China and the World
Thank you very much for inviting me to share some comments at your forum about China and its relationship and integration with the rest of the world. I’m recording these comments during the very unfortunate crisis that is going on in Ukraine.
When I prepared these few comments, it added to what I thought I wanted to say in advance. I think this is a generally pretty unique moment for China to think and adapt how it plans to carry on its integration with the rest of the world.
Integrating with the world
I have five key points to try to demonstrate what I mean. But before I go into them, it is worth of course reflecting back especially as I have the acronym BRICS stamped on my forehead. It’s 20 years now since I thought of that idea. It’s over 20 years, and the rise of China as an economic force in the world and everything that goes with it is truly staggering, and it’s the only one of the BRICS countries that has and continues to generally exceed all the assumptions I made, and hence China’s integration with the rest of the world is just so crucial to the rest of the world in the next 20 years and beyond. So in this regard, all the five ideas relate to, in my opinion, increased probability of China achieving its domestic goals, which I think at the center is trying to double the income per head of every one of the Chinese, 1.4 billion people on average, to $25,000 a head by 2035, and the only way to do that will be to grow the share of Chinese personal consumption in GDP.
There are plenty of domestic levers that are needed to do that, but I want to concentrate on the exact question of China’s integration with the rest of the world.
Belt and Road
So firstly, on the Belt and Road Initiative or what used to be called One Belt One Road (OBOR) which I had the pleasure of sitting in the audience when President Xi first unveiled his ambition about One Belt One Road to the world. I was very excited about what it could mean for world trade.
So on my first point, it relates to the One Belt One Road and China’s very ambitious plans to play a major influence in the developments of trade and investment flows linked to countries that are along the historic Silk Road and Silk Belt. I think it’s fair to say that the first era of OBOR hasn’t necessarily gone especially well, although there are many successes. I’m somebody that was there in the audience when President Xi first unveiled it at a famous forum in Hainan. [The Silk Road Economic Belt, part of the initiative, was in fact initially unveiled by President Xi in Kazakhstan.] It excited me about what the scale of influence on the pattern of world trade especially for many of the countries along the Belt and Road. I still believe with a more imaginative execution, it could transform world trade patterns including countries that trade with China. My central suggestion in that regard—it’s a tricky thing for China to deal with but I think it’s an important thing it needs to—is to actually play a more conscious role in inviting other countries, particularly big ones in the region, such as India, to actually devise and design some parts of OBOR going forward in order to make them feel bigger partners. And I deliberately mentioned India, because India is also the only other country in the world with more than a billion people.
If China and India could trade so much stronger with each other than they do today, which OBOR could be the central point, that in itself would be transformative to world trade patterns. So that’s my first idea.
Post COVID-19 global health
The second thing in this regard relates to what I’d call post-COVID-19 global health. China of course has been at the center of the global health challenge with the COVID-19. But also, rather, still impressive compared with many many other nations all over the world, China has managed to curtail the number of serious illnesses and deaths from COVID-19. It’s just an amazing thing to follow from somewhere like the UK. But in order to be better prepared for future pandemics, and what I often call the slow pandemic of antibiotic resistance, of which I’ve been heavily involved in, I think this crisis has demonstrated we need an improved WHO, a strengthened WHO, and the WHO to be at the center of a better integrated global health structure. And I’ve been involved in something called the Monti Commission, which is being enthusiastically pushing the idea of a global finance and health board to be coordinated under the leadership of the G20. And I think it’s very important for emerging countries to buy into this idea, because they will be the best beneficiaries of an improved global health system, and China can play a massive leadership role in doing this.
Global financial governance
The third area that I would touch on would be the global financial system. One of the consequences of course of this crisis has been the sanctioning of Russia’s Central Bank reserves, at least the ones that are held with Western central banks. This obviously has created all sorts of intellectual issues about the state of the world financial system. And China can obviously play a much bigger role in how the financial system evolves going forward, including the use of the RMB so that at some point in the future, China’s currency plays a bigger role in world finance and trade patterns commensurate with China’s increasing share of global GDP. And that can only happen when China manages to feel confident enough to allow its currency to be used somewhat more freely, although if not necessarily the same way in which the dollar and the pound are today. This is something I’m sure leading Chinese thinkers are contemplating right now.
Tackling climate change
My fourth idea is an obvious one that relates to climate change. Actually, China has already showed some pretty strong leadership on matters of global climate change.
I simply call on China to continue to do that—and unlike other nations around the world—to do more. I know from my frequent visits to China in the past, all your urban citizens can see many days of their lives the consequences of the changing climate and the environmental degradation that goes with it. It’s pretty obvious that it is in China’s domestic interests that we manage to succeed in slowing, if not reversing, the warming of the world’s climate. I call on China to continue to share this great leadership, and also to play possibly again through OBOR an even bigger role in helping other large emerging countries to navigate the way.
Boosting Consumption
Fifthly, if I put all of that together and bring it back, China’s core domestic economic challenges I mentioned earlier seems to me to be increasing the role of consumption in its overall GDP. It can do that obviously led by domestic policy initiatives. But if it doesn’t succeed in having a more subtle and successful way of integrating with the rest of the world, all these issues that I touched about before are going to make it a lot harder for China to achieve its domestic goal. So with that, let me say thank you for giving me the privilege of speaking at such a hugely prestigious event. I wish like many others that I could be there in person, and I look forward to coming back to China in the not too distant future hopefully. Thank you very much.
Jim O’Neill is a senior advisor and former Chairmen at Chatham House, the United Kingdom; former Commercial Secretary to the UK Treasury. This article was edited from his speech at the forum.
Edited by ZHAO YUAN
PRINT
CLOSE