China’s Role in Global Governance 9811666865, 9789811666865

Table of contents :
Contents
List of Contributors
List of Figures
List of Tables
On the Accelerated Expansion of the New Industrial Revolution and the Direction of Global Governance Change
Introduction
The New Industrial Revolution Builds New Momentum for Global Economic Development
The New Industrial Revolution Will Reshape the Competitive Landscape Between Countries
Multilateralism is Still the Leading Direction of Global Governance Change
Promote Necessary Reform of WTO Under the Principle of Multilateralism
Conclusion
References
Should China Join the CPTPP?
Changes in International and Domestic Situations
Necessity of China’s Accession to the CPTPP
Feasibility of China’s Accession to the CPTPP
Difficulties Facing China’s Accession to the CPTPP and Countermeasures
Conclusions and Recommendations
Perceptions of ‘Great, Once-in-a-Century Transformations’
Balance of Power: Fundamental Shifts
Scientific Progress: A Massive but Unpredictable Factor
Individual Interests: Increased Public Awareness
Demographics: Crucial but Complex
Post-WWII Dollar Economy: Nearing a Crossroads
Multilateral System: Time for Dissolution and Reconstruction
The United States: A Superpower in Decline
Increasing Tension: Confinement and Countermeasures
Constants Hold True Amid Secular Change
Looking Back a Century Hence
China–US Competition and the Staged Attributes and Goals of the Belt and Road Initiative
The Questions
China’s Rise and Relationship with the US-Led International System
Pressure on the Rise and Strategic Choices
Staged Attributes and Goals of the BRI
Global Governance Changes and China’s Response—The Supply of Global Public Goods
New Characteristics of Global Governance
Dynamics of Global Governance System
Countermeasures and Advice for Participating in Leading Global Governance in the New Era
The UN’s ‘Big Agenda’: Building an Inclusive Global Cooperation Framework
Introduction
The Expansion of UN Agendas
Dynamics of the ‘Big Agenda’
Contributions and Dilemmas of the ‘Big Agenda’
The Future of the ‘Big Agenda’
The Interaction Between the Belt and Road Initiative and the Global Governance System: A Typological Analysis
Introduction
Contending Perspectives in the Literature
Analytical Framework for the Relationship Between the BRI and the Global Governance System
The BRI’s Contribution to Global Governance
Conclusion
The Global Governance Dilemma in the Pandemic Shock and Its Root Causes
Pandemic Shock
Difficulties in Cooperation
Theoretical Elucidations
Case Examinations
Case 1: International System Model
Case 2: Major Country Coordination Model
Case 3: Mutual Cooperation Model
Case 4: Self-Help Cooperation Model
Conclusions and Recommendations
References
Political Logics and Challenges of Global Governance: An IPE Perspective
Economic Globalization and the Dilemma of Power Diffusion
Two Competing Solutions of Global Governance
Challenges of Global Governance
References

Citation preview

China’s Role in Global Governance Edited by

bi n z h a ng

China’s Role in Global Governance

Bin Zhang Editor

China’s Role in Global Governance

Editor Bin Zhang Chinese Academy of Social Sciences Beijing, China

ISBN 978-981-16-6686-5 ISBN 978-981-16-6687-2 (eBook) https://doi.org/10.1007/978-981-16-6687-2 Jointly published with Social Sciences Academic Press The print edition is not for sale in China Mainland. Customers from China Mainland please order the print book from Social Sciences Academic Press. ISBN of the China Mainland edition: 9787516182253 © Social Sciences Academic Press 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Contents

On the Accelerated Expansion of the New Industrial Revolution and the Direction of Global Governance Change Fuzhan Xie

1

Should China Join the CPTPP? Qingyi Su

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Perceptions of ‘Great, Once-in-a-Century Transformations’ Yuyan Zhang

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China–US Competition and the Staged Attributes and Goals of the Belt and Road Initiative Cheng Gao

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Global Governance Changes and China’s Response—The Supply of Global Public Goods Lin Ren and Bo Peng

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The UN’s ‘Big Agenda’: Building an Inclusive Global Cooperation Framework Dongyan Li

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The Interaction Between the Belt and Road Initiative and the Global Governance System: A Typological Analysis Laihui Xie

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CONTENTS

The Global Governance Dilemma in the Pandemic Shock and Its Root Causes Kejin Zhao

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Political Logics and Challenges of Global Governance: An IPE Perspective Zhengyi Wang

227

List of Contributors

Cheng Gao Chinese Academy of Social Sciences, Beijing, China Dongyan Li Institute of World Economics and Politics, Chinese Academy of Social Sciences, Beijing, China Bo Peng Chinese Academy of Social Sciences, Beijing, China Lin Ren Chinese Academy of Social Sciences, Beijing, China Qingyi Su Institute of World Economics and Politics, Chinese Academy of Social Sciences, Beijing, China Zhengyi Wang Department of International Political Economy, School of International Studies, Peking University, Beijing, China Fuzhan Xie Chinese Academy of Social Sciences, Beijing, China Laihui Xie National Institute of International Strategy (NIIS), Chinese Academy of Social Sciences (CASS), Beijing, China Yuyan Zhang Beijing, China Kejin Zhao School of Social Sciences, Tsinghua University, Beijing, China

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List of Figures

China–US Competition and the Staged Attributes and Goals of the Belt and Road Initiative Fig. 1

Matrix of a Major Country’s Economic Competition and Rise Situation (Source Compiled by the author)

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The Global Governance Dilemma in the Pandemic Shock and Its Root Causes Fig. 1

Global major market stock index gains and losses since 2020 (as of 27 March 2020) (Source Wind database)

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List of Tables

Should China Join the CPTPP? Table 1 Table 2 Table 3 Table 4

Economic effects of the CPTPP on China under different scenarios (% change) Progress in China’s reform and opening-up since October 2015 and corresponding CPTPP rules Classification of CPTPP rules by acceptance difficulty Overlaps between the China–US economic and trade negotiations and CPTPP rules

33 42 45 47

The UN’s ‘Big Agenda’: Building an Inclusive Global Cooperation Framework Table 1 Table 2

The agenda-promoting alliance of the pathways for peace proposed by the World Bank and the UN Attention paid by member states to UN topics

146 152

The Interaction Between the Belt and Road Initiative and the Global Governance System: A Typological Analysis Table 1 Table 2 Table 3

Major global governance mechanisms involved in the BRI Types of relationships between the BRI and global governance The BRI’s main newly-established governance mechanisms

172 177 194

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LIST OF TABLES

The Global Governance Dilemma in the Pandemic Shock and Its Root Causes Table 1 Table 2 Table 3

Summary of financial institutions’ forecasts of economic growth in 2020 for 18 major economies World bulk commodity prices (all spot prices) Framework on international cooperation against the pandemic

202 204 211

On the Accelerated Expansion of the New Industrial Revolution and the Direction of Global Governance Change Fuzhan Xie

Introduction The new industrial revolution featuring intellectualisation, networking, and digitalisation, a pivotal driving force for future global economic growth, is a major factor affecting the industrial competition pattern among countries. Following three decades of technology accumulation and market exploration, the current industrial revolution has shifted from being in the introduction period to the expansion period. The new general-purpose technologies (Bresnahan 2010) and the enabling

Parts of this article were presented at a seminar on ‘Global Governance: Global Challenges and Global Solutions in a Changing World’, co-organised by the Chinese Academy of Social Sciences and the Kiel Institute for the World Economy in Germany on 16 April 2019. F. Xie (B) Chinese Academy of Social Sciences, Beijing, China

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_1

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technologies (Fortune and Zirngibl 2009)1 represented by the new generation information technology and artificial intelligence continue to iterate and mature in the process of market application, accelerating the emergence of a number of pioneer industries such as automotive networking, intelligent manufacturing, and telemedicine. At the same time, they are also penetrating traditional industrial sectors such as textile, clothing, and energy, providing new momentum for global economic growth and inclusive development. Due to the consequential impact and significant value of the new industrial revolution, major industrial countries have introduced more active industrial and science, and technology policies to advance new technologies and industries as a means to seize the high ground in the new industrial revolution. However, some countries have abandoned the principle of fair competition, departing from the concept of inclusive development, and instead choosing an extreme unilateralist stance and a radical protectionist approach in order to monopolise the huge benefits created by new technologies and industries. This behaviour has caused serious harm to globalisation, multilateralism, and free trade order. On the one hand, new technologies and industries are accelerating breakthroughs and development. On the other hand, there is great uncertainty about where the global trade order will be heading. Against the background of the accelerating changes and adjustments in both technological and economic paradigms, clarifying the profound impact of the new industrial revolution on global governance rules and grasping the general trend of changes in the global governance system are crucial to establishing whether the world can effectively respond to the challenges of the new industrial revolution and whether China, as a responsible power, can promote the international order and ensure it moves in a more just and reasonable direction.

