China’s Participation in Global Economic Governance: Progress, Challenges and Approaches

Since its reform and opening-up in the late 1970s, China’s role in global economic governance has changed dramatically from an outlier to a follower and then to a participant and contributor. As the global governance system enters a critical period of accelerated changes, China is actively involved in reforming the system to make it fairer and more reasonable. This is not only an inevitable requirement for China’s domestic development in the new era, but is also an inherent component of China’s responsibilities for the world. A review and analysis of China’s achievements and experience in global economic governance since the 18th National Congress of the Communist Party of China (CPC), while pinpointing the difficulties and challenges facing China, can provide positive reference for China’s better participation in the future.

China’s Major Achievements in Global Economic Governance

In the new era, under the leadership of the CPC Central Committee with President Xi Jinping at its core, China has grasped the trend of global economy and taken an active part in the reform and improvement of the global economic governance system.

Contributing Chinese solutions to global economic governance

Adhering to the principles of being problem-oriented, demand-based and trend-driven, China has consistently put forward its original initiatives and proposals on multilateral occasions, fully elaborating on the Chinese approach to global economic governance.

First, China has advocated win-win cooperation to uphold economic globalization.1Long Guoqiang, “Historical Logic and China’s Role in Global Economic System Transformation,”People’s Daily, August 28, 2017, p.7.As President Xi Jinping has stressed, economic integration is the prevailing trend of the world; countries should step up their macroeconomic policy coordination, stay committed to an open world economy, and share the opportunities and benefits in the process of openingup for the sake of win-win outcomes.2“Let the Torch of Multilateralism Light up Humanity’s Way Forward: Special Address by H.E. Xi Jinping, President of the People’s Republic of China, at the World Economic Forum Virtual Event of the Davos Agenda,” Xinhua, January 25, 2021, http://www.xinhuanet.com/english/2021-01/25/c_139696610.htm.China explicitly opposes all forms of protectionism and firmly upholds the authority of a multilateral system.Apart from actively promoting multilateral trade negotiations at the World Trade Organization (WTO), it has also played a significant role in advancing various regional and bilateral trade agreement negotiations. China has made high-standard opening-up a priority in the new era and pushed for the development of 21 pilot free trade zones and the Hainan Free Trade Port domestically. China takes the initiative to open its market and readily share dividends of its development with the rest of the world by hosting a series of major events, including the China International Import Expo (CIIE).

Second, China has introduced “inclusive growth” and “development governance” into the mainstream concepts of global economic governance.Under China’s initiatives, the G20 Action Plan on the 2030 Agenda for Sustainable Development proposed at the G20 Hangzhou Summit prioritized development issues in global macroeconomic policy coordination for the first time. At the 2017 World Economic Forum Annual Meeting,China expounded on its initiative of strengthening inclusiveness of global economic growth, which calls for balanced, equitable and inclusive development and ensuring that the people have equal access to opportunities and share in the benefits of development. To address the problems with the world economy, China advocates a dynamic growth model, a model of open and win-win cooperation, a model of fair and equitable governance,and a balanced, equitable and inclusive development model.3Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth,” Qiushi, No.24,2020.In addition,China has launched the Least Developed Countries (LDCs) and Accessions Program, the G20 Initiative on Supporting Industrialization in Africa and LDCs, and the Global Infrastructure Connectivity Alliance. With the above measures, China has put into practice its proposition of “true development is development for all and good development is sustainable.”4“Xi Jinping: True Development Is Development for All and Good Development Is Sustainable,”November 10, 2020, http://www.gov.cn/xinwen/2020-11/10/content_5560307.htm.

