Ismail Serageldin

Speeches


China’s New Role in International Relations

 21/06/2017 | “XII High-Level Meeting” entitled “China’s New Role In International Relations: The Prospects Of One Belt One Road Initiative”

China’s New Role in International Relations

Remarks delivered by

Ismail Serageldin

In Beijing, 21-22 June 2017

 

 

 

 

 

 

A Personal Journey:

 

I had the privilege of visiting Beijing for the first time in 1978, almost exactly 40 years ago.  I then visited China again and again over the years, and here I am today, a living witness to one of the greatest transformations in the history of humanity.  Indeed, more has been achieved in China than anyone could have dreamed possible.  

 

In a few decades, the country has been transformed:

  • From a largely agrarian society to an industrial powerhouse;
  • From a closed society, to a champion of globalization and free trade;
  • From a poor developing country, it has become the second economy in the world and well on its way to overtake the USA as the largest economy in the world;
  • From a poor developing country needing to borrow, China became the biggest creditor of the United States;
  • China created the Infrastructure Bank, effectively challenging the Bretton woods system, while still staying within the Bretton woods institutions
  • Its currency has been recognized as a reserve currency and is part of the IMF’s SDR basket.

 

And in the process:

  • More people have been lifted out of poverty than the entire population of Europe;
  • The cities of China are booming; and
  • The infrastructure of China vies with the best in the world…

 

And as the middle class grows, cars and consumer products; pluralism and mobility are gradually replacing the rigid conformism symbolized by the Mao jackets, and carried to extremes by the cultural revolution.

But China is not just a vast manufacturing enterprise using cheap labor to flood world markets; far from it, it is competing in every field of endeavor and achieving remarkable results.

 

The scientific achievements of China are not only legion, but they also continue to challenge the world leaders in every field.   For example:

  • In Biology some of the most advanced work on Gene editing is done here;
  • In space and ICT, the first communication using quantum entanglement at a distance has just been accomplished by China;
  • In super-computing the two largest super computers are Chinese made, and the largest of these uses Chinese made integrated circuit chips;
  • In transport, the fastest maglev train is in China;

And the list goes on …

 

Yet that transformation has come at a great environmental cost, and now China, the biggest emitter of CO2 on the planet is leading the charge for emission control and the implementation of the Paris accords.

 

China is rapidly regaining its historic pre-eminence in so many fields.  It is an unstoppable process due to the size of her population, the industriousness of her workers and the creativity of her people.  In many respects, the performance of China is the envy of the world.  And despite its openness to globalization and trade, China remains quintessentially Chinese.  Conscious of its culture, justly proud if its heritage and drawing strength from its achievements; it challenges the world to accommodate itself to the greatness of China rather than seek to accommodate China to the world.

 

China and the Future of International Relations

 

Today, the tectonic plates of the world order are shifting

  • The USA has a difficult and uncertain internal political landscape, and its global leadership is not as clear as it once was;
  • Europe is in the throes of dealing with its own problems from bureaucracy to Brexit, from the Euro to immigration;
  • Russia seeks to reassert its leadership in a number of places from Syria to Ukraine;
  • The Middle East is up in Flames. Egypt surrounded by Libya, Sudan, South Sudan, Somalia, Yemen, Syria and Iraq – all in various stages of civil disorder and outright war;
  • And in the rest of the world India, LAC, EAP, and Africa are not providing global leadership even as they try to increase regional cohesion and improve their own performance.

 

Under these circumstances, the world turns to China with many questions: given the enormous and rapidly growing power of China economically, militarily and politically, what sort of contributions will it make to shaping that new world order? How will it contribute to the global economy, global security and global governance in this age of connectivity?

 

What is today certain is that there can be no crafting of a new global order without the full integration of China in that process, and China’s influence shall be a decisive factor in shaping the future of international relations.  Already, China’s impact in the global economy is monumental.

 

China’s Role in the Global Economic System

 

Under that heading, we can define three important themes worthy of notice and discussion. 