1 The concepts of general-purpose technologies and enabling technologies are widely used in academic literature or policy documents, but there are no widely accepted standard definitions. In this paper, general-purpose technologies refer to technologies that have a wide range of applications and can contribute to economic growth and significant productivity gains, while enabling technologies refer to technologies that can facilitate large-scale engineering and commercial applications of science and technology in specific industry sectors.

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The New Industrial Revolution Builds New Momentum for Global Economic Development An industrial revolution is the process of cluster breakthroughs and large-scale commercial application of general-purpose and enabling technologies. It is a systematic change in human economic development and a leapfrog evolution in the process of economic progression. If the mechanisation driven by steam engines, heavy industrialisation driven by electricity and steel, mass-standardised production driven by assembly line manufacturing, and flexible manufacturing driven by numerical control (NC) technology represent the dominant technology paradigm of previous industrial revolutions, the accelerated breakthroughs and applications of intelligent, networked, and digital technologies are the core drivers of the current industrial revolution. The reason why this technological and industrial change is a revolution is that the chain of breakthroughs and large-scale applications of intelligent and digital technologies is not only giving birth to or expediting a number of new pioneer industries, but is also integrating with traditional technologies and products to fundamentally change the technological basis, organisational models, and business forms of traditional industries, thus ultimately advancing profound changes in the global economic structure and development mode and releasing full economic growth potential. Each industrial revolution is both random and unique but also follows certain common patterns, exhibiting specific cyclical and structural features. From the perspective of economic history, each industrial revolution roughly goes through two phases: introduction and expansion, and each phase lasts for roughly two to three decades (Perez 2007).2 During the introduction phase, the innovation of new general-purpose and enabling technologies is mainly built on the accumulation and development of basic research and is strongly science-driven. At the same time, as the technological paradigm and technological path of new technologies are unclear, different types of innovation agents, especially start-ups, driven by the great potential benefits that new technologies may bring, usually actively engage in diversified technological routes and business

2 Perez uses the concept of ‘technological revolution’, but his generalisation of the stages of the technological revolution is equally applicable to the analysis of the industrial revolution in this paper.

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model exploration. When the general-purpose and enabling technologies and their matching business models gradually mature, the application of these new technologies begins to give rise to new industries and accelerates the diffusion of applications to other sectors of the national economy, at which point the industrial revolution begins to enter the second phase, namely the expansion phase. Since the main economic feature of the expansion phase of an industrial revolution is the accelerated application and large-scale commercialisation of new technologies in the market, the technological progress in this phase displays strong demandpull features. The information economy has gone through approximately three decades since the emergence of the Internet economy in the 1990s. Currently, intelligent, networked, and digital technologies are maturing and integrating with general-purpose technologies such as information and communication, new materials, and biomedicine. A number of platform-oriented enterprises with cutting-edge technologies and effective business models are emerging from many start-ups and industrial organisations are beginning to shift from the highly dynamic nature of the introduction phase to a more stable market structure. These trending techno-economic features signify that the new industrial revolution is currently shifting from the introduction to the expansion phase. Technological progress and industrial changes are crucial sources of human well-being. Industrial production has driven the rapid production and diffusion of scientific and technological knowledge and has promoted the modernisation of human beings. Economies of scale and the scope of industrial production have advanced the agglomeration of the factors of production and urbanisation in human society. Informationisation has greatly reduced the obstacles to communication and has strongly facilitated the global division of labour in industrial production. In a sense, today’s industrialised society and modern human life, with urbanisation as its core, are the fruits of successive industrial revolutions. The emerging industrial revolution, featuring intelligent interconnection among people, machines, and resources, is increasingly blurring the boundaries between the physical and the digital worlds, manufacturing, and services, providing a broad space for using modern technology to achieve more efficient and environmentally friendly economic growth. Similar to previous industrial revolutions, the current industrial revolution will certainly build a powerful growth engine for the global economy, profoundly change the economic structure and development modes of all countries, provide new solutions to the dilemmas and problems faced by the human economy

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and society, and promote leapfrog development. As the current industrial revolution moves from the introduction phase to the expansion phase, these economic and social effects will surface and be consolidated. First, the new industrial revolution will provide a new growth engine for the global economy. Since the international financial crisis in 2008, the global economic growth rate has dropped significantly, the income gap between countries, industries, regions, and groups of people has widened, and a concentration of wealth has been enjoyed by the minority. As a result, protectionism is on the rise, and populism is growing. Some countries are trying to promote unilateralism in order to transfer economic and political crises, posing serious challenges to global governance and bringing more uncertainty and instability to world economic growth. The new industrial revolution provides an opportunity for the global economy to regain its momentum. Historically, each industrial revolution has generated growth sectors that are basically composed of four types of sectors: power industries, pioneer industries, new infrastructure industries, and inducing industries (Perez 2010). The direction of the current industrial revolution is intellectualisation, digitalisation, and networking. Information technologies and products, such as artificial intelligence, big data, and cloud computing, which accelerate breakthroughs and large-scale commercial applications, are the power industries of the current industrial revolution. Intelligent manufacturing, telematics, smart cities, smart grids, telemedicine, and other intelligent, digital, networked technology-intensive applications, and deep cross-fertilisation of emerging areas will become the pioneer industries of the new industrial revolution. A more efficient, secure, reliable, and stable 5G information network is the key infrastructure underpinning the new industrial revolution. Enabling technologies such as artificial intelligence, 5G networks, and rich application scenarios, such as Telematics, will feed back to and enhance each other, continuously elevating the technical and commercial maturity of these fields, growing new models, new business forms, and new industries, and constituting a major engine for future global economic growth. Meanwhile, emerging technologies and business forms will continue to penetrate into traditional energy, consumer goods, and equipment industries, opening up new growth spaces in these industries and making them the leading industries (modernised industries) in the new industrial revolution. Together with the power industry, pioneer industry, and new infrastructure industry, they constitute a complete industrial system for the new economy.

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Second, the new industrial revolution will change the factor input structure of the economic system. In traditional production systems, land, labour, raw materials, and energy are the most important factors in production. The supply constraints of these factors are generally becoming stronger: the effective supply of labour is gradually decreasing due to the ageing of the population in major industrial countries and the growth of people’s marginal preference for leisure time that accompanies income growth; the supply of land is becoming increasingly constrained due to the expansion of industrial scale and rapid urbanisation; the continuous growth of global consumption and the large-scale heavy industrialisation process in developing countries constantly increases the demand for resources, raw materials, and traditional energy sources, while increasingly serious resource and environmental problems place a continuous ecological constraint on the supply of resources and non-renewable energy, and the contradiction between supply and demand factors must be solved by introducing new production methods. The technological structural changes accompanying the new industrial revolution will change the relative price and demand structure of factors, thus ultimately changing the factor input structure of the global production system. In the new industrial revolution, more efficient and widely used automation will drive a significant increase in the organic composition of capital (Marx 2004), significantly reduce the demand for manual labour for economic growth, and create a large-scale replacement of human mental labour with the development and maturation of artificial intelligence technologies. Therefore, the new industrial revolution may even lead to ‘jobless growth’ in some countries and sectors. At the same time, the new industrial revolution, which features intellectualisation, networking, and digitalisation, will significantly improve the production and management efficiency of enterprises, thus reducing the demand for traditional factors such as land, raw materials, and energy inputs in the economy and society. More importantly, as the new generation of information infrastructure significantly reduces the cost of data generation, storage, and transmission, data will start to become a new key element in the economic system. Data resources will gradually become the core competitive resources of countries and enterprises. Data-based technology development and application models have become the core competencies of countries and enterprises. Data may gradually replace traditional input factors and become the most essential economic resource in the economic system.

