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With a $12 trillion economy still growing at about 6.5 percent annually and $3 trillion in foreign exchange reserves, China is moving very rapidly to become a true global power. In recent years, the country has expanded its global and regional economic footprint especially through new institutions, such as the Asian Infrastructure Investment Bank (AIIB) and the ‘One Belt, One Road’ initiative. With such initiatives, Beijing seeks to carve out a leadership position within the global economy.
China’s economic diplomacy in 2017 was unveiled with President Xi Jinping’s important speech at the opening session of the World Economic Forum annual meeting in Davos. This reassuring and encouraging speech provided the answers to fundamental issues concerning the complex situation of world economy and economic globalization, charted the course for the confused international community and helped various parties reach consensus, demonstrating the responsibility and leadership of China as a major country.
This was an epitome of China’s economic diplomacy in the new era. With successful hosting of the APEC Economic Leaders’ Meeting in Beijing and the G20 Summit in Hangzhou, China’s economic diplomacy now stands at a new historical starting point with more distinct features of the time.
Guiding World Economy
Since the outbreak of international financial crisis in 2008, the international community has been exploring effective ways for recovery, but with little success as the world economy still faces instability with slow growth, lacklustre global trade and investment, rising trend of protectionism and de-globalization, accelerated restructuring of global industrial, supply and value chains and major changes in the geopolitical landscape. China, the world’s second biggest economy, is not only an anchor, but also an engine for the world economy. China is also seeking measures and ways to get the world economy out of trouble. On many important occasions, based on China’s own development experience, President Xi provided holistic prescriptions to this problem.
In doing so, China has targeted the root causes to cure the disease. In his Davos speech, President Xi pointed out three critical issues as the root causes of the problems facing the world economy. These included lack of robust driving forces for global growth, inadequate global economic governance and uneven global development. Thereupon, he proposed the solutions by calling for building a dynamic growth model that would feature an open and a win-win cooperation. He described this as a model of fair and equitable governance and of balanced and inclusive development. On the matter of the rising trend of de-globalization, he gave an in-depth elaboration on the law and characteristics of economic globalization. The stakeholders in the world economy need to recognize that economic globalization is a double-edged sword and that the world should work to re-balance the process of economic globalization and ensure that different countries and different groups of people all share the benefits of economic globalization.
The slow growth of world economy is mainly due to the lack of internal driving forces, and the fundamental solution lies in breaking the bottleneck by releasing and developing productive forces through innovation. At the 2016 G20 Hangzhou Summit, the topic was discussed at length and a G20 Blueprint on Innovative Growth was formulated, calling on various parties to seize the opportunities brought by innovation, digital economy and new industrial revolution and to reach consensus on the priority areas, guiding principles and indicators of structural reform. This can be of key importance in laying a solid foundation for unleashing the growth potential of world economy and ushering in a new round of world economic growth.
Moreover, with deep integration of the world economy, a community of shared future needs to be formed wherein countries will be interdependent with intertwined interests. At Davos, President Xi assured that China will remain committed to growing an open global economy, practice and promote global cooperation based on openness and will vigorously build a global network of free trade arrangements. In 2016, facing the setbacks in the global opening-up and cooperation and the Asia-Pacific regional cooperation, President Xi, at the APEC Economic Leaders’ Meeting in Lima, called on various parties to stick to the set agenda and translate consensus into concrete and effective actions to realize the Free Trade Area of the Asia-Pacific (FTAAP) which was agreed to be kicked off at the 2014 APEC Economic Leaders’ Meeting in Beijing.
Championing Global Development
As the world’s largest developing country, China has been actively advancing shared development in the world. At the United Nations Sustainable Development Summit in September 2015, President Xi advocated equitable, open, all-round and innovation-driven development, called for greater international development cooperation and announced a series of practical measures in support of such cooperation, which demonstrated China’s role as a responsible and constructive major country in the process.