Third, China has put forward new agendas and initiatives for global economic governance cooperation. As for green and sustainable development, China listed green financing on the G20 agenda for the first time in 2016,5“Xi Jinping: Strengthen Cooperation to Promote Transformation of Global Governance System, Jointly Uphold the Noble Cause of World Peace and Development,” Xinhua, September 28, 2016, http://www.xinhuanet.com/politics/2016-09/28/c_1119641652.htm.launched the Initiative for Belt and Road Partnership on Green Development together with 28 countries, and advocated a community of life for man and nature in 2021. In the field of digital economy, China launched the G20 Digital Economy Development and Cooperation Initiative, which was the first of its kind globally, and played a constructive role in the discussions on data security through various multilateral platforms including the UN, G20, BRICS, and the ASEAN Regional Forum. As the COVID-19 pandemic hit a heavy blow on the global economy, China has committed itself to working with other G20 members to implement the Debt Service Suspension Initiative for the poorest countries6“Statement by H.E. Xi Jinping at Virtual Event of Opening of the 73rd World Health Assembly,”People’s Daily, May 19, 2020, p.1.and has financed the founding of a Sub-Fund on APEC Cooperation on Combating COVID-19 and Economic Recovery.7“Remarks by H.E. Xi Jinping at the APEC Informal Economic Leaders’ Retreat,” Xinhua, July 16, 2021,http://www.xinhuanet.com/english/2021-07/16/c_1310065704.htm.At the 76th session of the UN General Assembly in September 2021, President Xi Jinping proposed the Global Development Initiative, calling for countries to stay committed to development as a priority, to a people-centered approach, to benefits for all,to innovation-driven development, to harmony between man and nature,and to results-oriented actions, thus steering global development toward a new stage of balanced, coordinated and inclusive growth.8“Full Text of Xi’s Statement at the General Debate of the 76th Session of the United Nations General Assembly,” Xinhua, September 22, 2021, http://www.news.cn/english/2021-09/22/c_1310201230.htm.

Offering new models and paths for solving global economic governance problems

The current predicament of the world economy, as President Xi Jinping pointed out, is rooted in a lack of robust driving forces, inadequate global economic governance, and uneven global development.9Xi Jinping, “Jointly Shoulder Responsibility of Our Times, Promote Global Growth.”To steer the global economy out of difficulty, China is offering new models and paths for solving the problems in global economic governance with its own wisdom and efforts.

China has fully implemented the Belt and Road Initiative (BRI) and provided high-quality public goods for balanced global development. Under the innovative global governance mechanism, by February 2022 China had signed more than 200 cooperation documents with 148 countries and 32 international organizations.10“Hotspot Dialogue: Jointly Build the Belt and Road and Follow the Trend of Economic Globalization,”People.cn, February 26, 2022, http://world.people.com.cn/n1/2022/0226/c1002-32360170.html.China has made substantive progress on a range of infrastructure projects, such as the Jakarta-Bandung High-Speed Railway,the China-Laos Railway, the Budapest-Belgrade Railway, the Mombasa-Nairobi Standard Gauge Railway, the Gwadar Port and the Hambantota Port. This has provided new opportunities for under-developed countries and regions to integrate into globalization. The BRI is not only a new globalization model, but also a fresh attempt for common development in conformity with the aspiration of most countries.11“Solid and Significant Outcomes – Sidelights on President Xi Jinping’s Attendance of the Third Seminar of the Belt and Road Construction,” Belt and Road Portal, November 21, 2021, https://www.yidaiyilu.gov.cn/xwzx/xgcdt/199884.htm.

China has been exploring new models for South-South and North-South cooperation. For example, China recently proposed the model of “third-party market cooperation” and issued the Third-Party Market Cooperation Guidelines and Cases. Thanks to the model, the advantageous production capacity of China and the advanced technologies of developed countries can synergize with the demands of developing states, and jointly promote the industrial development of these third countries and the improvement of their infrastructure and people’s livelihood, thus producing the effect of “1+1+1>3.”12“China Has Signed Third-Party Market Cooperation Documents with 14 Countries,” September 6,2019, http://www.gov.cn/xinwen/2019-09/06/content_5427727.htm.China has proposed and developed the “BRICS plus” model, which provides opportunities for more developing countries to get their appeals heard and heeded through the BRICS mechanism. China has also established the Institute of South-South Cooperation and Development and the South-South Cooperation Assistance Fund, and supported more than 100 livelihood projects in over 50 countries to help them nurture technical and high-end professionals.13“Hold High the Banner of a Community with a Shared Future and Strive for Greater Progress of South-South Cooperation: Remarks by State Councilor Wang Yi at the Event Marking the Fifth Anniversary of the South-South Cooperation Assistance Fund and the Institute of South-South Cooperation and Development,”China International Development Cooperation Agency, July 8, 2021, http://en.cidca.gov.cn/2021-07/09/c_641630.htm.

