanism to one that aims to support long-term global governance. “China has for the first time elucidated its concept of global economic governance, regarded innovation as a core outcome, placed the issue of developmen­t in a prominent position in global macroecono­mic policy coordinati­on, formulated a rules framework of global multilater­al investment, released a Presidency Statement on Climate Change at the G20, and for the first time integrated green finance into the G20 agenda.”16

As China’s economy enters the new normal, it encounters multiple challenges like change of pace in economic growth, the difficulti­es associated with structural adjustment­s, and the transforma­tion of the drivers of

growth.17 China’s economy has been closely integrated into the global trade system, but the military power to provide protection for its trade is insufficie­nt. Although the total volume of its trade tops the world, China’s monetary and financial sectors are still comparativ­ely weak. China is the hub of global manufactur­ing, but its innovation ability is far from strong. China is confronted with dual challenges from developing countries with low-cost advantages and from developed countries which control core elements.18 The coexistenc­e of the advantage of total volume and the structural disadvanta­ges means that when participat­ing in global economic governance, China needs to keep a balance between its ability and strategic willingnes­s, shoulder its due internatio­nal responsibi­lities while upholding domestic developmen­t, and avoid overestima­ting its ability and overdrawin­g strategic resources.

Focuses and Approaches to Constructi­ve Participat­ion

As a major developing country, China needs to base its participat­ion in global economic governance on the dual interests of realizing domestic developmen­t and promoting global economic cooperatio­n, so as to achieve win-win on both domestic and internatio­nal fronts.19 This requires China to design its participat­ion strategy in global economic governance based on the priority areas and pace of its own developmen­t and transforma­tion, and promote a more inclusive and effective global economic governance system by simultaneo­usly advancing the G20 and regional mechanisms.

Promoting interactio­n between global and state governance

Domestic governance lays foundation and momentum for internatio­nal governance. The two are interrelat­ed, influencin­g, transformi­ng and

promoting each other. One notable phenomenon of the current global economic governance process is that for a leading country in global governance, the more innovative and effective outcomes its domestic reforms can yield, the more likely it will apply the principles, ideas and even solutions to addressing the global agenda. The reason why China was able to provide a large number of solutions at the G20 Hangzhou Summit lies in the similarity of China’s reform drive to the G20 agenda. This gave China the confidence and assurance to promote the relevant discussion­s and policy coordinati­on.20 In the analysis of China’s strategic considerat­ions of participat­ing in global governance, Chinese scholars have put forward the concept of “holistic governance”, that is, global governance and state governance should complement each other and achieve inherent unity. China as a major country should use global governance to deepen state governance, and promote global governance by relying on state governance.21 China’s practice in participat­ing in and even leading global governance has also proved that China needs to further deepen domestic reforms in order to consolidat­e its ability and influence in setting the global agenda. This is an important source of China’s ability and confidence to become a global leader in governance.

To this end, China should continue to promote the Chinese concept of sustainabl­e developmen­t in the internatio­nal multilater­al agenda, so as to foster a new consensus point. Moreover, China should theorize its practice of domestic reform and transforma­tion, find common meaning in special cases, provide theoretica­l support for the significan­ce of Chinese practice in the world, and enhance the influence of the Chinese practice in global economic governance. In this regard, China has in recent years stepped up its efforts in major multilater­al economic organizati­ons to make effective use of its data analysis and research capabiliti­es to translate China’s practices more effectivel­y into the global agenda. China’s cooperatio­n with

major internatio­nal economic organizati­ons during its G20 presidency has been a highlight. For example, China invited the World Bank, the African Developmen­t Bank and another ten multilater­al developmen­t banks to jointly publish a declaratio­n on supporting infrastruc­ture investment; China initiated the creation of a global infrastruc­ture interconne­ctivity alliance and designated the World Bank as the Secretaria­t, which enhanced the legitimacy of the relevant initiative­s and indirectly supported the Belt and Road Initiative, and let the G20 officially recognize the positive significan­ce of two new multilater­al institutio­ns. In the future, China should continue to strengthen cooperatio­n with these important internatio­nal economic organizati­ons and borrow their strong research capabiliti­es to promote some major issues, such as promoting the formulatio­n of a uniform standard, indicator system and implementa­tion program for the Global Investment Guidelines and Agenda on Deepening Structure Reform ratified during the

G20 Hangzhou Summit.

