Coordinated Governance: A Remedy for a Changing and Chaotic World

China International Studies (English) - - Contents - Tao Jian & Xiao Guiyou

The entanglement and growing interdependence of economic and security issues necessitates an approach to global governance that coordinates the two. The major powers hold the key to solving the dilemma of global governance, and China should seize the historic opportunity to make a big contribution.

Striking changes have taken place in today’s international situation. Chinese Foreign Minister Wang Yi summarized the international situation of 2016 in two words: “volatility” and “turbulence.” The volatile and turbulent international situation has brought huge uncertainty and instability to the world and induced widespread worries.

This has been compounded by the global governance in recent years, which is far from satisfying: sluggish economic growth, poverty, unemployment, expanding gap between the rich and the poor, increasing social injustice, frequent regional conflicts, racial discrimination, large numbers of displaced people, and continuous terrorist attacks.1 These problems have revealed the disparity between the competence of global governance and the international reality. This long list of tasks demonstrates the need to strengthen and improve global governance.

How can we make sense of today’s complicated global situation, identify its root causes and thus define the key points for global governance? We believe that insights can be drawn from Deng Xiaoping’s statement that peace and development are the two dominant themes of the world. In 1992, in his inspection tour of southern China, he pointed out that neither peace nor development had been attained. Over the decades since Deng Xiaoping made that judgment, enormous progress

Tao Jian is President of the University of International Relations (UIR); Xiao Guiyou is a postgraduate student at the Department of International Economics, UIR.

1 Huang Ping, “Seeking Certainty in an Era of Uncertainty,” Contemporary World, 2017 (2).

has been made in terms of world peace and development,2 but now there are new issues surrounding them. The world today needs to respond to and solve two major problems: security threats and the weak economic recovery. Starting from the links between security and economy, this article argues that coordination on these two subjects are the priorities for global governance and the key to this coordinated governance lies in cooperation among major countries.

Entanglement and Interdependence of Security and Economy

In the era of globalization and informatization, the entanglement and interdependence of the global economy and security needs our attention.

Security factors are embedded in economic development. Security is the basis for human survival and economic development. Economic growth in the 21st century is deeply affected by regional hotspot issues and international challenges such as geopolitics, regional conflicts, refugee crises, climate change, terrorism, epidemics, cyberattacks and so on. More importantly, with the growing risks for investment by companies and people’s fears of terrorist attacks, security issues have become an embedded factor influencing economic development. “Security is just like oxygen. People won’t feel it when it is enough but they can do nothing when it is insufficient.” What an American strategist once described is now at play. Security issues have not only added to the cost of economic development, but have also changed dramatically people’s behavior and choices and disturbed the normal social and economic activities. This situation is unacceptable for China which seeks to foster a peaceful and stable external environment for its development. On April 1, 2016, when attending a leaders’ meeting on the Iranian nuclear issue under a sexpartite framework in Washington, Chinese President Xi Jinping stressed the urgency to strengthen global governance on security issues. Other world leaders are

2 Wang Jisi, “Five Objectives of World Politics,” International Politics Quarterly, 2016(5).

expected to think the same.

Economic factors are also embedded in security issues. Chinese leaders have long realized that development is the foundation for security and security is the prerequisite for development. The two promote each other and interact as both cause and effect. All in all, “development is the hard truth” and non-development is the biggest threat to security. The economic and fiscal conditions of a country are not only directly linked to the wellbeing of its nationals and the policy space available to politicians, but also affect the external policies of certain countries, major countries in particular.3 In the United States’ 2015 National Security Strategy, the Obama administration stated clearly that, “America’s growing economic strength is the foundation of our national security and a critical source of our influence abroad.” Safeguarding national security is based on the national strength of a country, and safeguarding global security needs continuous financial support from all countries in the world. Take the Islamic State terrorist group as an example. Its rapid expansion results to a large degree from the hopelessness of impoverished people, which is exploited by terrorists. To eradicate terrorism at the root, military victories are not enough. The lasting solution is to eradicate poverty and give people hope that through their own efforts they will be able to live a better life in the future. After its many years of experience fighting terrorism, the US has realized that a wise national security strategy is not solely reliant on military strength. The fundamental solution lies in addressing “the underlying conditions that can help foster violent extremism such as poverty, inequality, and repression.”