China has offered its own experience for global economic governance reform and innovation. China’s success in economic reform, infrastructure construction, macroeconomic regulation, poverty alleviation and green finance has provided valuable reference of models and insights for all countries, especially developing countries. The Chinese achievements in global economic governance cannot be accomplished without firmly safeguarding the interests of developing countries, combining national interests with global interests, improving but never overturning the existing global economic governance system, and gradually changing its own role in global economic governance in accordance with the reality of different stages.14Zhang Jiuqin, “China’s Role in Global Economic Governance: Retrospect and Prospect,” China Economic and Trade Herald, No.16, 2019, p.36

Promoting reconstruction and innovation of global economic governance rules

Rules-based governance stand at the core of global economic governance.15Sheng Bin and Wang Luyao, “China’s Role and Contribution in Global Governance,” Jianghai Academic Journal, No.1, 2017, p.84.Currently, the rules system of global economic governance is confronted with two major problems. While international rules in certain areas have become outdated, rules have yet to take shape for some emerging areas.16Zhao Longyue, “Economic Globalization under Covid-19 Pandemic and China’s Leading Role,”Contemporary World, No.11, 2020, p.18.As an active initiator and promoter amid the new wave of globalization, China has focused on institutional arrangements and participated in the rules-making of global economic governance.

China sticks to liberalizing and facilitating global trade and investment in line with international economic and trade rules. Since 2001 when it acceded to the WTO, its average import tariff has been slashed from 15.3 percent to 7.5 percent. It has continuously broadened market access for foreign investors, promulgated the Foreign Investment Law, and fully carried out pre-establishment national treatment and negative list system to create a more attractive environment for businesses and innovation.17Zhao Longyue, “Coordinate Domestic and International Rules: 70 Years of China’s Participation in Global Economic Governance,” Social Sciences Digest, December 21, 2019, pp.33-34.It has also played an important role in introducing the Joint Ministerial Statement on Investment Facilitation for Development at the WTO ministerial conference.

China has reached various bilateral investment treaties (BITs), free trade agreements (FTAs), regional trade and investment agreements (RTIAs), and economic partnership agreements (EPAs) with other countries. For example,China took the initiative to set up the world’s first-ever rules framework for multilateral investment – G20 Guiding Principles for Global Investment Policymaking, worked out the Outlines for BRICS Investment Facilitation with BRICS members, and signed the Regional Comprehensive Economic Partnership (RCEP) with ASEAN and several other Asia-Pacific countries.According to the WTO, China has been the principal trading partner of 120 states and regions with a total trade volume of 32.16 trillion yuan,accounting for over 10 percent of global goods trade.18“Statistical Communique of the People’s Republic of China on the 2020 National Economic and Social Development,” National Bureau of Statistics, February 28, 2021, http://www.stats.gov.cn/tjsj/zxfb/202102/t20210227_1814154.html.

To meet the new demands of global economic growth, China has been proactively proposing economic governance rules in emerging fields. With China’s efforts, platform economy and e-commerce sections in the RCEP have successfully included terms that encourage contracting parties to improve trade management and procedures electronically, which shows that China has managed to introduce e-commerce/digital trade into regional trade agreements (RTAs).

Participating in establishment and reform of global economic governance mechanisms

As the world’s largest developing country, China understands how hard it is for developing countries to benefit from global value chains and participate in international economic governance. Therefore, it has been endeavoring to build a more equitable platform of global economic governance for all participants.

China has been promoting incremental reforms of traditional global economic governance institutions, including the WTO and the International Monetary Fund (IMF). China released its position paper on WTO reform and is committed to the core values of fairness, openness and nondiscrimination in the multilateral trade system. On the WTO’s consensusbased decision-making mechanism, China has pragmatically put forward the idea of open plurilateral negotiation. Furthermore, it has helped transfer over 6 percent of the IMF quotas and 3.13 percent of the World Bank voting power from developed countries to emerging market and developing economies. With the Chinese renminbi included in the Special Drawing Rights basket, the interests of emerging market and developing countries are better represented.