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Once again, the new industrial revolution will change the production and manufacturing modes and the research and development (R&D) organisational form of industries. Following mechanisation, mass production, and flexible manufacturing, smart manufacturing will become the new dominant manufacturing paradigm, leading to a new labour structure and R&D organisation. In the era of mechanised production, skilled labour is the main labour input for production, and enterprise knowledge comes mainly from individuals (inventors). In the era of mass production, the demand for operational labour has surged, and scale expansion, and modern management have become the core competencies of enterprises. Corporate innovation has gradually become a key factor in enterprise competition. Large enterprises strengthened technological innovation by building professional internal R&D institutions, and highly specialised individual knowledge jointly constituted the organisational knowledge of enterprises through the division of labour. After the 1970s, along with the development of flexible manufacturing, lean manufacturing and automation technology began to become the core competencies of enterprises, and leading enterprises enhanced their technological capabilities by making full use of global technological elements and building global innovation networks. It can be expected that as human society enters the era of intelligent manufacturing, operational labour and some intellectual labour will be replaced by automation and intellectualisation, and the demand for knowledge-based employees with knowledge of machine learning and natural language processing will increase dramatically. As technological innovation becomes increasingly dynamic, enterprises, in addition to continuing their high-intensity internal R&D and improving their global innovation networks, also need to dynamically maintain their dominant position in the global technology innovation system based on new R&D organisational models such as entrepreneurship. Finally, the new industrial revolution will provide new solutions to global problems. The world today faces major problems such as slowed global economic growth, unbalanced development, widening gaps between the rich and poor, climate change, and geopolitical tensions. The new industrial revolution has provided new possible solutions to these major global problems. For example, the development and promotion of green energy provides a more effective solution to the environmental problems caused by population growth and industrialisation, and the development of driverless and intelligent transportation will provide new

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technical routes to solve increasingly serious urban transportation problems. In addition, the development of cross-border e-commerce and other new business models brought about by digital technology, as well as the increase in the convenience of trade-in services, will strongly promote the growth of global trade. The World Trade Report 2018, released by the World Trade Organization (WTO), predicts that global trade will increase by 1.8–2.0 percentage points per year until 2030, which will lead to spatial re-decomposition and the combination of global value chains, supply chains, and industrial chains, further driving the deepening of labour divisions and the improvement of transaction efficiency, thus promoting the accelerated recovery of the global economy. The new industrial revolution has created technological and economic conditions for fostering new dynamics in global economic growth, advancing inclusive and sustainable development, and creating favourable conditions for solving global problems.

The New Industrial Revolution Will Reshape the Competitive Landscape Between Countries The new industrial revolution will be a significant driver in rebuilding growth dynamics and enhancing the global well-being of human society. However, while the dividends of the new industrial revolution are sufficient to benefit the world, the value created by new technologies and industries is unevenly distributed among countries. Developed industrial countries hope to consolidate or even further strengthen their dominant position in the global economic map by accelerating technological breakthroughs and the development of pioneer industries. Late-developing countries that already have a certain industrial base and technological capability also hope to take advantage of the window of opportunity created by the new industrial revolution to catch up by creating unique technological paths and business models (Perez and Luc 1988). Therefore, competition and catch-up are inevitably part of the new industrial revolution. The process of advancing a new industrial revolution involves competition and choice. The introduction and expansion phases of the industrial revolution are precisely characterised by stimulating competition among countries and enterprises at both the technological and commercial levels. First, during the introduction phase of the industrial revolution, multiple technology routes compete with one another. Due to the uncertainty of

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the technology routes themselves and the high R&D investment that each technology route needs to follow, no single country can dominate all technology routes. Although some countries and enterprises have firstmover advantages in frontier technologies and basic research, there is still great uncertainty as to whether they can eventually become the developers of leading technologies. Coupled with the distinctive short-cycle features of information technology development, if late-developing countries can carry out high-intensity technological learning, there is also a high probability that they can achieve technological catch-up (Lee 2016). Second, when the industrial revolution enters the expansion phase, that is, the period when both general-purpose and enabling technologies tend to mature and thus gradually enter large-scale commercial application, the technology leader may also lose the opportunity to transform technological leadership into industrial leadership because the country’s institutions and strategies are likely to be unable to adapt to the requirements of the dominant technology in a timely manner. Dominant technologies and dominant business models are formed through iterative market selection in a continuous feedback process between technology and the market (Rosenberg 2004). The technology leader is likely to lose in the commercialisation phase of the competition, while the technology follower is likely to leverage its market advantage or infrastructure advantage to become the ultimate winner of the market competition. It can be said that the huge economic dividends that may be created by the new industrial revolution and its profound impact on the industrial competition pattern among countries motivate every country to actively participate in it, while the complexity of the techno-economic process of the new industrial revolution makes the competitive outcome highly uncertain. Competition and catch-up among countries during the new industrial revolution will eventually be reflected in the dynamic changes in competitive ability and interest patterns among countries. According to the experience of previous industrial revolutions, during the introduction phase, the main curators of general-purpose and enabling technologies are the first to promote the transformation of basic scientific research results into technological applications, which explore different technological routes in an attempt to become the controller of dominant technologies. In this process, the scientific research and technological level of these countries mutually enhance and promote each other to become the scientific and technological highlands of the new industrial

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revolution. As the new industrial revolution evolves from the introduction phase to the expansion phase, the leading technologies gradually take shape, and the corresponding engineering and industrialisation become the focus of competition among countries. At this point, countries with stronger engineering capabilities and creative business models become major competitors. Since the technological origins of the new industrial revolution primarily occurred in a few countries, the technological level between countries at this stage will be polarised, but the technological capability has not yet been fully transformed into each country’s industrial competitiveness and economic welfare. Currently, the new industrial revolution is undergoing the transition from the introduction to the expansion phase, and countries such as the United States, China, Japan, and Germany are the major promoters of the maturation and application of leading technologies. As the new industrial revolution enters the expansion phase, general-purpose technologies and enabling technologies begin to spread and be applied. Countries that take the lead in advancing the diffusion and application of leading technologies in pioneer and inducing industries will become the biggest beneficiaries of the new industrial revolution in terms of their technological capabilities, production efficiency, economic growth, employment level, and national comprehensive strength. Since R&D and manufacturing are highly integrated and concentrated in a few source countries at the early stage of industrialisation of new technologies, these countries will form trade surpluses with developing countries on the periphery of the new industrial revolution, and their economic growth levels will be further differentiated. As the technologies and industries of the new industrial revolution become more mature, the standardisation of technology and production and the saturation of the domestic markets of the source countries will prompt enterprises in these countries to shift their manufacturing to developing countries with lower costs and larger incremental markets. In other words, a new round of interstate gradient transfer of mature industries will begin, and the economic growth levels of developed and developing countries will converge to a certain extent. During this period, developing countries that can more actively use foreign capital and international markets may form trade surpluses with developed countries and regions, while developed countries that cannot effectively reduce the comprehensive cost of manufacturing may even experience industrial hollowing out. The new industrial revolution is a complex process involving a concerted technological and economic paradigm shift. Technological

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progress and industrial development are embedded in a country’s institutional and policy systems, and technological breakthroughs and industrial changes can be institutionally resisted by changing established patterns of interest. Therefore, countries and regions that can relatively quickly adapt their institutions and policies to more effectively support the development of new labour skills, emerging technologies, start-ups, and pioneering industries, and thus better match the techno-economic requirements of the new industrial revolution, will be its main beneficiaries. In this competition between institutions and policies, developed countries are trying to use the window of opportunity created by the new industrial revolution to enhance their industrial competitive advantages, curb the trend of ‘industrial hollowing out’, and regain competitive advantages in manufacturing. In recent years, these countries or regions have introduced medium-term and long-term development strategies for manufacturing industries oriented to intelligent, networked, and digital technologies, such as the United States’ ‘National Strategic Plan for Advanced Manufacturing’, Germany’s ‘Industry 4.0’, France’s ‘New Industrial France’, the European Union’s ‘Digitising European Industry’, Spain’s ‘Connected Industry 4.0’, Japan’s ‘Robot Strategy’, the Republic of Korea’s ‘Manufacturing Innovation 3.0’, and Italy’s ‘Manufacturing in Italy’, which all reflect the ambitious vision of developed industrial countries to further strengthen their competitive advantages in science and technology and in industry. In the past four decades, developing countries represented by China have rapidly established a relatively complete industrial and innovation system by undertaking industrial transfer and independent innovation. The extensive participation of developing countries with a certain industrial base, including China, in the breakthrough and application of high technology is the most important feature of the current industrial revolution compared with previous ones. According to the traditional logic of development economics, the basic model of economic growth of latedeveloping countries is to take over the capacity transfer of mature industries in developed countries with the advantage of low cost. Although industrial transfer based on the ‘Flying Geese Formation Model’ can help developing countries achieve high growth during the economic take-off stage, in the long run, since multinational companies (MNCs) always keep their core technologies in their home countries and only transfer mature technologies to host developing countries, technology development in host developing countries is basically for the purpose of meeting the