It would be a disaster if an economy grew only according to the logic of the market, regardless of the security needs. The stability and controllability of the world economic development have been weakened by globalization,

3 Zhang Yuyan, “Mechanisms Behind the Complex World,” in Yellow Book of International Politics: Annual Report on International Politics and Security (2017), Social Sciences Academic Press, 2017.

All in all, “development is the hard truth” and nondevelopment is the biggest threat to security.

as the global allocation of production and capital is anarchic. Without the constraint of the visible hand, the invisible hand has unbalanced the global economy, plunged it into stagnation, and has created many financial crises in Europe, Southeast Asia and the US over the past two decades with severe social, political and security consequences. In particular, the imbalanced distribution of wealth in the process of globalization has widened. The most impoverished 20 percent of the world’s population owns just 1.5 percent of the world’s wealth and the Gini coefficient of the world has reached 0.71, higher than the recognized danger line of 0.6. Along with the growing wealth divide, grave traditional and non-traditional security crises have broken out in some regions, including poverty, famine, economic recession, coups, civil wars, racial and religious conflicts, massacres and so on. At the same time, the debts of developed countries have risen dangerously high and the disparity in income between the rich and the poor in these countries has noticeably expanded. The current conflicts and problems in each country’s politics are mainly about social equality and justice, from which populism has emerged. These negative effects of globalization cannot be digested or rectified on their own.

Security and economic issues are entangled with each other, making it difficult to respond to one without addressing the other. The effects of government policies are no longer simple. For instance, there are appeals against globalization, migration and free trade from certain groups in developed countries. Once their appeals are answered, the implications will go beyond domestic economy, trade and society and affect international politics and security. Brexit, the election of Donald Trump as US president and the resignation of Italian Prime Minister Matteo Renzi were three examples of this kind with far-reaching repercussions in 2016. The entanglement and interdependence of the global economy and security have demonstrated that security cannot be ignored in developing the economy and economic development cannot be put aside when responding to security challenges. If we want to walk steadily forward, these two legs must maintain their coordination. Therefore, to make coordinated governance possible, it is

necessary to explore the links between security and economy.

Foundation, Path and Objectives of Coordinated Governance

Although there are many challenges confronting global governance, progress has been made in the last few years, which has helped lay the groundwork for coordinated global security and economic governance.

First, efforts have been made to attract as many participants as possible. James Rosenau, one of the founders of global governance theory, has argued that governance is a system of rules that only becomes effective with recognition by many. Joint governance is one important feature of the modern governance system. With regard to modern international society, governance is not one-way from top to bottom, but coordinated among many parties. The overall effect of governance can be realized only when many parties participate in the process and play their respective roles.4 In global economic governance, the rise of emerging countries as a group and their full participation has put an end to the era when only a few developed countries had their say. Through consultation and cooperation, emerging and developed economies now work together to respond to global economic issues. In global security governance, although Western countries are still the main drivers and dominate the discourse, the actors involved are becoming diversified with non-western countries especially China playing a bigger role than before. Apart from sovereign states, the civil society, such as NGOS, the private sector and the media, are also becoming actors of global economic and security governance. The fight against climate change and the Islamic State reveals that in the face of common threats and challenges, all countries and stakeholders can work together and coordinate to make progress.

Second, the current global governance system is undergoing structural reform to improve its functioning. In the economic field, the mechanism of global economic governance is transforming from one for crisis-management

4 Li Hanqing, “Theory of Coordinated Governance,” Theory Monthly, 2014(1).

to one for long-term governance. It is also transitioning from one that focuses on external economic relations to one that focuses on coordination of respective macro-economic policies. It is also becoming rules-based and legally binding from being consensus-based and consultative.5 The most significant progress is the reform of the IMF and the World Bank. In the security field, the United Nations has been making efforts to relate security to issues of good governance that pertains to development, in order to construct a comprehensive concept of security and promote a more effective mode of governance. The UN organizations are playing a further greater role in global security governance, and the function of regional and sub-regional organizations such as the Shanghai Cooperation Organization is becoming more prominent.

Third, new initiatives have been put forward and new mechanisms set up. The G20, BRICS, the Asian Infrastructure Investment Bank (AIIB) and other new multilateral organizations and groupings have emerged. Some of them have shown interest and willingness to cooperate in the fields of food security, energy security, climate change, financial security, anti-terrorism and so on. The possible roles of these new mechanisms in global governance have been generally valued and looked upon. To emerging economies, it represents a historic progress that the G20 becomes the leading platform for international dialogue on global economic governance. China’s outstanding performance lies in participating in or even proposing many constructive initiatives, such as the AIIB and the BRICS New Development Bank. The Joint Declaration on Cooperation in the Field of Non-traditional Security Issues marks the start of comprehensive cooperation against non-traditional security threats between China and ASEAN. The Belt and Road Initiative has become the latest Chinese solution to advance the agenda of global economic governance.