 

First: the enormous transformation of the world economy due to the transformation of China:

 

The conventional views of the world economic order that has been largely dominated by the west since the Second World War, have been transformed by the emergence of East Asia.  First Japan, which rose to becoming the second largest economy in the world was largely added with the western powers, especially since Japan had no particular wish to translate its economic power into political goals and ambitions.  Then came the Newly Industrialized Countries (NICs) of South Korea, Taiwan, Singapore and Hong Kong.  Again while their performance was spectacular, it did not challenge the overall economic order of the world, and again there was not much political impact. 

 

But China is different.  It has not only become a powerhouse in global trade, it has the largest reserves, and has become the second economy in the world and is on a path to overtake the US quite rapidly to become the greatest economic power.  Furthermore, China has become the largest foreign creditor of the US.  China has a seat and veto at the Security Council, and international policy initiatives.  The USA’s withdrawal from the Paris Accords and from the Trans Pacific Partnership (TPP) opens up more avenues for the expanding role of China.  The sheer size of China and its unlimited possibilities, and the recognition that it is well on its way to becoming the world’s largest economy, that it is unstoppable like a rising tide, foreshadows important shifts in the decades ahead.  It will not be just a reshuffling of places in the world ranking tables.

 

 

Second: The internal transformation of the Chinese economy:

 

The transformation of China from an agricultural economy into a manufacturing powerhouse had a major impact on the western economies and on global trade.  But I believe that the Chinese economy is currently undergoing a profound transformation that is worthy of attention.   Like the rest of the world, it is undergoing a major increase in income inequality, but in China, the rapid rise of all incomes makes this much less of an issue than in other countries where the overall growth in per capita income is not as rapid as it is in China.  The structure of the economy is also undergoing a profound transformation as services gradually displace manufacturing to become the major contributor to GDP.   In addition, there is shift from export orientation to satisfying domestic demand.  This will be accompanied by a lowering of the savings rate and the expansion of domestic consumption. 

 

 

This shift in the Chinese economy, will have cascading effects on the evolution of   the world economy, which may start seeing the Chinese economy as an enormous market that they can export to, not just as a producer of goods that they import.  It is a balanced position that befits a global leader.

 

Furthermore, this gradual transformation of the Chinese economy to a balanced very advanced economy, shows that the Chinese leaders are paying a lot of attention to the cutting edge sectors.  We see that in science, research, patents, and applications from space to biotechnology, while the agricultural sector gets transformed by the application of smart agriculture that produces some of the highest yields in the world.

 

Third: whither the global economy?

 

So with the rising incomes of the workers in China, and the transformation of the structure of the economy, where will the low-wage manufacturing jobs go?  There has been a view advanced in the ‘New Structural Economics’ that the transformation of Japan opened the door to the start and the transformation of the NICs (Singapore, Taiwan, Hong Kong and Korea).  Will the transformation and rising wages in China shift the low-wage manufacturing jobs to Vietnam, Thailand, Malaysia and Indonesia?  Or even beyond that to Africa (including Egypt) and South Asia (India, Bangladesh, Pakistan)? Conversely, Latin American incomes are too high to benefit from such a shift.

 

But the extremely rapid scientific advances and the technologies they are making possible means that the old models of production will have to shift.  The application of robotics and Artificial Intelligence (AI) may change the existing patterns of global supply chains and could transform the content and nature of manufacturing jobs as they are currently understood.   This may mean that repatriation of many manufacturing jobs into the advanced high wage countries becomes a possibility, even as the total number of global manufacturing jobs remains constant or even decreases.

 

In the face of very rapid change, managing the consequences of the shifting technologies that may, or may not, lead to a new deployment of the jobs of the future will be a challenge to China and all the major countries in the global economy.  They would have to handle a number of policies from macro-economics, trade, research and development of new technologies, and the deployment of that while adjusting to the inevitable wrenching changes in the labor and employment markets as the new technologies become more and more widespread.

 

 

China as a Contributor to Global Security:

 

In a world of conflict and terrorism, of uncertainty and strife, we are witnessing the emergence of a New World Order for the 21st century.  The wisdom of Chinese leaders, their deliberation and their commitment to the long view will all be needed to make this a world where all will find peace and prosperity.

 

In the past, global affairs were dominated by the Cold War, but today, the expansionist philosophy of the cold war needs to be replaced by a cooperative framework to cope with the rapidly changing world.