China has played a significant role in building new mechanisms and institutions for the global economic governance system. It has continuously upheld the G20 as a major economic governance platform with inclusiveness,transforming its role from crisis response to a long-term governance mechanism. It initiated the New Development Bank (NDB) and the BRICS Contingency Reserve Arrangement (CRA) as a new development paradigm for emerging assistance donors. It established the Asian Infrastructure Investment Bank (AIIB) to ease the financing bottleneck for infrastructure construction, effectively complementing existing multilateral development banks. By March 3, 2022, the AIIB had approved 168 projects and US$33.63 billion worth of financing,19“Project Summary,” AIIB, March 3, 2022, https://www.aiib.org/en/projects/summary/index.html.Its membership has grown from 57 to 105 across Asia, Europe, Africa, North America, South America and Oceania.20“Members and Prospective Members of the Bank,” AIIB, March 17, 2022, https://www.aiib.org/en/about-aiib/governance/members-of-bank/index.html.

Reasons for China’s Success in Global Economic Governance

Despite the complicated international environment, China has still contributed to the improvement of the global economic governance system.This cannot have happened without China’s rapid economic growth and original governing philosophy, which enables China to take resolute actions in accordance with the situation and seize new opportunities in the evolution of the global economic governance system.

Rapid growth of China’s economy as fundamental prerequisite

Since the 18th CPC National Congress, China’s economy has entered a phase of high-quality development, and its status in the global economy has been rising steadily. In light of the changes in domestic and international situation, the CPC Central Committee has decided to proceed with the strategy of expanding domestic demand as the basic standpoint for driving stable economic growth.21Questions and Answers for Learning Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, Xuexi Publishing House & People’s Publishing House, 2021, p.266.Specifically, it has endeavored to deepen supply-side structural reform, and resorted to sufficient policy instruments to unleash the potential of domestic demand,and improve the balance between supply and demand, and replace old driving forces of growth with new ones. All these efforts have contributed to high-quality economic growth driven by both supply and demand.During the 13th Five-Year Plan period (2016-2020), China’s aggregate economic output achieved leap-forward development. Its GDP expanded from 74.6 trillion yuan in 2016 to 101.6 trillion yuan in 2020,22“Statistical Communique of the People’s Republic of China on the 2020 National Economic and Social Development.”ranking second across the globe and accounting for 30 percent of the global economic growth. In the first year of its 14th Five-Year Plan (2021-2025), China’s economy, despite a complicated external environment,showed steady recovery with solid and sound growth.23“Spokesperson of National Bureau of Statistics on China’s Economy in First Half of 2021,” National Bureau of Statistics, July 15, 2021, http://www.stats.gov.cn/tjsj/sjjd/202107/t20210715_1819497.html.At the same time,China has been deeply engaged in global value chains, growing into the world’s largest trader of goods, the second largest recipient of foreign investment and the biggest holder of foreign exchange reserves.24“Statistical Communique of the People’s Republic of China on the 2020 National Economic and Social Development.”Under the impact of the COVID-19 pandemic, China has managed to stabilize the fundamentals of foreign trade and investment with its inherent huge market advantage and domestic demand potential, serving as the anchor of stability and the driving force for global economic recovery and development.25Chen Weiguang et al., “Fostering the New Development Pattern of ‘Dual Circulation’: Based on Analysis of Economic Relationship between China and the World,” Reform, 2021, No.7, p.57.With its expanding aggregate economic output and growing international influence, China is confident and competent to play a more important role in global economic governance.

Coordination of domestic and foreign policies as solid guarantee

China’s success in translating its economic power into a greater say in global economic governance can be attributed to its efforts to promote interaction and synergy by continuously strengthening coordination of domestic and international policies and regulations, which provides a necessary institutional guarantee for its participation in global economic governance. China has endeavored to maximize the positive spillovers and minimize the negative external impacts through the coordination of its macroeconomic policies. At the same time, China has been dedicated to addressing the asymmetries in systems, policies and standards through communication and mutual learning with other actors in the international community. Aiming at all-round opening-up during the 13th Five-Year Plan period, China advanced the systematic synergy of border and behind-the-border regulations to get rid of structural and institutional obstacles, thus facilitating more cooperation among global trade and economic factors within its borders. At the 2018 Central Economic Work Conference, it was pointed out that China shall keep up with the new development dynamics, adapt to the needs of the times, and accelerate the transition from opening-up based on the flow of goods and factors of production to opening-up based on rules and related institutions.26“Xi Jinping, Li Keqiang Deliver Important Remarks at Central Economic Work Conference,” State Council of the People’s Republic of China, December 21, 2018, http://www.gov.cn/xinwen/2018-12/21/content_5350934.htm.In 2020, the fifth plenary session of the 19th CPC Central Committee put forward the requirement of “opening up at a higher level and achieving win-win cooperation,” and clarified the strategic deployment of establishing “new systems for a higher-standard open economy” in the 14th Five-Year Plan,27“The Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035,” State Council of the People’s Republic of China,March 13, 2021, http://www.gov.cn/xinwen/2021-03/13/content_5592681.htm.indicating China’s determination to boost its capability and performance in expediting domestic and international policy interconnection. This will not only provide an institutional guarantee for China’s participation in global economic governance, but also promote constructive interactions between domestic development and international coordination.