The current global governance system is undergoing structural reform to improve its functioning.

5 Huang Renwei, “Reform in Global Economic Governance and New Opportunities for the Ascent of BRICS,” Journal of International Relations, 2013(1).

There are three paths to achieve global governance. The first is a problem-oriented action-reaction mode. The world is now confronted with many conventional and non-conventional security challenges and old problems are intertwined with new ones. Developed countries need to finish their re-industrialization while developing countries need to speed up the process of industrialization. Both developed and developing countries have to respond to the global risks from slower growth and domestic challenges that they cannot afford to avert or postpone. The second is taking advantage of and giving play to the existing mechanisms to the fullest extent: maintaining stability of the current international order and promoting democratization and rationalization of international relations; motivating the leadership of major powers while encouraging broader participation from emerging and small countries; valuing the UN’S dominant role in security while elevating the influence of regional and sub-regional organizations; empowering new mechanisms such as the G20 and BRICS while exploring the possibility of involving security governance in these economic cooperation mechanisms and extending the reach of regional organizations; and well utilizing informal mechanisms and platforms such as the Shangri-la Dialogue to complement the formal ones. The “1+6” roundtable meeting between China and six major international organizations (World Bank, IMF, WTO, International Labor Organization, OECD and Financial Stability Board) is a good example of innovation of governance mechanisms. The third path is to create competition and cooperation among actors. Governance is in fact the process of competition and coordination among different actors. It is in this process that commonly agreed rules are formed to realize the goal of global governance. Whether in this interaction process a self-governance network can be established is key to building a global system of coordinated governance. One important approach to achieving this is to promote the synergy of existing strategic partnerships and regional multilateral mechanisms of all kinds, to create a joint force conducive to global coordinated governance. As President Xi Jinping noted, “We should forge a global partnership at both international and regional levels, and embrace

a new approach to state-to-state relations that features dialogue rather than confrontation and partnership instead of alliance.”6

Peaceful development and win-win cooperation are the trend of times and the goals of global governance. To achieve these goals, countries, regardless of their size, must first feel a sense of security and fulfillment. Security should be common and global. A country’s security should be respected and guaranteed. It is not acceptable that certain countries are secure while others are not. Nor is it acceptable for a country to seek its own security at the cost of other’s security. This also applies to economy. All countries should abide by international norms and commitments, shoulder together the responsibility for maintaining economic prosperity, and share the fruits of economic globalization. Second, countries should advance reform in global governance in keeping with new changes in the relative strengths of international forces, respond to concerns and aspirations of various parties, and better uphold the legitimate rights and interests of developing countries.7 Last but not least, all should adhere to the principle of democratizing international relations and advocate the global governance concept of wide consultation, joint contribution and shared benefits, enabling all countries big or small, poor or rich to equally participate in governance to build a community of shared future, and developing the global governance system in a more just, reasonable and effective direction.

Major-country Cooperation and Coordinated Governance

Constrained by conflicts of national interests, there is a lack of effectiveness and coordination in global governance. The implementation of coordinated governance is difficult because of loosely binding rules, empty content and retarded actions. Where is the way out? In global governance, the cooperation among nation states, particularly major powers, plays a central

6 “Xi Jinping Attends General Debate of 70th Session of the UN General Assembly and Delivers Important Speech,” September 29, 2015, http://www.fmprc.gov.cn/mfa_eng/topics_665678/ xjpdmgjxgsfwbcxlhgcl70znxlfh/t1304144.shtml.

7 “Carry Forward the Five Principles of Peaceful Coexistence to Build a Better World Through Win-win Cooperation,” June 28, 2014, http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1170143.shtml.

8 Wang Yiwei, Beyond Balance of Power: Global Governance and Major-power Cooperation, Shanghai Joint Publishing Co., 2008, p.227.

9 Zheng Xianwu, “great-power Coordination and International Security Governance,” World Economics and Politics, 2010(5).

role in the distribution of power, interests and values.8 Major-country coordination is key to success of global governance.