 

In western democracies, there exists the dilemma of increasing pre-emptive security while still protecting the basic liberties and freedoms of the citizens. Expanded surveillance threatens the privacy of the citizens and the pre-emptive detention is incompatible with the presumption of innocence.  In the Middle East and a number of the Muslim-majority countries, there is a part of the population which sympathizes with the extremists from which terrorism springs.  However, all governments need a much greater collaboration in the sharing of information and intelligence, and the Chinese authorities must play a role, especially now that we see the extension of these extreme elements to threaten a number of Asian countries including Indonesia and the Philippines.

 

China in the Age of Connectivity

 

The ICT revolution and the amazing emergence of social connectivity, and today the marriage of the internet and the mobile hand-held phone, have been the major definers of global connectivity.  But connectivity is more than that.  Indeed, the degree of economic interaction between various economies, the global interdependence that international trade and capital flows increasingly have woven into the very fabric of international relations also strengthen bonds between countries.  And given China’s size and heft in the global economy, it is clear that China is a major factor on the global scene.

 

So the world turns to China; the country that  is looking beyond its borders, and has become a huge investor in the rest of the world.  China that has brought the world the One Belt One Road (OBOR) concept as a new way to promote trade and prosperity and cultural exchange.  This enormous project, which is seen by some as only an infrastructure project, is certainly much more than that.  It is new infrastructure that will help the country beneficiaries to improve their economic performance, and that will also result in new, modern links between China and its westwards partners, be it by land or sea.  I am aware that it also provides further work for Chinese companies abroad, and expands the potential for such companies to do contracting in many new countries.  But that is a classic win-win result of this very special Chinese outreach.

 

Under these circumstances, we can ask: what sort of a New World Order will emerge from the interactions and transactions of China with the rest of the world?  While no one can predict the future, it is clear that the international environment is conducive to the emerging Leadership of China, which requires legitimacy in addition to power, and political will reflected in domestic support for the governmental initiatives, as well as soft power in addition to hard power. 

 

 

China as a Contributor to Global Governance

 

But whatever the new international order, politically and economically that will emerge, and whatever China’s ultimate position in that will be, it behooves us to ask about the role of China in developing a better system of international governance. Position process performance

 

The centrality of China to the emerging New International Order, means that it is well positioned to influence the process of designing new governance structures, that will hopefully perform better than the current system of the UN and Bretton woods combined.

 

The shifts are already occurring, and China is providing the backbone for the globalizing, free trade system and the support needed by international organizations, including creating new institutions in addition to - not to replace - existing organizations.  It is seeking to have meaningful collective, regional and bilateral relations with the rest of the world.  It is providing leadership to the Paris agreements to combat Climate Change.

 

China believes in Order, and thus rules that should apply to everyone.  Now, China is coming forward to lead by example;  they are actively strengthening the institutions of global multilateralism.

 

One can hope that this will mean that within the framework of these global institutions:

•        The richer should help the poorer

•        The larger should help the smaller

•        The stronger should protect the weaker

 

Such a contribution to a new system of global governance is not visible on the horizon yet.  But China’s contribution to its development is an important next step in the assertion of China’s place in the realm of global leadership, a place that transcends sheer economic and military power, and brings in aspects of  “soft” power as well.

 

 

Conclusions:

 

 

So in conclusion, there is no doubt that China will affect profoundly the course of global events in the decades ahead, and will be central in the formulation of new economic, political, trade and governance relations at the global level.  Many of us hope that the wisdom of Chinese leaders will result in a more equitable world system that addresses current injustices, as well as the future legacy we will leave our children and grandchildren.

 

If these are dreams, look at how dreams get realized: 

•        Who could have predicted the success of the EU

•        Who could have predicted the miracle of China

•        Who could have imagined a bloodless transition in Post-apartheid South Africa

•        Who could have imagined all the countries of the world coming together around human rights, the MDGs and the SDGs

•        Who could have believed that all countries of the world would agree and sign the Paris Accords for Climate Change

 

Indeed, we have not yet exhausted the miracles that devoted people can bring to reality.

 

 


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