Progressive governing philosophy with Chinese characteristics as powerful guidance

Progressive ideas are indispensable for institutional reforms in global governance.28“Xi Jinping: Promote Fairer and More Reasonable Global Governance System and Create Beneficial Environment for China’s Development and World Peace,” People’s Daily, October 14, 2015, p.1.When it comes to global economic governance and its future direction, the different schemes and methods adopted by different governing subjects are in essence the result of different governance concepts. Thanks to the attractiveness and competitiveness of its governing philosophy, China is able to pool strength from different parties in global economic governance. On multiple important occasions both at home and abroad, President Xi Jinping has called for the building of a community with a shared future for mankind, proposed a vision of global governance featuring extensive consultation, joint contribution and shared benefits, and a new economic globalization concept of greater openness,inclusiveness, balance and win-win outcomes. All these constitute the essence of the global economic governance philosophy with Chinese characteristics. With an eye to safeguarding world peace and prosperity,the community with a shared future calls on all nations and peoples to cooperate with each other in a harmonious way, which demonstrates China’s profound understanding of the global trend and human destiny.29Yang Jiemian, “Firmly Uphold the Concept of the Community with a Shared Future for Mankind,”Qiushi, 2016, No.6, pp.60-62.Guided by this important concept, China upholds the basic values of equality, openness, cooperation and benefits for all, maintaining that all countries should jointly shape the future of the world, write international rules, manage global affairs and ensure that development outcomes are shared by all.30“Work Together to Build a Community of Shared Future for Mankind: Speech by H.E. Xi Jinping,President of the People’s Republic of China, at the United Nations Office at Geneva,” Xinhua, January 19,2017, http://www.xinhuanet.com/english/2017-01/19/c_135994707.htm.In global economic governance, a new vision of seeking benefits for all should be upheld while the outdated mindset of zero-sum game or winner-take-all should be discarded.31Xi Jinping: The Governance of China, Vol.II, Foreign Languages Press, 2017, p.523.Only in that way can more like-minded partners be attracted to jointly promote global economic governance. In particular, China stresses that global economic governance should be fortified and furthered based on equality, better reflect the new reality of the world economic landscape, and increase the representation and voice of emerging economies and developing countries.32“Promote Equality, Openness, Cooperation and Benefits for All, Jointly Improve Global Economic Governance,” People.cn, September 18, 2016, http://world.people.com.cn/n1/2016/0918/c1002-28719448.html.In such a scenario, more developing countries will be encouraged to join global economic governance and it can be ensured that all countries enjoy equal rights and opportunities and follow the same rules in international economic cooperation.

Systematic reform of global economic governance as objective need

Since the 2008 global financial crisis, the global economic governance system has entered a key period of accelerated evolution under the joint effect of multiple forces. In the global economic landscape, the trend has become increasingly prominent that the East is on the rise while the West on the decline. With the collective rise of emerging markets and developing countries, especially the BRICS countries, they have held a much larger share in international trade and investment, and begun calling for greater representation and voice in the international economic system.33Qin Yaqing, ed., Practice and Coevolution: China’s Engagement with the International System, World Affairs Press, 2016, p.102.However, the current global economic governance system fails to reflect the world’s power dynamics with developed economies including the US still clinging to their overwhelming superiority. Moreover, a chronic overemphasis on efficiency and growth by major global economic institutions has made global development more imbalanced, and the case has become even worse with the new round of scientific revolution and industrial transformation. Against such a background, China has been devoted to revamping the rules of global economic governance in accordance with international power dynamics and fighting for greater representation and voice for emerging economies and developing countries, thus solidifying the foundation for the world’s long-term stable development. Standing on the right side of history, China’s objectives and its position have constantly been in conformity with the global development trend and the interests of developing countries.