Major countries are the mainstay in breaking the dilemma of global governance. With considerable weight in managing international relations, they have great influence in resolving major conflicts and sometimes may even affect the course of world history. The roles of the five permanent members of the UN Security Council in the post-wwii era have demonstrated that major countries are essential to keeping world peace and solving major international crises, and that their coordination has become the main channel for global security governance.9 In the new era, the G20 has been considered the best platform for coordination of major countries. In the face of anti-globalization movements, people are pinning their hopes on China and other major countries to fight against protectionism and reorient trade as the original driver for inclusive development. Strengthening consultation and coordination among major countries and working out a way to promote common security and prosperity is the realistic way to solve the global security and economic problems. As President Xi has stressed, “The international community is one of shared destiny. Major countries should become the mainstay to solve problems like they did in solving the Iranian nuclear issue.”

Major countries should lead the direction of reform of the global governance system. For many years, in setting up and pushing forward important agendas such as climate change, anti-terrorism, poverty reduction, refugees and contagious diseases, European countries, the US, Japan, China, Russia and India have played a significant role. As the host country for the G20 summit in 2016, China has grasped the core issues of global economic governance with the theme of “innovative, invigorated, interconnected and inclusive” development, and contributed its wisdom to achieve breakthroughs

in global governance. In the meantime, within the G20 framework, China has been promoting in-depth cooperation on conventional and non-conventional challenges such as maintaining peace and security, anti-terrorism, achieving the UN Sustainable Development Goals, disaster prevention and relief, and security of water resources. What China has been doing in realizing global economic and security coordinated governance is of great significance.

Coordination among major countries is beneficial to improving the effectiveness of global governance. First, in the era of informatization and globalization, the complexity and difficulty facing global governance calls for improvement of effectiveness and exactness of its measures. Coordination among major countries is a must to achieve this. For example, the security of the Asia-pacific region is not possible without the coordination of major countries within and beyond the region. The framework agreement of five major powers on the Cambodia issue and the Six Party Talks on the North Korean nuclear issue were both born out of necessity. Building coordination among major powers, based on current bilateral and multilateral mechanisms that involve the countries, is the inevitable way to promote better security governance in the Asia-pacific. Second, each country has its own problems to solve. Among the five permanent members of the UN Security Council, there are many factors hindering the effectiveness of their capacity of global governance, such as the isolation of Russia in the international community, the inward-looking trend of the US, and Brexit. Only through coordination among major countries can the indecision and antagonism that exist between countries be overcome. The strategic dialogue mechanisms between major countries have proved to be the most effective and important pattern of interaction. Third, the demonstration effect and the free-riding problem that beset global governance should be resolved via major-country coordination. Due to differences in value and behavior pattern, the demonstration effect of a model becomes critical in coordinated governance that involves multiple participants. Good examples from major countries can motivate the eagerness and awareness of medium and small countries and the civil society, mitigate their dissatisfaction, resistance or even opposition, and elevate the overall effectiveness of global coordinated

governance. In addition, due to diffusion of responsibility and lack of a sense of social fairness, free-riding has been prevalent in coordinated governance. There are two ways to tackle this. First, major countries should have enough tolerance and ensure the continuous provision of public goods. For example, the US has been tolerant of free-riding by its alliance and partners for a long time in the post-war era. China, in recent years, has also been welcoming developing countries to free-ride on its development. On the other hand, major countries can leverage their influence and use methods of guiding, exhortation, encouragement, persuasion and even sanctions to direct medium and small countries’ stable participation in global governance, in the process changing the portfolio from mainly interest induction to one that is based on agreement and rules.

The development of a new type of relationship between major countries will make the coordination more effective. China and the US, both in a critical period of their respective political and economic development, are in need of major-country coordination to stabilize the current international order, which was founded by the US and has benefited the US the most. China is a major builder and participant of the international order and is one of its beneficiaries especially after the reform and opening up. There are many converging points of interests between the two countries in global governance, and both have the competence to participate in the process. It can be said that the coordination of global economic and security governance cannot work without the leadership of China and the US and the building of a new type of major-country relationship.

