China contributes its wisdom to G20
- By Hu Angang
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E-mail China Today, September 22, 2016
As a rising power, China is bound by ever closer ties to the rest of the world, while exerting an ever greater influence on global development. This has in turn exposed the country to more global challenges as regards politics, the economy, the environment and national security. The fate of China is now linked to that of the larger world to an unprecedented degree. In other words, the developmental challenges it faces are the same as those the entire world confronts amid global development, and vice-versa. Based on this awareness, China now actively participates in global economic governance, charting a constructive course in international affairs, while assuming more obligations, particularly at times of international crisis.
Rise of China and the Southern Hemisphere
Global economic governance has shifted from a "great divergence" between the northern and southern hemispheres over the past two centuries to a "great convergence" in the past 10-odd years. The disparity in economic strength of southern countries (share of GDP and import/export volume), as compared to the world total, shrank from the northern hemisphere's predominant 2.14 times in 2000 to just 1.05 times in 2014.
China, meanwhile, has steadily consolidated its economic might. The country's GDP (calculated per the official exchange rate) rose to the world's second-largest in 2014, up from the sixth spot in 2000. If measured by purchasing power parity (PPP) China's GDP is now first in the world. The value of its imports and exports has climbed from the world No.8 spot to No.1, and its share of the world economy grew from third largest to No.1 between 2000 and 2014.
This attests to the impetus China's rise gives to growth of the southern hemisphere which, in turn, draws strength from such growth. The predominance of northern hemisphere nations in the world economy, therefore, has yielded to a more balanced, shared rule by countries in both hemispheres.
China's Voice in the G20
The 2008 financial crisis paved a path for China's increased participation in global economic governance. Since 2008, the Chinese president has attended and spoken at each of the 10 G20 summits thus far, conveying the voice of China and presenting Chinese proposals. China has reiterated the principles of "joint efforts," "international cooperation," "mutual benefit," and "innovative and shared development." It has taken the lead in implementing the measures prescribed in G20 summit communiqués. China has moreover proposed nearly 100 initiatives for international cooperation, thereby extending its firm support to the world economy.
Since 2013, President Xi Jinping has attended the G20 summits in St. Petersburg, Brisbane and Antalya, during which he spoke of building a more open world economy, pooling global efforts to fight Ebola, and China's endeavor to advance reforms and pursue open development.
At the St. Petersburg Summit, China urged countries around the world to adopt a long-term vision to cultivate a world economy featuring innovative development, interconnected growth and a confluence of the interests of individual countries. It called on them to uphold and develop an open world economy, forge closer economic partnerships, and shoulder due responsibilities in these respects.
At the Brisbane Summit, China stressed an innovative growth pattern, the building of an open world economy and improvement of global economic governance.
At the Antalya Summit, China elaborated its views on and propositions as regards the world economic situation, and expounded its policies and measures towards deepening domestic reforms so as to build an open economic system.
The ideas and plans that China has brought to G20 summits have better acquainted the world with the country's progress in building an open economy, protected and promoted China's global interests and, moreover, helped forge a community with a shared future among the G20 members. All of this encapsulates China's prescription for the world economy, and its development and security: "working in unison for win-win results." By contributing these ideas and plans, China displays a strong sense of responsibility and courage as a major country, and also its resolve to grow along with other countries while sharing weal and woe with them in the course thereof.
This reflects a fundamental change in China's relationship with the rest of the world. With the largest volume of foreign trade globally and the world's second-largest economy, and as a major trade partner of more than 200 countries and regions, China now finds itself bound together with the larger world, for better or for worse. China is ready and willing to take on its international responsibilities, and will play an active part not only in the G20, but also other international governance mechanisms.
Resurrecting the World Economy
A spate of problems currently plagues the G20. These include a faltering recovery of the world economy, slowing growth in potential GDP, more upheavals in international financial markets, low levels of global trade and investment, high unemployment rates, and persistent inequality and imbalances. The search for solutions to these intractable issues requires innovative development concepts and new approaches to global economic governance. China is well positioned to contribute significantly in this regard.
On December 1, 2015, the day China donned the mantle of the G20 presidency, President Xi delivered a speech on the country's plan to host the 2016 G20 Summit. Under the theme of "Building an Innovative, Invigorated, Interconnected and Inclusive World Economy," this meeting was expected to respond to the development needs of different countries in the current world economic milieu by addressing the pressing issue of achieving stable growth in the immediate future, so as to build up momentum for long-term development.
To this end, China has proposed four key priorities for the summit, to wit: 1) forging a new path for growth; 2) more effective and efficient global economic and financial governance; 3) robust international trade and investment; and 4) inclusive and interconnected development.
"New path for growth" lays emphasis on growth driven by innovation, including innovation in concepts, systems, business models and structural reform. This will demand more funding for research and experimentation. Among G20 members, spending in this area as a share of the world total by countries in the northern hemisphere fell by five percentage points from 2010 to 2014, in comparison with a gain of three percentage points for their southern peers, with China scoring a 3.7 percentage point rise. In the coming years, northern countries must invest more in long-term, innovative and productive R&D programs, and further curtail nonproductive, short-term, welfare-type subsidies. For southern countries, the efficiency and effects of investment must be improved when funneling more momentum into R&D activities and building their respective innovation centers, so that their people will benefit the most from such investments.