Challenges for China’s Participation in Global Economic Governance

The world is currently undergoing momentous changes unseen in a century: traditional geopolitics has returned, the global development gap is widening, the new round of scientific and technological revolution and industrial transformation is advancing at an accelerated pace, and economic nationalism is raging globally. The mismatches and asymmetries between global economic governance and global economic changes are unprecedented, which requires urgent reforms and improvement. Amid complex and profound changes in the international situation, China is also facing new challenges in global economic governance.

Constraints from the US and other Western countries

In the face of growing major-power competition, the US and other Western countries have taken more extensive and tougher measures to contain China’s development. On the one hand, they have resorted to trade friction, reconstruction of supply chains and blockade of high-tech exports to impede China’s rapid economic development; on the other, they have introduced new trade and economic rules to suppress China’s participation in global economic governance. Utilizing their advantageous position in the system, the US and other Western countries have attempted to constrain China in the shackles of a range of higher-standard and more exclusive economic liberalization arrangements.34David A. Wemer, “Adviser on Biden’s Foreign Policy: Start at Home and Repair Alliances,” Atlantic Council, August 21, 2020, http://www.atlanticcouncil.org/blogs/news-atlanticist/adviser-on-bidens-foreignpolicy-start-at-home-and-repair-alliances/.Moreover, they have rolled out rules in their own favor through various bilateral or multilateral platforms and added exclusive clauses to trade agreements. For example, a so-called“poison pill” provision, which prevents contracting parties from commencing free trade agreements with non-market economies, was incorporated into the US-Mexico-Canada Agreement (USMCA).35“Agreement between the United States of America, the United of Mexican States and Canada,” Office of the United States Trade Representative, January 7, 2020, https://ustr.gov/trade-agreements/free-tradeagreements/united-states-mexico-canada-agreement/agreement-between.During the presidency of Donald Trump, the United States held seven trilateral meetings of trade ministers with Japan and the European Union, in which a wide range of consensus regarding China-related issues was reached, such as state-owned enterprises, industrial subsidies and technology transfer. With the pretentious claim for reciprocity and fair competition, the consensus in essence is aimed at suppressing and containing China’s economic development. After taking office, US President Joe Biden has been devoted to strengthening coordination and cooperation with America’s allies to jointly promote a new round of international economic and trade reforms. In March 2021, the G7 Trade Ministers’ Meeting launched the G7 Trade Track, urging for stronger cooperation among “the world’s leading democratic trading nations.”36“G7 Trade Ministers’ Meeting – Chair’s Statement,” Government of the United Kingdom, March 31,2021, https://www.gov.uk/government/news/g7-trade-ministers-meeting-chairs-statement.

The Biden administration, along with its allies, has been engaged in building a democratic technology alliance and a global value chain alliance that exclude China. These alliances function to isolate China from economic cooperation, limit China’s role in the formulation of rules and standards of certain fields, and squeeze China’s say in the international rules system. Targeting the BRI, the US and some other Western powers have put forward competing and alternative schemes. For example, the Trump government initiated the Blue Dot Network with Japan and Australia; the Biden administration announced the Build Back Better World initiative and plans for an Indo-Pacific Economic Framework; the EU unveiled the Global Gateway; and the UK launched the Clean Green Initiative. These programs will all create competition with the BRI.

