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China has a special role at crucial stage of global economic development

YAROSLAV LISSOVOLIK | 2022-11-26 | Hits:
Chinese Social Sciences Today

In the economic sphere, there are several important messages coming from the speech of Chinese President Xi Jinping at the 20th CPC National Congress. We can foresee that it will continue to support the development of the private economy along with allowing the markets to play a major role in the operation of the economy, which are all important guidelines and signals to the investor community. Xi also stressed the importance of reforms and economic openness that enabled China in the preceding decades to attain impressive success in economic modernization.?

What these messages from China’s leader mean for the world economy is that China is committed to forging ahead with further modernizing its economic system and supporting open markets for the good of “common prosperity.” This is essentially the paradigm of a “win-win” economic strategy that expands the possibility set of international economic cooperation as opposed to protectionism and Realpolitik that has increasingly been observed from the US and some of the other advanced economies.?

In view of the complexities associated with de-globalization, the disruption of supply chains, and the global economic downturn, China’s leader has rightly emphasized the need to focus on developing the sectors in which China was still to demonstrate sufficient catch-up growth vis-à-vis advanced economies. This is particularly important in sectors such as IT and computer technology that will determine to a significant degree the competitiveness of national economies in the coming decades. This will in turn necessitate the attainment of strategic alliances with partners from the Global South via the platforms introduced in recent periods by China such as: BRI, BRICS+, RCEP.?

And indeed as noted by Xi, the next five years will be decisive in many ways—China and the world economy will need to surmount the current perilousness of geopolitical rifts, the persistence of the shocks from the COVID-19 pandemic and the fragility associated with the increasingly likely global recession. China’s role in leading the world economy into safer waters will be defined by its ability to innovate and present new modes of economic cooperation. The target in this journey has been defined by Xi as a “high-level socialist market system” and China’s success on the road to reaching these ambitious goals will be critical to the recovery and dynamic growth of the world economy.?

China has a special role at this crucial stage of global economic development that is characterized by increasing rifts between national economies and regions. Against the tide of de-globalization China is advancing a rejuvenated globalization agenda that targets greater connectivity, trade openness, and inclusivity. China is also actively moving towards creating new international institutions, such as the New Development Bank and the Asian Infrastructure Investment Bank. With the global economy becoming increasingly fragmented and regionalized, China may become the key force in the globalization process that reverses the protectionist and de-globalization trends.?

In my view, the main innovation coming from China in recent years has been the BRICS+ paradigm, because this is the first case of a partnership that is open, inclusive and diversified across the global economy. The beauty of this concept is that creates tremendous scope for further innovation in creating alliances that have not been explored in the advanced world.?

In this respect, such innovation allows China and its partners in the developing world to be at the very frontier of innovation in creating new types of economic alliances. These may include digital economic accords, trade, and investment alliances across the extended platform of BRICS+. Most importantly, China can lead the creation of new layers of global governance on the basis of the BRICS+ platform via bringing together the main regional integration blocks and regional development institutions. Thus far there are no such platforms of coordination of regional institutions and blocks in the global economy.?

The world economy after a brief recovery in 2021 is again headed into negative growth territory. Alarm bells regarding the risks of a recession in the world economy are increasingly emanating from global organizations such as the IMF. China and its BRICS partners may play a decisive and a leading role in overcoming these challenges. For example, joint efforts could direct at developing vaccines and making them available to other developing nations. There is also considerable potential for the countries of the BRICS+ block to address issues related to energy security. To address geopolitical and geo-economic challenges BRICS countries need to play a more active role in building new financial mechanisms, including de-dollarizing the global economy through the greater use of national currencies and creating a new BRICS reserve currency (the so-called R5 initiative).?

Finally, the BRICS together with China need to create new anti-crisis mechanisms that provide a greater role to regional development institutions. Such a new anti-crisis mechanism could rely on a greater role of the BRICS Contingent Reserve Arrangement (CRA) in working together with regional development arrangements of developing countries with the aim of devising coordinated measures to tackle recessionary risks.?

Yaroslav Lissovolik is program director of the Valdai International Discussion Club and member of the Russian International Affairs Council. This article was edited based on an exclusive interview on Yaroslav Lissovolik by CSST.?

Edited by BAI LE