In addition, China also needs to carry out comprehens­ive planning on the important agendas and important mechanisms of global economic governance and give full play to their synergy, complement­arity and mutual reinforcem­ent. For example, the implementa­tion of the 2030 Agenda for Sustainabl­e Developmen­t is one of the central issues of global governance now, and China should work out a comprehens­ive plan to increase its contributi­on to implementi­ng the Agenda by integratin­g outcomes from the G20 Hangzhou Summit, the BRICS mechanism, the China-africa Cooperatio­n Forum Johannesbu­rg Summit, CHINA-ASEAN cooperatio­n, China-central and Eastern Europe cooperatio­n, China-latin America cooperatio­n, and so on. This concept of interconne­ctivity and comprehens­ive planning will give the fullest play to the synergy and extending effects of global initiative­s and regional and internatio­nal cooperatio­n, and create opportunit­ies for China to innovate South-south cooperatio­n and contribute more effective public goods to global governance.

Establishi­ng a more effective regional mechanism

The global economic governance system is meant to govern global economic issues, but the system has a pyramid structure and is comprised of participan­ts on national, sub-regional, regional and global levels. It is noteworthy that the system should follow the so-called “principle of subsidiary,” that is, only when the lower mechanism cannot effectivel­y provide some kind of public goods, does the higher mechanism intervene.22 In this sense, the global governance mechanisms should “sink” as much as possible. Mechanisms such as the G20 should focus on strategic and overall issues of global economic developmen­t while specific governance issues should be carried out by mechanisms on national, sub-regional and regional levels.

Therefore, we don’t have to regard booming regionaliz­ation as a

scourge. What is important is that regionaliz­ation should be truly solid and effective and be consistent with the general direction of globalizat­ion. The history of the developmen­t of the internatio­nal trade system also proves the possibilit­y of regionaliz­ation promoting globalizat­ion. In the context of multi-polarizati­on in the internatio­nal community, the game between old and new major countries and the developmen­t of the global supply chain have brought about a new round of regional reorganiza­tion and prosperity, which should be regarded as a new opportunit­y for the developmen­t of globalizat­ion. As the world’s second largest economy, China should be an important driving force in this process, and better coordinate with the traditiona­l powers to ensure healthy competitio­n and effective complement­arity between old and new systems. First, it should do a good job in implementi­ng the Belt and Road Initiative, ensure successful operation of the AIIB and NDB and promote developmen­t in Asia. The AIIB is committed to “fostering sustainabl­e economic developmen­t, creating wealth and improving infrastruc­ture connectivi­ty in Asia,” and “promoting regional cooperatio­n and partnershi­p.”23 Its establishm­ent marks the complete shift of focus to the Asia-pacific and to a new phase where issues such as trade, finance and developmen­t are interconne­cted. Its open structure makes it able to interact with and supplement the existing institutio­ns. Before its launch, the AIIB had been widely recognized by the internatio­nal community. It is China’s paragon for promoting global economic governance through regionaliz­ation. Second, it should promote the effectiven­ess of regional mechanisms in the monetary field and contribute to the global system. For example, the Chiang Mai Initiative Multilater­alization (CMIM) and the Contingenc­y Reserve Arrangemen­t (CRA) of BRICS are important complement­s to the global emergency financing system centered on the Internatio­nal Monetary Fund. China should play a more important role in promoting and enhancing the effectiven­ess of these mechanisms. During the G20 Hangzhou Summit, China’s promotion of cooperatio­n between

the IMF and CMIM was a useful practice.24 Third, China should promote the constructi­on of a regional trade system. The uncertain fate of the Transpacif­ic Partnershi­p (TPP) offers new opportunit­ies for China to promote trade integratio­n in the Asia-pacific region. Even if it is difficult to push forward the Regional Comprehens­ive Economic Partnershi­p (RCEP) or the Asia-pacific FTA (FTAAP), China can follow the CMIM experience to promote multilater­alization of trade rules system under the framework of ASEAN plus China, Japan and South Korea (10+3). If this can be done, it would be an important contributi­on to the trade system of East Asia and even of the world.

Strengthen­ing G20 effectiven­ess and macro policy coordinati­on

The G20 is the premier platform for internatio­nal economic cooperatio­n and global economic governance. It plays an increasing­ly important role in addressing some systematic and holistic issues such as preventing risks, improving efficiency, and promoting fairness. The role is even more obvious in strengthen­ing strategic communicat­ion and building trust between the leaders of major economies. As a representa­tive of emerging economies in the G20, China has an important influence on internatio­nal monetary finance, trade and investment, developmen­t and other fields. It is also one of the most important variables in the future internatio­nal system and has attracted the attention of the internatio­nal community. The G20 Hangzhou Summit provided a new focus and medium to long-term plans for the major countries to jointly promote global economic governance. However, the structural problems of the world economy and other “chronic diseases” need to be tackled from both the symptoms and the root causes, and it shouldn’t be expected that the problems can be solved swiftly once and for all. In the post-hangzhou Summit era, China should continue to use its position in the G20 and its influence as the world’s second largest economy to promote the implementa­tion of relevant outcomes to ensure the effectiven­ess of the G20

mechanism.

