Publication: Survival: Global Politics and Strategy December 2013–January 2014
29 November 2013
China’s geo-economic rise, in which its tremendous economic resources have evolved into increasing geopolitical influence, is the most important strategic trend of our time. How China chooses to engage with the outside world on economic issues, and how other major powers – most notably, but not limited to, the United States – react to it, will have profound implications for international order in general, and in particular for the latticework of institutions, groupings and standards that make up the architecture of global economic governance.
Former Chinese premier Wen Jiabao’s speech at the January 2009 World Economic Forum annual meeting in Davos stood out as a direct challenge to the whole system of global economic governance that emerged in the decades following the Bretton Woods Conference of 1944. In his speech, Wen argued that the global financial crisis that began in 2008 had ‘fully exposed the deficiencies in the existing international financial system and its governance structure’, and called for ‘the establishment of a new world economic order that is just, equitable, sound and stable’.
While Wen’s words echoed a widely held sentiment, they were particularly significant because they seemed to represent a shift away from Deng Xiaoping’s famous counsel for Chinese leaders on the international stage to ‘hide one’s talents, bide one’s time’ (tao guang yang hui). It seemed that China was ready and willing to challenge the established international economic order, strengthening the voices of those who argued that a ‘Beijing Consensus’, or China model, would come to dominate global economic affairs.
Over four years on, the Chinese leadership has toned down its rhetoric on the need for wholesale reform of the architecture of global economic governance. In the intervening period, China has become a champion of the G20, is increasingly engaged with a range of international financial institutions and has publicly argued that it wants to ‘integrate’ into the global system and ‘follow the international rules’. However, Beijing has also begun to play an increasingly active role in alternative groupings, leading calls for the establishment of new financial institutions attached to both the BRICS (Brazil, Russia, India, China and South Africa) group and the Shanghai Cooperation Organization (SCO), as well as exploring numerous bilateral and regional free-trade agreements.