At the new starting point of the history, China should take a global perspective, assume its responsibility earnestly, draw on thinking and brilliance from China’s great traditional culture, participate actively in the global economic governance and the supply of public goods, and raise theories and advocacy to promote the global economic growth and optimize the order of global economic governance.

The 11th G20 Summit was held successfully on September 4th and 5th, 2016 in Hangzhou, Zhejiang Province. This summit has a theme based on four words that start with the letter “I”, namely, “Innovative, Invigorated, Interconnected and Inclusive”. The topics discussed in the summit extend from short-term issues to in-depth long-term issues, with the aim of boosting global economic coordination, creating new objectives of global economic governance, and promoting G20’s transformation from a crisis response mechanism to a long-term governance mechanism. This is the first time for China to dominate the setting of the four key topics on the agenda in this major platform for global economic governance, indicating a new phase of China’s involvement in global governance.

Ever since the 21st Century, the international political and economic pattern has undergone the most important and profound adjustments and reforms after the Cold War, presenting great complexity in its development. Along with the rises of emerging markets represented by BRICS countries, the disadvantages of the system, institution, and concept of the global economic governance led by the western developed countries become more and more noticeable, and the reform of the system of global governance is now at the historic turning point. The 2008 financial crisis has swept all the developed countries, and the economy of the predominant countries is facing recession. The power of the emerging markets is increasing while the power of the developed countries is decreasing. The center of the world economy has been shifted rapidly, slightly towards the emerging markets. Under this circumstance, the structure of the power distribution in the international system has seen an unprecedented tendency of change. Meanwhile, most economies stress the necessity to reform and perfect the traditional framework of economic governance such as International Monetary Fund, World Bank, and World Trade Organization, etc. and to set up a fair mechanism of global economic governance according to the new requirements of the global economic development. It is bound to occur if the world economy continues to develop and it is an important opportunity to push the economic globalization onto a higher level. To seize this opportunity and to participate in perfecting the system of global economic governance is a historic choice made in the interest of China.

In the Post-financial Crisis Era, the world economy has not yet recovered, and the idea, structure and rules of global economic governance are going through a period of in-depth adjustment and changes. As a mechanism for international economic cooperation in which for the first time developing countries have been given relatively equal status in participating and making decisions, G20 has broken the ongoing norm in which developing countries are mostly passive receivers of international orders and they are just told to follow international rules set by developed countries. G20 has given for the first time the developing countries, especially the newly emerging big countries, the opportunity to participate in the reform and development of the system of global economic governance. It plays an important role in promoting the stability and growth of the world economy. In the international governance system, China represents the interests and requirements of developing countries, playing the role of connecting developing countries and developed countries. Chair of Association of Southeast Asian Nations for 2016, chairperson of the African Union for 2016, president of New Partnership for Africa’s Development, and the country that holds the Chairmanship of G77 for 2016 have all been invited to participate in the G20 Summit in Hangzhou. G20 Summit in Hangzhou has become the summit with the largest number of developing countries participating in it in history. It has increased developing countries’ say, met the high expectation of the international society, and started G20’s new era to promote the reform of global economic governance system.

Now, China has been incorporated into the world economic system successfully, becoming the second largest economy, the largest trading nation and the country that has the largest foreign exchange reserves in the world, and having a systemic spillover effect on certain areas such as global trade and investment, and international finance, etc. From 2008 to 2015, China has made a great contribution to the GDP growth in the world, namely, 47% of the growth is contributed by China, so there is no denying that China is leading the world economy in this sense, and in a certain period in the future, this tendency will not be changed. As China’s economic power keeps growing and China’s interest interacts more with other countries in the global context, it is inevitable that China should participate in the global economic governance more actively if China wants to guard its own rights.

In order to get the right to set the agenda topics in the international economic coordination mechanism and the say that matches its own economic power, China is striving to strengthen its impact and power in influencing the system of global economic governance. After the 2008 financial crisis, the Chinese government and the Chinese leaders frequently make remarks on global governance. Ever since the 18th CPC National Congress, Chinese leaders including President Xi Jinping have advocated the Chinese initiative concerning global economic governance on several international occasions such as General Assembly of the United Nations, G20 Summit, the APEC Economic Leaders’ Meeting, East Asia Summit, the Informal BRICS Leaders Meeting, Davos World Economic Forum, and Boao Forum for Asia, etc. President Xi repeatedly mentioned, “China is the participant, constructor and contributor of the present international system, the advocator of international cooperation, and the active performer in the international multilateralism.” As a responsible big country, besides continuing learning from other countries, China also starts taking more initiatives, participating more actively in the global economic governance, and making its own contribution to the development of the global economic system.