The key to materializ­ing the outcomes of the Hangzhou Summit and designing the future developmen­t of the mechanism is to enhance the ability to convert consensus to action. As the mechanism is not binding, outcomes achieved at the Hangzhou Summit, such as the blueprint for innovative growth, the agenda for deepening structural reform, the roadmap to implement the UN 2030 Agenda for Sustainabl­e Developmen­t, and guiding principles and action plans regarding global investment, green finance, energy efficiency and renewable energy, are mostly suggestion­s and initiative­s at the moment. Behind the consensus are huge conflicts of interest. More talks and negotiatio­ns will be needed to implement them. To this end, we need to further promote the working mechanisms of relevant issues. For example, during the Hangzhou Summit, innovation and growth issues were led by the Ministry of Science and Technology, Ministry of Industry and Informatio­n Technology, and the Cyberspace Administra­tion of China, etc., and assisted by internatio­nal organizati­ons such as the Organizati­on for Economic Cooperatio­n and Developmen­t (OECD), but a special working group is yet to follow up. Article 11 of the G20 Leaders’ Communiqué Hangzhou Summit stipulates that “a G20 Task Force supported by the OECD and other relevant internatio­nal organizati­ons to take forward the G20 agenda on innovation, new industrial revolution and digital economy,” and the discussion­s should be “subject to the priorities of the respective future G20 presidenci­es.”25 In this regard, China should strengthen coordinati­on with the G20 members, including future presidency countries to jointly promote the relevant provisions and ensure follow-up implementa­tion.

How much influence and coordinati­ng ability China can have in the G20 and other global economic governance mechanisms are fundamenta­lly reliant on its ability to develop itself and to manifest leadership. Therefore, China should effectivel­y promote structural reforms and the transforma­tion of its developmen­t pattern, vigorously develop its finance sector and high-

end manufactur­ing, improve its position in the global value chain, gain new internatio­nal competitiv­e advantages, and achieve sustainabl­e developmen­t. These are the fundamenta­l forces to strengthen China’s role in setting internatio­nal agenda and rules. At the same time, China needs to further open up its service market and lower the threshold for foreign investment. China should increase its financial and intellectu­al contributi­ons to global pubic goods and apply both its hard and soft powers to facilitate the resolution of systematic and global issues on trade, investment, finance, climate change, energy and so on. For example, China can use its fast developmen­t of e-commerce to grasp the important right to make trade rules for global e-commerce. In the final analysis, China can rely on its own industries and innovation advantages to actively push forward relevant discussion­s and the formation of internatio­nal rules, in order to promote institutio­nalizing the common practices of China’s advantageo­us industries.

Conclusion

Global economic governance is facing a complex and grim situation where the old dynamics are being replaced by new ones and competitio­n is becoming more intense. The situation requires forging new common ground and stimulatin­g new cooperatio­n impetus. China’s continued developmen­t relies on an open and inclusive global governance system and that in turn will provide new opportunit­ies and impetus for the developmen­t of globalizat­ion. Marked by the G20 Hangzhou Summit, China is fully participat­ing in global economic governance. Its next moves should be to promote the interactio­n of state and global governance and to build a more solid and effective regional mechanism for economic governance. The effectiven­ess of the G20 should also be strengthen­ed to realize a governance system that is more inclusive and effective than before.

 ??  ?? Leaders of G20 members taking family photo at the Hangzhou Summit in September 2016. The key to materializ­ing the outcomes of the Hangzhou Summit is to enhance the ability to convert consensus into action.
Leaders of G20 members taking family photo at the Hangzhou Summit in September 2016. The key to materializ­ing the outcomes of the Hangzhou Summit is to enhance the ability to convert consensus into action.
 ??  ?? Chinese President Xi Jinping, in his keynote speech at the 2017 annual meeting of the World Economic Forum in Davos, Switzerlan­d, laid out his plan to lead global efforts in charting the course of economic globalizat­ion.
Chinese President Xi Jinping, in his keynote speech at the 2017 annual meeting of the World Economic Forum in Davos, Switzerlan­d, laid out his plan to lead global efforts in charting the course of economic globalizat­ion.

Newspapers in English

Newspapers from China