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host country’s own market demands. Therefore, the innovations carried out by MNCs in developing markets are mostly minor improvements of the ‘utilisation type’. This also means that once the dividends of mature technology transfer are harvested, and the local enterprises in developing countries cannot successfully create the space for technological catch-up, their economic growth will enter a long-term period of relative stagnation. The problem of the ‘middle-income trap’ faced by Latin American countries such as Brazil and Chile is microscopically manifested by the fact that after the transfer of mature technologies from MNCs is completed, local enterprises in these countries do not have the ability to form and follow up on their own innovation, and thus enter a plateau period of technological capacity and economic growth. It can be said that behind the ‘middle-income trap’ is the ‘technological capacity trap’ of developing countries. Taking advantage of the historical opportunity of the new industrial revolution, cultivating local innovation capacity and innovation subjects, and forming independent product platforms, R&D systems, and experimental systems are the catch-up paths for late-developing countries to jump out of the ‘middle-income trap’ at the technological level. In the new industrial revolution, not only do late-developing countries have the opportunity to catch up in new industries, they also have the opportunity to catch up in mature industries by taking advantage of their unique market and resource advantages created by the integration of traditional technologies and traditional industries with new technologies. In the 1970s, when the automotive technology line changed from low-cost and power enhancement to diversification and energy conservation, Japanese companies achieved catch-up with the United States and German automotive industries through flexible production and lean manufacturing, which is the reality of this theoretical logic. Over the past four decades, China has continuously promoted theoretical and institutional innovations from its national conditions, which have greatly enriched the paths and models of economic development in late-developing countries (Xie 2018). China’s ‘Made in China Strategy’, Russia’s ‘National Technology Initiative’ (NTI), Argentina’s ‘National Production Plan’, and India’s ‘Make-in-India’ Strategy all reflect the vast number of developing countries’ legitimate aspirations to participate extensively in the new industrial revolution and their ideal ambition to contribute to the new industrial revolution for humanity.

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Multilateralism is Still the Leading Direction of Global Governance Change Revolutions in productivity and production methods inevitably bring about changes in production relations. Looking back at the history of human economic development, the unfolding of each industrial revolution is the process of both the emergence of breakthrough technologies and the adjustment of the national policy system and interstate governance rules that correspond to these technologies. It is a concerted transformation of technological and economic paradigms and the process of ‘creative destruction’ of technology and institutions. It can be expected that the new industrial revolution, which is accelerating, will bring about changes in economic paradigms such as institutions, industrial policies, and global governance while giving rise to breakthrough technologies. Since the new industrial revolution will have a systematic and profound impact on deep-seated national interests such as national technological capabilities, economic growth, employment, trade and investment, and even national security, major industrial countries have embraced the new industrial revolution as a national strategy and promoted the cultivation and development of new technologies and industries through more active and diversified industrial policies. Conflicting interests among countries, as well as corresponding strategic and policy adjustments, will certainly have an impact on the established global governance system, leading to challenges to the established rules of governance and a gradual move towards a new equilibrium in national competition. The reshaping of national competition patterns, the reallocation of individual economic interests, the reorganisation of global governance rules, the impact of a career change and unemployment, and the challenge to social ethics and morality may all become by-products of the new industrial revolution. However, these challenges do not pose a threat to the development of human society. The key question is the direction in which the global governance system will be adjusted and developed. Facing the opportunities and challenges of the new industrial revolution, different countries present different global governance value orientations and adopt different globalisation strategies. Currently, most countries advocate strengthening dialogue, deepening cooperation, expanding openness, promoting international cooperation and innovation, embracing the new industrial revolution in the process of competition and cooperation, and solving global problems using a multilateral

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framework. However, some discordant voices have emerged in the international arena. In order to seize the first opportunity presented by the new industrial revolution, some countries try to hinder the development of other countries by unilateralism and protectionism, using national power to discredit and combat the leading technology enterprises of other countries, which negatively affects the international trade order and the stability of the world economy, pushing the competitive cooperation relationship of the new industrial revolution to a ‘zero-sum game’. This irresponsible and narrow view of global governance is not only detrimental to the deepening of the new industrial revolution and the cultivation of new dynamics of global economic growth but also undermines the multilateralism framework of global cooperation to meet the challenges of the new industrial revolution. In the face of the new industrial revolution driven by information technology, multilateralism is still the dominant institutional paradigm required for a country to share the dividends of the industrial revolution to a greater extent. It is also the fundamental way to effectively meet the challenges of the industrial revolution, the mainstream direction, and leading logic that global governance changes must adhere to. First, building a more open industrial and innovation ecology under multilateralism is the rational strategic choice required for a country to participate in the new round of science and technology and industrial competition. Compared with previous industrial revolutions, this new industrial revolution featuring intellectualisation, digitalisation, and networking involves an unprecedented breadth of its science and technology base, depth of its technology integration, and complexity of its market application. No country can master all the links in the new industrial revolution industrial system, supply chain system, value chain system, or innovation system alone. Consider smart manufacturing as an example. The United States’ advantage is the underlying technology and the industrial Internet, Germany’s advantage is digital-physical system integration, Japan’s advantage is lean production and manufacturing management, while China’s advantage is the large-scale engineering and market application of new technologies. No country can master all the key technologies of smart manufacturing alone and form a complete industrial chain that is completely self-sufficient. It is foreseeable that, unlike previous industrial revolutions that occurred mainly in very few source countries, the new industrial revolution requires more countries to directly participate in the innovation of basic science, frontier technologies, and diverse commercial

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applications. The biggest beneficiaries of the new industrial revolution will be the countries that gather global science and technology elements with a more open attitude, while sharing the value of innovation with other countries. Whichever country can establish a more open innovation ecology will be able to occupy a more favourable position in the industrial system of the new industrial revolution. If any country tries to monopolise the benefits of the new industrial revolution by pursuing unilateralism and protectionism with the monopolistic technological advantages already formed, this will be a misjudgement of the trend of scientific and technological diversification in the new industrial revolution and the power of multilateralism in the global governance system. Second, only by coordinating competition policies under the framework of multilateralism and jointly addressing the social and ethical issues that may be brought about by new technologies, can countries more effectively respond to the challenges of the new industrial revolution and guide it in a direction conducive to solving major global problems. Entering the Internet era, economies of scope have replaced economies of scale as the dominant logic of industrial organisation, and platform enterprises have mastered the underlying technologies and core data to become leaders in driving the innovation and development of the entire industrial ecology. However, once dominant technologies and industrial ecology tend to mature, platform enterprises in the fields of operating systems, chips, social media, search engines, and so on will use their market position and financial advantages to adopt various forms of monopolistic behaviours such as bundling and aggressive pricing to stifle innovation and market vitality. At this point, instead of leading innovation, platform companies with market power are more likely to hinder it. This will require the international community to promote the establishment of an effective interstate competition policy coordination mechanism that can team up in regulating monopolies and guarantee the continuous expansion of technological boundaries and innovation of business models in the digital economy. At the same time, technologies such as artificial intelligence and genetic engineering, which constitute important elements of the new industrial revolution, require more extensive and in-depth interstate policy coordination as they involve major issues of human development, such as information security and ethics of science and technology. If these technologies are not developed and applied within the constraints of the multilateral framework, the negative effects of the new industrial revolution, which are a ‘double-edged sword’, may