The new type of major-country relationship features a partnership of mutual respect and win-win cooperation. Although the friction regarding the One China policy shortly after Trump was elected was quickly resolved, it should be noted that the evolution of China-us relations presents some degree of inevitability after many years of cooperation and competition between the two sides. The recognition and understanding of China’s

Coordination among major countries is beneficial to improving the effectiveness of global governance.

positions and policies on the part of the US results, in the final analysis, from China’s insistence and struggles, from China’s growing national strength, and from converging national interests of the two countries. Since the One China policy is not a gift from the US, it cannot be denied or discarded at will either. The same goes for China-us trade. The election of Trump does have brought more uncertainties to the international situation, China-us relations and global governance. Therefore, the two countries need to make mutual adjustments and display flexibility in diplomacy and policy. After all, the basic logic of coordinated governance is the belief that the power of reason can turn all-out confrontation into disagreements that can be settled. Coordinated governance would lose ground if people’s irrationality led to a situation where the respective fundamental interests and principles could not be compromised. In this sense, the rational common ground established by the US and China over the decades cannot afford to be shaken. Otherwise, the new type of major-country relationship and coordinated governance of major countries would definitely collapse.

Conclusion

In the face of a long to-do list for global governance, all countries must pick up their pace and follow the general trend. On the part of China, it should seize the historic opportunity to participate and play a leading role in global governance. It is in the field of coordinated governance that China can make big contributions.

Expanding the circle of friends. Governance is “the sum of the many ways individuals and institutions, public and private, manage their common affairs,” and the number of participants determines its effectiveness and sustainability. China needs to expand its circle of friends if it wants to play its deserved role in global coordinated governance. In the field of security, China should advocate the concept of common, comprehensive, cooperative and sustainable security, acknowledge the legitimate security concerns of each country, and strengthen international and regional cooperation to jointly

address the growing non-conventional security threats and establish a global community of shared future. In the economic field, China should recognize the importance of free trade in driving global economic development and social progress, support the free trade system through the WTO and other channels, seek to strike agreements with other major economies on removing trade barriers and trade protectionism, promote the renminbi into one of the world’s international settlement currencies, encourage domestic companies and capital to go global, and create a sound external environment for Chinese enterprises.10 Over the past three years since the Belt and Road Initiative was first proposed by President Xi, more than 100 countries and international organizations have joined in and China has signed agreements on jointly building the Belt and Road with over 30 countries and has conducted cooperation on energy with over 20 countries. Financial cooperation represented by the AIIB and the Silk Road Fund has deepened. The Initiative has become a symphony of development and become the paragon of global coordinated governance.

Pushing forward a solution for better coordinated governance. While global economic governance should tackle issues of irrationality and injustice, global security governance should address the issue of responsibility distribution. With regard to economic governance, the first thing is to expand the convergence of interests and establish a win-win instead of a zerosum concept, in order to gain momentum for global governance. At the same time, developed countries should face up to the reality and coordinate with emerging countries in a reasonable manner, in order to narrow the gap of power in the international system. In fact, it is the most important variable determining whether the governance dilemma can be resolved. As a rising country, China has an important role to play in this regard.

As with security governance, all countries are entitled to equal participation in international and regional security affairs, and shoulder the responsibility to safeguard international and regional peace. In reforming

10 Fu Yu & Yang Yongcong, “Transformation and Reconstruction of Global Economic Governance Framework.” International Economics and Trade Research, 2013(12).

the structure of global governance, a new hierarchy should not be created. We should not replace the old hegemon with a new one, nor should we set up an authority that decides global issues at its will. As President Xi pointed out, “The world order should be decided not by one country or a few, but by broad international agreement. It’s for the people of all countries to decide through consultations what international order and global governance systems can benefit the world and people of all nations.”11 It is said that the relative decline of the United States’ strength under the Trump administration would give more room for China. This is too simplified a judgment. If viewed within the framework of China-us coordination of security interests, the distribution of responsibility and the maintenance of global order, this is not naturally a zero-sum game where one’s loss translates into the other’s gains.

Having a clear position and making active efforts. China’s economy has entered the “new normal” period. Its hard power continues to grow but its soft power has yet to be developed. China needs the determination to face up to challenges in pushing forward global economic and security coordinated governance. It also needs the wisdom to know what to do and what not to do. As the biggest developing country, China should put on the top of its agenda safeguarding the status, interests, representation and discourse power of developing countries and emerging economies in the international system, and strengthen cooperation and consultation with other developing countries, in the hope of involving more partners into global governance. At the same time, China should help consolidate the role of the United Nations and push forward the structural reforms of the IMF, the World Bank and other international organizations, properly increasing its capital share and improving its discourse power to play leading roles in certain regional organizations.

11 “Xi: China to Contribute Wisdom to Global Governance”, July 1, 2016, http://www.chinadaily.com.cn/ china/2016-07/01/content_25933506.htm.

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