Communiqué of the Fifth Plenary Session of the 18th Central Committee of the CPC says that China will “participate in global economic governance and the supply of public goods, increase China’s say in global economic governance, and establish a far-ranging community of shared interests”. The technological innovation and the industrial revolution are taking place around the whole world. All countries in the world share more common interests and rely more on each other in the important areas such as politics, economy, and military, etc. The whole world has become a community of common destiny in which every country is involved and all countries are connected with each other. Therefore, to contribute the Chinese understanding as to how to revitalize the world economy and how to maintain the sustainable development, the G20 Summit in Hangzhou has set four key topics on the agenda, namely, “breaking a new path for growth; greater efficiency of global economic and financial governance; robust international trade and investment; and inclusive and interconnected development”.

In recent years, some international events that had happened before the G20 summits always caused interruption and distraction; therefore, practical outcomes could not be reached. As the country to chair this year’s summit, China peacefully observes the changes and keeps calm, “holding its ground despite pressure or opposition.” By taking this opportunity, on the basis of accurately understanding and leading the contemporary tendency, China presents to the world its efforts to maintain the world peace and promote the mutual development, voices its advocacy of reforming and optimizing the mechanism of global economic governance as a responsible big country, takes the initiative, wins the respect of the people around the world, and paves the way for its effective participation in establishing the rules of international economy.

At the new starting point of the history, China should take a global perspective, assume its responsibility earnestly, draw on thinking and brilliance from China’s great traditional culture, participate actively in the global economic governance and the supply of public goods, and raise theories and advocacy to promote the global economic growth and optimize the order of global economic governance.

On the one hand, the mechanism of global economic governance should avoid relying on the traditional thinking and the traditional development path. We should do away with the “Cold War” ideas in the global economic governance. We should get rid of the “single-level thinking” in global economic development, minimize the impact from politics and ideology, treat all the economies in a more tolerant and fair way, admit the existence of multi-polarization in the world, take the interests and needs of every country into account, and strive for the mutual development in the global economy. Only in this way can the mechanism of global economic governance succeed. Moreover, we should reform the traditional rules of industrial investment and international trade. Along with the advancement of science and technology and the development of economic globalization, the connectivity and the interaction of the global economy is becoming more and more intense, all economies in the world being closely connected with each other. The industrial structure of each country interacts actively with each other, the degree of which has exceeded that in any other period in the past. Hence, a mega system of industrial structure in the global economy has been formed, and the design of the policies for international trade and investment should be adjusted in accordance with it. Besides, we should do away with the restriction of the traditional financial policies and monetary policies. The 2008 international financial crisis is the outcome of the interaction between the technological and industrial agglomeration and the traditional mechanism of economic governance. At present, the financial and monetary policies adopted in each country still pay excessive attention to its domestic economy in the short term and its inflation-related targets, which may have an effect on other countries and increase the potential financial risks. We need to establish a coordinated policy system with mutual evaluation in the international society, turn the short-term macro-economic policies into the medium/long-term strategies, design a long-term financial plan that meets the needs of international financial system, and bring the plan into effect.

On the other hand, we need to establish and optimize a new mechanism of global economic governance immediately. The traditional system of global economic governance is in need of reform. In accordance with Charter of the United Nations and based on the actual need and the development trend of global economy, we should attach more importance to the calls of emerging markets and developing countries for the participation in governance. We should reform and optimize the mechanism of global economic governance to meet these needs, and promote the democracy and legitimacy of the international economic relations. We should also establish a mechanism of supervision and coordination in the world economy and continue to promote the reforms in the three traditional organizations of governance, namely, International Monetary Fund, World Bank, and World Trade Organization. We should increase and optimize the duty and operation mechanism, build a mechanism that connects and coordinates the issues among them, boost the representativity and influence of emerging markets and developing countries in those organizations, and solve problems such as the inadequacy of global financial supervision, imbalance of monetary governance, and frequent occurrences of trade disputes, etc. We should also build the innovation and creation mechanism for the world technology and its industrial form. Now the economic growth in the world is slowing, but a new round of technological and industrial revolution begins to appear. To aggregate the superior resources, to set up a platform for innovation, to promote the technological innovation, industrial innovation and business mode innovation in the world, and to revitalize the global economy should become an important part in the reform of the global economic governance mechanism.

G20 should always adapt to the changes, focus on the long-term interests, actively lead the global economic agenda, promote the reform of global economic governance mechanism, and improve its policy mechanism and initiative to boost the sustainable development in the world economy further. At the same time, G20 should help the new international mechanisms such as Asian Infrastructure Investment Bank and BRICS Development Bank, etc. to better perform their functions. It should also build a bridge to connect the old platform and the new platform and boost the communication between them, set up and optimize the new international mechanism through its diverse practices, and make the international economic order develop in a more fair, cooperative, and win-win situation.

Note: The author is the deputy dean and professor in the School of Economics and Management at Tongji University. This article first appeared in Shanghai Observer on the following website: https://www.shobserver.com/news/detail?id=29580