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be magnified and may even pose a great threat to the progress of human society. Once again, only scientific research competition and industrial competition that conform to the principle of fair competition and are bound by multilateral rules are conducive to the new industrial revolution and to promoting global economic growth. To more effectively adapt to and promote the development of new technologies and industries, it is reasonable and inevitable for each country to adjust and innovate its national innovation system and industrial policies in light of its own institutional characteristics, philosophy, development stage, and other national conditions. However, strengthening support for new national technologies and industries should not be at the expense of multilateralism. There is no contradiction between the diversified policy exploration of countries and adherence to multilateralism. The more rampant the pan-politicisation of economic issues and the more protectionism prevails, the more important multilateral rules and fair competition become. Only under the constraints of multilateral rules consistent with fair competition can scientific research competition and industrial competition among countries contribute to the improvement of global welfare. In contrast, in the absence of multilateral rules to be observed by all, the industrial policy competition in the context of the new industrial revolution may evolve into a ‘beggar-thyneighbour’ disorderly competition, which will ultimately undermine the effectiveness of the new industrial revolution to promote global economic recovery. Therefore, policy adjustment and scientific and technological competition among countries during the new industrial revolution should be fair under the constraints of multilateral rules, rather than be a bullying rivalry without rules. Finally, polarisation that may be brought about by the new industrial revolution must be addressed through more inclusive multilateral rules. The substitution of manual and mental labour with automation and intellectualisation-driven capital, while greatly improving economic production efficiency, may also slow down or even reverse the trend of gradual transfer of traditional manufacturing from developed to developing countries and impact on established traditional industries and jobs in the vast majority of developing countries. As it is difficult for the new industrial revolution to radiate to most developing countries in the short term, the traditional comparative advantage of developing

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countries may be weakened. From this perspective, the ‘digital divide’ caused by the new industrial revolution may lead to further divergence in the level of global economic development. In the face of this situation, developed countries, on the one hand, have the responsibility to contribute to solving the problem of unbalanced development—in the process of global industrialisation in the past decades, developing countries are at the lowest end of the global industry and value chains, bearing the heaviest manual labour input, the most serious ecological and environmental damage and the minimum value added. On the other hand, since the main products of the new industrial revolution are not tangible products, but rather information products and services with almost zero marginal costs, developed countries can also expand their markets to developing countries in order to achieve a win–win situation for them both. Based on this understanding, unilateralism runs counter to inclusive growth and poverty reduction. It is not only necessary but also feasible to solve the problem of global development imbalance and inequality by adhering to and improving multilateralism. Only under the framework of multilateral cooperation can countries that are the main drivers and beneficiaries of the new industrial revolution reach consensus on the provision of support for developing countries in building information infrastructure, the improvement of the system of assistance for mature and applicable technologies, and the provision of skills training for workers that is compatible with the new production methods; thus, the global economy can head in a more inclusive direction. Information technology progress and development have greatly reduced the cost of the global layout of industrial chains, value chains, and infrastructure, as well as strengthened scale, scope, and network economies. The resulting new industrial revolution provides a rare opportunity for developed countries to help developing countries integrate more deeply into the global production system and innovation networks. In short, from the perspective of greater national self-interest, maximising global well-being, inclusive development, openness, and multilateralism are the dominant economic paradigms that are compatible with the technological paradigm of the new industrial revolution. Protectionism and unilateralism are counter-trend behaviours that lack popular support.

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Promote Necessary Reform of WTO Under the Principle of Multilateralism Multilateralism based on cooperation, reciprocity, and consultation will remain dominant in adjusting global governance. However, adherence to multilateralism does not mean that established multilateral organisations and mechanisms are perfect. Take the WTO for example, although it has made consequential contributions to improving the dispute settlement mechanism, organisational structure, and multilateral negotiation process in the past, contradictions between its existing institutional mechanism and the new international competitive environment are increasingly prominent. The former is not well adapted to and is incompatible with the latter. The complex and changing international competition pattern in the context of the new industrial revolution and the divergent interests of the members have led to difficulties in promoting WTO issues under negotiation and prolonged delays. Difficulty in forging a consensus on new issues has seriously undermined the efficiency and authority of the WTO. Therefore, it is urgent to accelerate the necessary reform of the WTO, to promote the WTO to reform and adjust in a direction more in line with fair competition that is more conducive to an innovative and inclusive development of the global economy, to consolidate the multilateral trading system as the main channel in the process of global trade liberalisation and facilitation, and to push the WTO to play a greater role in global economic governance. Desirable endeavours could be the following: First, strengthen the binding force of member countries to fulfil their responsibilities and strive to improve the effectiveness of the dispute settlement mechanism. The multilateral trading system is essentially a binding commitment made by member countries to open their markets to each other and conduct fair competition. However, due to the strategic importance of the new economy, countries are more motivated to implement policy interventions to promote breakthroughs in key technologies and the cultivation of new industries. In addition to traditional tariff barriers, disputes over non-tariff barriers between countries have emerged in recent years. Under such circumstances, it is particularly necessary to consolidate the binding force and dispute settlement capacity of the WTO. To this end, the WTO should reform the Council, its committees,

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and secretariat; give them the mandate to monitor the transparency and fairness of member countries’ trade policies; regulate member countries’ compliance with their notification obligations; restart the selection process for members of the Appellate Body; reinforce the multilateral monitoring mechanism; curb the unilateralist measures of some member countries; enhance the WTO’s credibility in global governance, decision-making, and administrative efficiency on the basis of the WTO’s own governance structure; innovate the dispute settlement mechanism; and resolve trade differences in a proactive, rapid, and efficient manner. Second, adhere to multilateral governance and trade liberalisation and adopt an approach to deal with exclusive regionalism. As intellectualisation, networking, and automation are more easily realised within regions with close development levels, the tendency of regionalisation of global innovation value chains in the context of the new industrial revolution is more obvious. Within the Asia– Pacific region and the EU, the supply chain system based on the regional division of labour has demonstrated higher efficiency and activity. This is the result of the deepening of global value chains, although it also causes difficulties for the realisation of multilateral governance and comprehensive trade liberalisation. In view of this, we may consider promoting plurilateral negotiations under the WTO framework, seeking common ground while reserving differences; respecting the respective development models of each member country, addressing the impact of exclusive regionalism faced by WTO through a ‘compromised’ multilateralism over the ‘open plurilateralism’, so as to rebuild the authority of WTO; responding effectively to the demands of industrial development, strengthening multilateral discussions on new issues such as small-and mediumsized enterprises, ensuring that industrial policies implemented by countries in the context of the new industrial revolution are in line with the WTO’s principle of fair competition, and promoting the effective resolution of trade, investment, and intellectual property disputes under the WTO framework. Third, recognise the special status of developing countries, guarantee differential treatment, and expand the participation of developing countries with ensured special and differential treatment. Striving to bridge the capacity gap between developing and developed countries, including the digital divide, is an important element in

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promoting global inclusive development through multilateral frameworks such as the WTO. In the face of the new industrial revolution, which may aggravate unbalanced development globally, the ‘special status and differential treatment’ provisions for developing countries should be guaranteed. Reform of the WTO is advised to take into full consideration the actual demands and specific difficulties of developing countries, insist on differential treatment for developing countries in future trade and investment rule making, and encourage developing countries to participate more actively in global governance and to assume obligations commensurate with their level of development. Fourth, correctly handle the relationship between intellectual property rights (IPR) protection and technology diffusion, and promote global open innovation. In the competition among countries in the new industrial revolution, developed countries have invested heavily in science and technology innovation in order to occupy the high ground of global competition and are bound to protect their intellectual property rights for major R&D and its industrialisation results. However, excessive protection of intellectual property rights will not only be detrimental to the expansion of commercialisation of technological achievements and inclusive global development, but will also limit the enthusiasm of developing countries to expand their openness to the outside world. The WTO should take into full consideration the interests of all parties, properly handle the relationship between IPR protection and technology diffusion, and avoid a ‘one-size-fits-all’ approach to IPR disputes. Effective measures should be taken to deal with IPR disputes in a categorical manner. The WTO should increase the specificity of technical assistance to developing countries to promote the diffusion and application of advanced and mature technologies in developing countries, allowing the fruits of the new industrial revolution to benefit more countries and people in the world. Fifth, adapt to the trend of the new industrial revolution and solve new problems such as digital trade. In recent years, digital trade represented by e-commerce and driven by the new industrial revolution has seen rapid development. According to the data released by the Amazon Web Services Summit Beijing (2018), global B2C crossborder e-commerce transactions increased significantly from $233 billion in 2014 to $676 billion in 2018. Digitisation has substantially

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improved the convenience of cross-border transaction services. It is a trending and important issue to which the WTO must pay attention. At the turn of the century the WTO was relied on for the negotiation of digital trade rules, but this has recently stalled. If the global digital trade rules system is to be formed eventually, it is difficult to bypass the WTO and other traditional multilateral platforms. It might be advisable that negotiations first be guided by Internet-based trade rules for goods, as this is an area that is less divergent and where it is easy to reach consensus. Strengthening technical assistance and capacity building for less developed countries and achieving a balance between technology, commerce, security, sovereignty, and other policy objectives of concern to all parties involved could be expected to break the deadlock in these negotiations, thereby increasing confidence in the rest of the negotiations.