A year later, China championed development again at the Hangzhou Summit, which set a record in the G20 history in terms of the number of participating developing countries and the distinctly pro-development agenda and outcomes. The Summit put development at a prominent place in the global macro policy coordination framework, adopted the G20 Action Plan on the 2030 Agenda for Sustainable Development and took collective actions in support of the industrialization of African countries and the Least Developed Countries (LDCs).
China has also been playing a key role in working for an early entry into force and implementation of the Paris Agreement on Climate Change, an important consensus in international development cooperation. At China’s initiative, a presidency statement on climate change was issued during preparations for the Hangzhou Summit for the first time in the G20 history, in which all members pledged to sign and implement the Agreement at an early date. The presidents of China and the United States deposited the instruments of joining the Paris Agreement with the then UN Secretary-General Ban Ki-moon during the summit, demonstrating the exemplary role of the two countries in addressing climate change. At Davos, President Xi reiterated China’s firm support for the Paris Agreement and called on all signatories to stick to it as this is a responsibility the countries must assume for future generations. These actions have highlighted China’s strong sense of responsibility in addressing climate change.
Improving the Model of Economic Governance
The global financial crisis has demonstrated that global economic development is unbalanced and the reform of the international financial system is all the more necessary. It has also highlighted the importance and urgency to further strengthen and improve the global economic governance system which can provide stronger support to global growth only when it adapts to the new global economic landscape and its requirements. As the balance of global economic powers is undergoing significant and profound changes, it has become ever more urgent to put a more equitable, reasonable, reliable and efficient system in place. China and other emerging market countries have been gradually taking up the central place on the world stage, thanks to their rising economic strength and global influence.
By hosting the G20 Summit, China has made a successful attempt to take a more active part in global economic governance and accelerate the reform of the system. Moreover, President Xi has also expounded a comprehensive vision of global economic governance which is based on equality, openness, cooperation and is aimed at shared benefits. He has called for joint efforts to ensure equitable and efficient global financial governance, open and transparent global trade and investment governance, green and low-carbon global energy governance and inclusive and interconnected global development governance.
China has been actively promoting the reform of the international financial institutions. During China’s G20 presidency, the long-delayed IMF quota reform plan was followed through, the Renminbi (RMB) was included in the Special Drawing Rights (SDR) currency basket of the IMF, and the International Financial Architecture Working Group, which had been dormant for years, was re-launched. These major breakthroughs in the reform of international financial institutions have greatly increased the representation and voice of emerging markets and developing countries.
China is also an active participant in the establishment of new international economic and financial mechanisms. At China’s initiative and with its efforts, the BRICS New Development Bank – the first international financial institution independently founded by developing countries since World War II – was formally inaugurated; the Asian Infrastructure Investment Bank (AIIB) was formally put into operation, which, with its 57 founding members from countries from five continents, has injected new impetus and vigour into the development of international infrastructure and connectivity.
Sharing China’s Development Philosophy
Rising economic standing and international influence triggered ever-growing reflections and studies on China’s economic mode and development path. On multiple major international fora such as economic summits, President Xi elaborated on the Chinese path from both angles of history and reality and in comparison with the paths of other countries. He articulated the philosophy of innovative, coordinated, green, open and shared development, revealed the essence of the miracle of Chinese growth and shared China’s experience with the world.
Conclusion
2017 is not just another year for China’s economic diplomacy as it marks the holding of two major events: the Belt and Road Forum for International Cooperation (the BRF) and the BRICS Summit. These events offer opportunities not just for China’s own development, but also for the development of other countries and the world economy. The ‘Belt and Road’ initiative is China’s response to the world economic conundrum and the bottleneck in global growth. The country looks forward to working with all parties to deepen partnership, put in place new platforms for cooperation, and bring about a new landscape of development.
China is marching toward a new era where its economic diplomacy can make remarkable achievements.
This article has been extracted from “China’s Economic Diplomacy Entered the New Era,” an article penned by Zhang Jun, Director-General of the Department of International Economic Affairs, Ministry of Foreign Affairs, China.