De-globalization trends driven by populist sentiments

In recent years, a backlash against globalization has emerged across the globe. On the one hand, inherent defects in the income distribution system of developed countries, downward economic pressure and social injustice have nurtured populism and isolationism. However, those countries falsely argue that the problems are triggered by economic globalization,and veer towards protectionism. On the other hand, the surge of populist political forces globally has brought anti-globalization into full swing. The COVID-19 pandemic has sped up the de-globalization process, with most countries choosing to “isolate from” rather than “connect with” others.The fragility of international cooperation has turned up and given rise to greater competition and more serious impact of economic nationalism.More and more countries have started to care about their positions in globalization, taking economic security as the top priority of national security and introducing isolationist and conservative economic policies. In 2020, 1,829 protectionist policies undertaken by G20 members had been documented by Global Trade Alert, among which 1,140 were issued by the US and other developed countries, 1.8 times more than that released by 11 emerging countries (E11).37Simon J. Evenett, “Must an Effective Activist State Harm Trading Partners? Evidence from the G20 members during 2020,” Global Trade Alert, July 30, 2021, https://www.globaltradealert.org/reports/77.Involution of global value chains and vulnerability of the multilateral trade and economic order have greatly downgraded the global investment liberalization. According to statistics,global flows of foreign direct investment (FDI) fell to $1 trillion in 2020,20 percent below the lowest point in 2009 after the global financial crisis,and the FDI in developed economies plummeted by 58 percent. In 2020,67 economies introduced an aggregate 152 foreign investment policies, and the number of restrictive or regulatory investment measures doubled and reached 41 percent, the highest on record, as compared to 2019.38UNCTAD, “World Investment Report 2021: Investing in Sustainable Recovery,” June 21, 2021, https://unctad.org/system/files/official-document/wir2021_en.pdf.

Under the impact of populism, developed countries tend to establish clubs in the global economic governance system and narrowly interpret multilateralism as the order built on Western values. After President Biden came to power, in particular, the US has been more inclined to rebuild tangible and intangible boundaries between developed and developing countries by means of launching ideologically-based blocs, only to squeeze China’s position and interests in global economic governance.

Difficulty in reaching consensus in emerging economic areas

Over the past few years, emerging areas and new problems have sprung up in global economic governance. However, updating and revamping of the corresponding governing rules has been held back with no consensus reached. This is mainly because rules-making in the emerging fields usually involves competition for dominance, with rivalry among major powers and the redistribution of interests for all parties involved. This has undoubtedly led to greater complexity and difficulty of the governance in emerging areas.Any attempt to change the status quo will encounter problems including“institutional inertia” and “path dependence.”39Han Zhaoying and Lyu Xian, “Global Economic Governance Innovation: An Analysis Based on Topic Adjustment and Rule Reconstruction,” Forum of World Economics & Politics, No.1, 2021, p.96.

Take governance in the digital economy for example. Even though digital goods and services have become the driving force of global economic growth, global trade agreements, with the WTO as the major institution,have yet to formally address digital trade, and the corresponding regulatory regime has not been in place.40Manfred Elsig, ed., “Introduction: Current Challenges and Future Scenarios,” in Gabriele Spilker,eds., The Shifting Landscape of Global Trade Governance: World Trade Forum, Cambridge: Cambridge University Press, 2019, pp.2-3.On the one hand, under the impact of data localization and digital protectionism, major countries like China and the US have been involved in comprehensive competition on digital technology and cross-border data flows. The US views the BRI as a new threat to its global digital dominance and has taken measures such as the Clean Network to cut its connections with China and prevent Chinese enterprises from obtaining key components including data. On the other hand, the bloc confrontation among major powers and the reorganization of alliances have also intensified the rivalry between different governing models.41Mao Weizhun and Liu Yishen, “Data Nationalism: Rationale and Policy Influence,” Global Review,No.3, 2020, pp.36-37.Nowadays, competition has emerged among the firm-centric US form of data governance, the state-centric China form and the individual-centric EU bloc,42Kyle L. Evanoff, “Cyber Governance: More Spam than Substance?” June 14, 2019, https://www.cfr.org/blog/cyber-governance-more-spam-substance.and global economic governance has increasingly been characterized by small but exclusive clubs.43Liu Hongsong and Cheng Haiye, “Global Governance of Transborder Data Flow: Progress, Trends, and China’s Path,” Global Review, No.6, 2020, pp.67-68.In addition, given the differences in technological mastery and on certain key issues between developed and developing countries,emerging economies may fail to take a unified stand because of intervention by developed economies, which makes it harder for them to reach consensus on coordination and upgrading of rules and mechanisms in relevant fields.All this sets higher requirements for China’s agenda-setting ability in global economic governance.

Suggestions for China’s Future Efforts

As an increasingly important force in the global economic governance system, China is in urgent need of precisely understanding the characteristics of global economic governance and grasping the rationale of its development,and adjusting to the ever-changing international situation. Still, China should maintain its strategic focus, adhere to the principle of extensive consultation, joint contribution and shared benefits, and advance the global economic governance system in a fairer and more reasonable direction.44Shen Guobing, “Actively Participate in the Global Economic Governance Reforms,” Gmw.cn, April 22, 2021, https://m.gmw.cn/baijia/2021-04/22/34785294.html.