Conclusion Currently, the new industrial revolution featuring intellectualisation, networking, and digitalisation is shifting from the introduction period of scientific and technological exploration to expansion-based commercial application. The release of the huge economic value of the new industrial revolution is promoting profound changes in the global industrial structure and development mode and providing strong momentum for global economic growth. In order to grasp the first opportunity presented by the new industrial revolution and occupy the high ground, major industrial countries have intensively introduced industrial policies to accelerate the development of new technologies and industries. Policy competition among countries in the context of the new industrial revolution is conducive to diversified technological exploration and market experiments. This is a significant and positive force that promotes the new industrial revolution. However, interstate competition around the new industrial revolution should not amount to an unregulated rivalry that undermines multilateralism and inclusive development. The more intense this competition is, the more multilateral rules based on the principle of fair competition are needed to restrain and guide it. Unlike previous industrial revolutions, which occurred primarily in a very small number of source countries, the technological and industrial complexity of this industrial revolution determines the need for more countries to be directly involved in the innovation of basic science, frontier technologies, and

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diverse commercial applications. Countries that are able to build a more open industrial and innovation ecology under multilateralism are the biggest winners in the competition related to the new industrial revolution. The new industrial revolution has brought the interests and destinies of all countries closer together and made them more deeply intertwined. Only by coordinating competition and social policies under the framework of multilateralism and addressing economic and social issues such as monopoly in joint efforts, ‘jobless growth’, and social ethics that may be brought about by new technologies can countries more effectively respond to the challenges resulting from the new industrial revolution and guide it in a direction conducive to solving major global problems and promoting a global inclusive development. The advent of the era of the new industrial revolution and economic globalisation are two interacting and irreversible forces. Under the wave of globalisation driven by the new industrial revolution, multilateralism will remain the dominant economic paradigm required for the world to share the dividends of the new industrial revolution to the greatest extent, and the fundamental way for mankind to effectively meet the challenges of the new industrial revolution, the leading logic behind global governance change, and the basic position and direction that any responsible country should adhere to. Multilateralism based on cooperation, reciprocity, and consultation remains the dominant direction required by global governance change. Of course, adhering to multilateralism does not mean that existing multilateral organisations and mechanisms are perfect. There is an urgent need to accelerate the necessary reform of the WTO, promote the WTO to adjust in a direction more in line with fair competition and more conducive to innovative and inclusive development of the global economy, strengthen the leading position of the multilateral trading system in the process of global trade liberalisation and facilitation, and promote the WTO to play a greater role in global economic governance. China is not only a beneficiary of economic globalisation, but is also an important contributor and promoter. Currently, China is advocating for high-quality development and building a modernised economic system with deeper reforms and higher levels of openness. On the one hand, China will actively promote economic globalisation to meet the advent of the new industrial revolution; on the other hand, it will firmly support multilateralism and free trade, and resolutely oppose unilateralism and protectionism that goes against the general trend of world development.

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Since its accession to the WTO, China has fulfilled its WTO accession commitments and opened its market significantly. With mutual benefits and win–win results, China’s contribution to world economic growth and stability is undeniable. In the face of the new industrial revolution and the complex and changing international situation, China will open its doors even wider. It is keen to facilitate the necessary reforms of the WTO under the principle of multilateralism and propel the partnership with the new industrial revolution. China, together with other countries, will follow the trend of the new industrial revolution, explore new technologies, new industries and new models, new growth momentum and development paths, and contribute to global open and inclusive development.

References Bresnahan, T., 2010, “General Purpose Technologies”, in H. H. Bronwyn, and R. Nathan, editors, Handbook of the Economics of Innovation, Elsevier: Oxford. Fortune, S., and M. Zirngibl, 2009, “Enabling Science and Technology”, Bell Labs Technical Journal, 14(3), 1–5. Lee, Keun, 2016, Schumpeterian Analysis of Economic Catch-Up: Knowledge, Path-Creation, and the Middle-Income Trap, Tsinghua University Press. Marx, Karl, 2004, Capital (Vol. 1), People’s Publishing House: China. Perez, Carlota, 2007, Technological Revolutions and Financial Capital—The Dynamics of Bubbles and Golden Ages, China Renmin University Press. Perez, C., 2010, “Technological Revolutions and Techno-Economic Paradigms”, Cambridge Journal of Economics, 34(1), 185–202. Perez, C., and S. Luc, 1988, “Catching Up in Technology: Entry Barriers and Windows of Opportunity”, in D. Giovanni et al., editors, Technical Change and Economic Theory, Francis Pinter: London. Rosenberg, 2004, Exploring the Black Box: Technology, Economics, and History, The Commercial Press: Shanghai, China. Xie, Fuzhan, 2018, “China’s Economic Development and Development Economics Innovation”, Social Sciences in China (11).

Should China Join the CPTPP? Qingyi Su

On December 30, 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially entered into force. The CPTPP is a free trade agreement (FTA) rebranded and re-signed by the 11 Trans-Pacific Partnership Agreement (TPP) signatories that remained after the United States’ withdrawal in January 2017. With the official entry into force of the CPTPP and subsequent consideration of the accession of new signatories, the debate on whether China should join

The Chinese text of this paper was originally published in International Economic Review, Issue 4, 2019. Q. Su (B) Institute of World Economics and Politics, Chinese Academy of Social Sciences, Beijing, China e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_2

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the CPTPP has heated up again.1 Already in October 2015, when the TPP negotiations were concluded, there had been debate about whether China should join the TPP.2 Now, nearly six years have passed, and both the context and reasons for the debate have changed. As such, China needs to think seriously about whether it should join the CPTPP.3 In this paper, this question is analysed from four aspects: changes in the international and domestic situation, necessity of accession, feasibility of accession, and difficulties it faces in doing so, with recommendations proposed accordingly.

Changes in International and Domestic Situations Since the heated debate on whether China should join the TPP six years ago, the backgrounds and reasons (i.e. the international and domestic situations) for why China might choose to join the CPTPP have changed. Internationally, the biggest change is that the United States pulled out of the TPP, and is not a signatory of the CPTPP. Meanwhile, the CPTPP has come into force and its rules have a lower standard than TPP rules.

1 Scholars such as Bai Jie and Su Qingyi (2019) and Wang Huiyao (2019) have explicitly proposed that China should join the CPTPP, but without detailed arguments. In fact, after the CPTPP was signed in March 2018, officials and scholars from China, the United States, and the CPTPP parties began internal discussions on whether China should join the CPTPP. See: Bai Jie and Su Qingyi, ‘Rules, Impact and China’s Countermeasures: A Comparative Study on the CPTPP and the TPP’, International Economic Review, Issue 1, 2019, pp. 58–76; Wang Huiyao, “China Takes the Initiative to Join the CPTPP for Easing the China–U.S. Trade Dispute”, FTChinese.com, January 8, 2019. Some foreign scholars have also supported China’s accession into the CPTPP. 2 Domestic government departments and scholars began to keep a watchful eye on the TPP when the United States officially announced its accession to the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP), the predecessor of the TPP, in November 2008. Especially with the expansion of new parties, after the TPP had included 12 countries in the Asia–Pacific region in 2012, debates on whether China should join the TPP began to increase at home and abroad. It was when the TPP negotiations were concluded in October 2015 that the TPP truly attracted attention and triggered heated debates. After the US withdrawal from the TPP, there were discussions on whether China should join the TPP to fill the US vacancy, but at that time there was too much uncertainty and the remaining TPP parties had not yet decided how to respond to the US withdrawal. 3 Noteworthy, whether China should join the CPTPP and whether CPTPP parties would agree on China’s accession should be distinguished. The author examines the first issue and regards the second issue as the challenge China faces in joining the CPTPP.