Noteworthy is that China is now an international innovation hub. In 2010, patent applications by its citizens accounted for 19.58 percent of the world total, just behind the 24.54 percent claimed by the U.S., and ahead of Japan's 17.25 percent. Four years later, China's share had soared to 46.09 percent, 1.37 times that of the U.S. (21.59 percent) and Japan (12.16 percent) combined. This strong momentum in China will assuredly fuel worldwide innovation.
The world must explore new paths and discover new drivers that can infuse new life into the world economy in order to spur robust international trade and investment. Tourism is emerging here as a new growth point. In China, the number of domestic travels hit four billion last year, and this figure is projected to reach 6.5-7 billion by 2020. Domestic travel netted RMB 3.42 trillion in 2015, an amount predicted to double by 2020. According to the UNWTO Tourism Highlights 2015 edition, Chinese travelers embarked on 120 million international trips in 2015 to 151 countries and regions, branding China as the major source of international tourists worldwide. Their disbursements abroad, valued at US $104.5 billion, once again topped the world's charts.
UNWTO's Future Vision: Tourism Towards 2030 predicts that the number of tours embarked on globally will rise to 1.8 billion, with 57 percent from emerging economies. China's share is estimated at above 10 percent of the world total. In light of this prospect, moves to facilitate cross-border service trades, including tourism among G20 countries (such as China and the U.S. granting multiple-entry visas to each other's qualifying citizens) will significantly boost such trade all over the world, and may likely propel the volume of global tourists to exceed the UNWTO forecast. This result is in the interests of countries in both the northern and southern hemispheres.
In addition to tourism, Industry 4.0, intelligent manufacturing, robots, big data, Internet Plus, and cloud computing are all new industrial models and new drivers that will power future world economic growth.
"Interconnected development" will be impossible without building a community of shared future and interests, and this will entail enhancing international economic cooperation. Interconnection will open up opportunities for all parties, and their positive interactions will pool their strengths.
Today, aging infrastructure in the northern hemisphere is in dire need of upgrading and rebuilding, while infrastructure in southern hemisphere nations is greatly deficient. This has constituted a bottleneck in global development. This however bodes well for a golden age of infrastructure construction worldwide, which will greatly boost the global economy.
The World Bank has established the Global Infrastructure Facility (GIF), a platform that coordinates and integrates the efforts of multilateral development banks (MDBs), private sector investors and financiers, and governments interested in infrastructure investment in emerging markets and developing economies. China has initiated the Asian Infrastructure Investment Bank (AIIB) to accelerate infrastructure connectivity in countries along the Silk Road Economic Belt and the 21st-Century Maritime Silk Road (Belt and Road). Participating nations share the desire to develop their economies and improve transport by building more roads and other infrastructure projects.
For instance, the China-Pakistan Economic Corridor and the accompanying cooperative agreements between the two countries worth US $46 billion have notably boosted development in Pakistan's transport, energy, power grid, and cable communication sectors. As a result, annual economic growth in this country of 200 million people is expected to climb from the current four percent to six-to-seven percent.
Achieving "inclusive development" requires closure of the disparity between countries, bestowing more attention on the southern hemisphere, and ensuring all of humanity shares the benefits of world economic growth. One such development gap is the digital gap, and China is diligently working on this: its Huawei Group operates in 170 or more countries and regions worldwide, thereby providing services to more than one third of the world's population. The top beneficiaries of its endeavors live in the southern hemisphere.
In September 2015 the United Nations Sustainable Development Summit adopted the 2030 Agenda for Sustainable Development. In light of this document, China declared in its 13th Five-Year Plan that it will expand foreign aid, better the forms of this aid, and provide more free training and consultation for other developing countries in the fields of human resources, development planning and economic policy. The nation will also expand international cooperation and assistance in such areas as sci-tech, education, medical care and public health, disaster prevention and relief, environmental remediation, wildlife protection, and poverty alleviation. By 2015, the ranks of foreign students in China had edged to 400,000, and this number is projected to double in the next decade. In response, the Chinese government is poised to offer more scholarships to international students – particularly those from the southern hemisphere – to help cultivate professionals in various disciplines.
China believes that, in order to be successful, the 2016 G20 Summit must advance innovative proposals, offer constructive guidance to the world economic agenda from a global perspective, and deliver practical public goods to the world. This is expected to lead the world economy out of the doldrums and onto the path to innovation-driven, sustained and shared growth.
DR. HU ANGANG is director of the Center for China Studies of the Chinese Academy of Sciences and Tsinghua University, and a professor at the School of Public Policy and Management, Tsinghua University.
LI MENG, a doctoral student at the School of Public Policy and Management, Tsinghua University, also contributed to this article.
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