Pursuing high-quality economic development

The stable growth of domestic economy underpins China’s contribution to the improvement of global economic governance. Over the past four decades of reform and opening-up, China has stepped into the new stage of high-quality economic development with stronger material and institutional support. China does enjoy many favorable conditions and strengths for further development, but instability and uncertainty do exist at the same time.45“The Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035.”Therefore, China must attach great importance to the three critical turning points that respectively herald a change in the speed, structure and dynamics of economic development. To readily embrace the new development stage, China should take proactive measures to practice the new development philosophy and foster a new development paradigm. To be specific, first, it should uphold and continue to improve the basic economic system whereby public ownership plays a dominant role and economic entities under diverse forms of ownership develop side by side, as well as the distribution system whereby distribution according to labor is dominant and a variety of other modes of distribution exist alongside it, and further develop the socialist market economy. Second, China should continue to deepen supply-side structural reform, lead and create new demand by innovation and quality supply, establish an effective system to boost domestic demand, foster a sound system of domestic demand, firmly advance reforms and remove the institutional barriers affecting economic circulation. Lastly, in the context of regular pandemic prevention and control, China should strike a balance between pandemic response and economic growth, pursuing high-quality development as well as economic transformation and upgrading despite negative impacts.

Expanding opening-up and building high-standard trade network

Economic globalization is a historical trend resulting from growing social productivity, and a natural outcome of scientific and technological progress. China shall continue supporting and promoting economic globalization as one of its beneficiaries and defenders. In the context of rising de-globalization, China should stay committed to expand openingup, build a higher-level open economic system, promote high-quality development of the Belt and Road and play a more active role in the global community. By doing these, China can share opportunities and benefits with other countries and thus achieve mutually beneficial cooperation.Moreover, China shall further reforms in its free trade zones and ports while establishing a high-standard free trade network that focuses on its neighboring areas, radiates across the Belt and Road countries and opens to the world, thus creating a “dual circulation” development pattern with domestic circulation as the mainstay and domestic and international circulations reinforcing each other.

Safeguarding and improving multilateral governance mechanisms

Although there have been serious defects in the existing global economic governance system that require immediate action, the process of reform is far from a simple replacement of the old with the new, but full of entanglements between the two.46Yu Zhengliang et al., “Suggestions for Reform and Construction of the Global Governance System,”International Review, No.3, 2021, p.10.As China is a beneficiary of the current global economic governance system, it is reasonable for China to help maintain its stability and mitigate the uncertainty arising from its challenges and relevant responses. To achieve that, China should take proper measures according to its development stage and economic power to gradually promote the betterment of global economic governance. China should continue to firmly uphold the multilateral trade system, offer more solutions and wisdom for the reform of global economic governance, and resolutely safeguard the collective interests of developing countries. In addition,China should endeavor to improve the emerging mechanisms in global economic governance, bring the functioning of G20 as an international economic cooperation platform into full play, and further boost the influence of BRICS. It is also important for China to explore new paths for the communication and coordination of international macroeconomic policies,and provide more high-quality international public goods to help build better platforms and foster new models and mechanisms in global economic governance.

Building consensus in global economic governance

Reforms of the global economic governance system will inevitably impact the overall distribution of interests, and trigger disputes and rivalries among various governance subjects. Under the principle of seeking common ground while shelving differences, China should explore the convergence of interests and cooperation with all countries and promote more consensus in global economic governance. First, it should uphold openness and inclusiveness, expand the areas of consensus that can be built with other governance bodies, strengthen and deepen cooperation with other countries, and actively develop global partnerships. Second,China should properly address its disagreements with leading powers in global economic governance with utmost wisdom and optimal strategies so as to ensure and promote coordination and cooperation. Particularly for China and the US, beyond the solid foundation for their bilateral trade and economic ties, there is ample room for further cooperation in many fields including climate change and public health. Lastly, China should strengthen solidarity and cooperation with other developing countries and explore fresh momentum for South-South cooperation. while speaking in one voice in global economic governance to increase their collective global influence.