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Despite these lower standards, many CPTPP rules function effectively as international economic and trade rules, e.g. similar high-standard international economic and trade rules are involved in the reform of the World Trade Organisation (WTO), the EU-Canada FTA and the EU-Japan Economic Partnership Agreement (EPA) that are currently in force, and the United States-Mexico-Canada Agreement (USMCA) whose negotiation has been completed. Domestically, after six years of deepening reform and expansion of opening-up, the gap between China’s systems and policies and CPTPP rules has narrowed considerably. These international and domestic changes are now discussed in more detail. (I) Changes in the International Situation As mentioned above, the United States has pulled out of the TPP, and is not a signatory of the CPTPP. It is well known that although the United States was not a founding party of the TPP, it became the leader and coordinator of negotiations after it joined. The Obama administration even regarded it as an important achievement of Obama’s time in office, and promoted the completion of TPP negotiations in October 2015. However, in the last year of Obama’s presidency, the United States failed pass the TPP, as it did not win the support of the US Congress. President Trump subsequently fulfilled a campaign pledge and withdrew from the TPP after he took office. The remaining 11 signatories rebranded and resigned the TPP as the CPTPP, to which the United States is no longer a signatory. This change favours China’s accession to the CPTPP. When the United States was a signatory of the TPP, China would have needed to obtain the consent of and negotiate with the United States, a nation that boasts the strongest negotiating power worldwide. Given the tug-of-war negotiations with the United States that ensued during China’s accession to the WTO, China would undoubtedly have faced a great challenge in this regard. The United States’ absence from the CPTPP means that China does not need to obtain its consent. Without this need for negotiation with the United States, China’s accession has become much more feasible. Furthermore, during the debate over whether China should join the TPP in 2015 and 2016, the TPP had only completed negotiations, and was still a long way from coming into force; now, the CPTPP has already

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come into force.4 Among other things, the biggest obstacle to implementing the TPP was the United States. According to the rules for TPP implementation at that time, the consent of the United States and Japan was effectively required.5 Obama pushed the US Congress to pass the TPP in the last year of his administration, but to no avail. It was impossible for the TPP to consider the accession of new signatories while it was not in effect. Thus, the debate on whether China should join the TPP was actually a debate on whether China should join the TPP after it came into effect; this date was unknown at the time. Given that the CPTPP has already come into effect, it is a more realistic question for China to consider whether to join. Additionally, the CPTPP rules have reduced standards compared with TPP rules. The biggest change was the suspension of controversial provisions.6 The suspended provisions, of which there were 22 according to the official statements of CPTPP signatories, were promoted by Japan; most had been proposed by the United States during the TPP negotiations. These include general provisions on customs regulation and trade facilitation, investment, cross-border delivery in service trade, government procurement, intellectual property, transparency and anti-corruption, and sector-specific provisions on financial, telecommunications, postal, and environmental services. Among them, the most significant suspension was the provision on investment and intellectual property, which effectively lowered the standards of the CPTPP rules. The difficulty in China’s accession was reduced accordingly. Furthermore, many CPTPP rules are functioning effectively as international economic and trade rules. In addition to the CPTPP, current influential high-standard FTAs include the USMCA, the EU-Canada FTA, the EU-Japan EPA, and the negotiations on zero tariffs, zero nontariff barriers, and zero subsidies proposed by the United States and the 4 Of course, in the debate over whether China should join the TPP before October 2015, the TPP had not even completed its negotiations. 5 The condition for bringing the TPP into effect: ratification by at least six member countries accounting for 85% of the combined GDP (in reference to the GDP in 2013) of the signatories, where the United States and Japan represented 60.4 and 17.6% for the total GDP of 12 parties. Consequently, the United States and Japan owned the veto power: if they fail to complete their domestic procedures, the TPP could not enter into force. 6 Bai Jie and Su Qingyi, ‘Rules, Impact and China’s Countermeasures: A Comparative Study of CPTPP and TPP’, International Economic Review, Issue 1, 2019, pp. 58–76.

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EU.7 These high-standard FTAs include basically similar contents to the CPTPP, which has become a template for future high-standard FTAs. More importantly, many of the CPTPP rules are expected to gradually become elements of WTO reform under consideration by the US, EU, and Japan, related to matters such as state-owned enterprises, subsidies, competitive neutrality, and e-commerce.8 Therefore, despite their USled formulation, the CPTPP rules will serve as a reference for future international economic and trade rules. (II) Changes in the Domestic Situation Domestically, the gap between China’s systems and policies and the CPTPP rules has narrowed. China has launched initiatives to deepen reform and opening-up since 2015. In March 2017, the State Council approved the establishment of free trade pilot zones in seven provinces and municipalities, i.e. Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, and Shaanxi. This increase in the scope and number of free trade pilot zones in China has seen many rules piloted and then extended to the whole country. In April 2018, China announced the building of a pilot free trade port in Hainan Province.9 In addition to these free trade zones and ports, China has launched reform initiatives in many areas (to be analysed later in the paper). With its deepening reform and opening-up, China’s receptiveness to high-standard economic and trade rules has increased significantly. The Central Economic Work Conference in December 2018 introduced the concept of ‘institutional opening-up’ for the first time: ‘the transition of opening-up from the flow of commodities and production factors to changes in rules and other systems shall be

7 The EU-Canada FTA and the EU-Japan EPA have entered into force, and the USMCA has completed its negotiations. The negotiation on zero tariffs, zero non-tariff barriers and zero subsidies was proposed by the US President Trump and European Commission President Jean-Claude Juncker during their meeting in late July 2018, and the negotiation has not yet started. 8 These areas have been addressed in multiple statements on the Trilateral Meeting of the Trade Ministers of the United States, Japan, and the European Union and in the EU’s proposals for WTO reform. 9 On June 28, 2019, President Xi Jinping announced at the G20 Summit in Osaka, Japan that China will set up six new pilot free trade zones and open a new section of the Shanghai Pilot Free Trade Zone.

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supported’. China’s promotion of institutional opening-up will dovetail with international high-standard economic and trade rules. Another new scenario that has emerged in the last six years is that China must identify solutions to the current economic and trade frictions with the United States. Six years ago, as part of the ‘Asia–Pacific Rebalance’ strategy, the US-led TPP targeted China (the TPP rules contain many elements targeting China). The TPP was strategically aimed at squeezing out China in the Asia–Pacific region.10 In other words, the United States considered China as a competitor. China faced a dilemma: not joining the TTP, China would be excluded from the US-led trade agreement arrangement; by joining it, China would be at the mercy of the United States’ negotiation offer. Since then, the United States has clearly shown its intention to suppress China following bilateral economic and trade frictions, to which the CPTPP may serve as a solution. If it does not join the CPTPP, China would be strategically squeezed out by the United States if and when it rejoins the CPTPP; if China decides to join before the United States rejoins, it would not have to negotiate with and would no longer be threatened by the United States in this context. (III) China Should Urgently Decide to Join the CPTPP All of the changes to the background context mentioned above support the idea of China joining the CPTPP. Six years have passed, and China must seriously consider whether to join the CPTPP based on solid argumentation, instead of conducting debate without any results or adopting a wait-and-see attitude based on balancing the pros and cons.11 As time 10 In his speech after the completion of the TPP negotiations, the then President Obama explicitly mentioned that the U.S. is the country that writes this century’s rules for international economic and trade. Many U.S. scholars close to the U.S. government departments also made it clear in private exchanges that the TPP rules were made by the U.S. specifically for China, whose high standards could not be sufficed by China in the short term. 11 For example, scholars who supported China’s accession to the TPP at that time include Song Hong (2016), Yu Miaojie and Zhang Rui (2016), while Zhang Jianping (2016) argued that China had not have the objective conditions for participating in the TPP negotiations in the short term and Su Qingyi (2015) said that neither the quickaccession nor no-accession is feasible, instead, an objective judgement should be made. See: Song Hong, ‘China’s Accession to the TPP: How Long Will It Take?’, International Economic Review, Issue 2, 2016, pp. 57–70; Yu Miaojie and Zhang Rui, ‘Make TPP

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is pressing, instead of adopting a wait-and-see attitude, China should urgently decide whether to join the CPTPP. Nonetheless, the reasons for opposing China’s accession to the CPTPP are more diverse than those opposed to joining the TPP six years ago. Although no Chinese scholars have publicly opposed China’s accession to the CPTPP, the author learned in private exchanges that there are three main reasons for opposition. First, there is no need for China to join the CPTPP because the FTAs it already has under negotiation are sufficient; second, there are concerns about the difficulties China faces in joining the CPTPP, such as the possible impact on the Regional Comprehensive Economic Partnership (RCEP) negotiations, the opposition of CPTPP signatories to China’s accession, US obstruction, and China’s inability to meet the high-standard CPTPP rules; third, CPTPP rules were developed by the United States and do not align with China’s interests. In contrast, the reasons for opposing China’s accession to the TPP six years ago were simple: the TPP was dominated by the United States and there was a large gap between China and the TPP rules. Understandably, joining a US-led trade agreement did face many difficulties. But the reasons for opposing China’s accession to the CPTPP are less problematic. Important FTAs that China has signed in the Asia–Pacific region include the China-ASEAN FTA (including the upgraded version), the China-Korea FTA, and the China-Australia FTA. Important FTAs under negotiation or under consideration include the RCEP, the China-JapanKorea FTA, and the phase II of the China-Korea FTA negotiations. Although the China-Korea FTA features high standards, they are not comparable to the CPTPP. The China-Japan-Korea FTA negotiations face great uncertainty due to political interference. Therefore, these existing, negotiated, or under-study FTAs are no substitute for the CPTPP. Although China will face difficulties in joining the CPTPP, this does not mean it should refuse to attempt accession; instead, solutions to these difficulties should be developed. As to whether the CPTPP rules are in China’s interest, it is true that the CPTPP rules were developed by the United States and not all of them are fully in line with China’s interests, but even the WTO rules have advantages and disadvantages for

Work for China: China Should Seek to Join TPP’, International Economic Review, Issue 2, 2016, pp. 39–56; Zhang Jianping, ‘How Far Away Is China from the TPP?’, International Economic Review, Issue 2, 2016, pp. 71–86; Su Qingyi, ‘How to View the TPP’, Maritime China, Issue 11, 2015, pp. 22–23.

32

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China and their formulation is also US-led. Therefore, the US-dominated formulation of the CPTPP rules is not a valid reason for opposing China’s accession to the CPTPP. China should consider this question based on the benefits that would be gained; the potential difficulties and losses should be mitigated as much as possible and properly dealt with.

Necessity of China’s Accession to the CPTPP (I) Accession to the CPTPP Would Benefit China When considering whether to join an FTA, China should first consider the benefits; this is the fundamental condition for judgement. China’s accession to the CPTPP would benefit its economy, deepening the process of reform and opening-up and participation in global economic governance. I now analyse these points in detail. First, China’s accession to the CPTPP can bring huge economic benefits. In order to quantify these benefits, the economic effects under different scenarios, for example, the CPTPP’s current size is maintained or increased, or the United States rejoins, should be considered. Based on the results of the computable general equilibrium model constructed by Professor Li Chunding, China’s social welfare, gross domestic product (GDP), manufacturing employment, and exports and imports will increase after the CPTPP comes into force at its current size of 11 signatories. However, under all scenarios, China would obtain significantly greater benefits if it joined the CPTPP; accession would boost China’s GDP by 0.74–2.27% and exports by 4.69–10.25%, both notably higher than the respective 0.25 and 0.09% benefit that would be obtained without joining the CPTPP (see Table 1 for details). The study by Peter A. Petri and Michael G. Plummer from the U.S. Peterson Institute for International Economics (PIIE) also suggests that China could reap significant economic gains by joining the CPTPP.12 According to their study, if China does not join the CPTPP, it could lose $10 billion in total income due to the CPTPP’s trade diversion effect, but gain $298

12 Peter A. Petri and Michael G. Plummer, ‘China Should Join the New Trans-Pacific Partnership’, Peterson Institute for International Economics Policy Brief 19–1, January 2019, available at: https://piie.com/system/files/documents/pb19-1.pdf [2019–06–09].

China joins the CPTPP

CPTPP 11 + 5 + U.S Scenario 4 CPTPP 11 + U.S Scenario 5

Scenario 3

Scenario 1 CPTPP 11 Scenario 2 CPTPP 11 + 5

Different scenarios

0.735

−0.044

0.386

0.166

0.049

0.033

0.306

Colombia, Indonesia, Thailand, the Philippines and Korea as the first batch of new signatories Five new signatories; Return of the United States Return of the United States in the short run China joins individually as the first new signatory 0.004

0.105

0.249

Social welfare

Current situation

GDP

1.722

0.434

0.006

0.457

0.378

Manufacturing employment

Economic effects of the CPTPP on China under different scenarios (% change)

China does not join the CPTPP

Table 1

4.69

1.545

2.55

0.10

0.092

Export trade

(continued)

5.339

1.375

0.077

1.372

1.141

Import trade

SHOULD CHINA JOIN THE CPTPP?

33

CPTPP 11 + China Scenario 6 CPTPP 11 + 5 + China Scenario 7 CPTPP 11 + 5 + U.S. + China

Different scenarios

(continued)

China joins with five other countries Five countries join; the United States returns; China joins

0.595

1.485

2.269

Social welfare

0.908

GDP

3.642

2.941

Manufacturing employment

10.247

6.52

Export trade

12

9.299

Import trade

Source Numerical simulation results by Professor Li Chunding at the College of Economics and Management, China Agricultural University

Table 1

34 Q. SU

SHOULD CHINA JOIN THE CPTPP?

35

billion if it joins; under the scenario that the CPTPP accepts new signatories, China could lose $53 billion in total income if it does not join but gain $325 billion if it joins.13 Second, China’s accession to the CPTPP would facilitate the deepening of reform and institutional opening-up. China’s accession to the WTO proved that the negotiation process before accession to an agreement whose standards are higher demands the deepening of reform and opening-up to meet these standards. In order to fulfil its requirements, China must improve its laws and regulations, policies, measures, and practices after accession. In other words, joining a high-standard agreement helps reassess the aims of reform and opening-up. After entering a ‘deep water’ zone, China’s reform and opening-up faces difficulties in pushing forward, although the impetus to do so has not weakened. In particular, China has made the decision on promoting the opening-up based on commodities and production factors to institutional opening-up, which can be met by joining the CPTPP. Third, China’s accession to the CPTPP would facilitate its engagement in constructing the global trade governance system. There are three possible paths for Asia–Pacific economic integration: the FTA of the Asia– Pacific (FTAAP), the CPTPP, and the RCEP. China’s accession to the CPTPP following the FTAAP and the RCEP would facilitate its engagement in combining these three paths in Asia–Pacific economic integration. China’s accession to the CPTPP would also help it negotiate other highstandard FTAs in the future, for example, increasing the standards in the China-Japan-Korea FTA negotiations and negotiating FTAs with developed economies (e.g. the China-Canada FTA). On the other hand, multilateral WTO reform seems inevitable, an important part of which involves reshaping trade rules; it is likely that some CPTPP rules will be incorporated as part of this reform. Negotiating China’s accession to the CPTPP would involve enhancing its ability to accept rules, which would 13 Economies that have expressed interest in joining the CPTPP include Colombia, Indonesia, Thailand, the Philippines, Korea, Taiwan (China), and the United Kingdom. Petri and Plummer (2019) included Indonesia, Thailand, the Philippines, Korea and Taiwan (China) as new parties in their simulation, while Professor Li Chunding included Colombia, Indonesia, Thailand, the Philippines and Korea as new parties in his simulation. But there is no substantial difference in their results. Peter A. Petri and Michael G. Plummer, ‘China Should Join the New Trans-Pacific Partnership’, Peterson Institute for International Economics Policy Brief 19–1, January 2019, available at: https://piie.com/ system/files/documents/pb19-1.pdf [2019–06–09].

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enable China to take a driving seat in WTO reform. In fact, if China’s previous accession to the WTO involved joining established multilateral trade rules, its accession to the CPTPP means proactively participating in the update of multilateral trade rules.14 In addition, among the existing high-standard FTAs, only the CPTPP is subject to great differences among signatories, indicating that it was concluded after these different interests were coordinated. High-standard FTAs that have been completed or are currently being negotiated are the EU-Canada FTA, the EU-Japan EPA, the USMCA, and the Transatlantic Trade and Investment Partnership (TTIP ) negotiations (or negotiations on zero tariffs, zero non-tariff barriers and zero subsidies). Undoubtedly, as FTAs between or among developed countries, they are less inclusive. The TPP, although reflecting the United States’ trade philosophy due to its US-led negotiations, still took into account the interests of other signatories in order to complete the negotiations.15 The TPP signatories included both developed and developing countries, both capitalist and socialist countries, both (super) large and small countries, as well as both North and South American and Asian and Oceanian countries. Its success was partly due to the strong US leadership, but it also shows that high-standard international economic and trade rules can be accepted by very different countries. In summary, the CPTPP is currently the best option for China to enhance its participation in global trade governance by joining a high-standard FTA. (II) Temporary Window of Opportunity Created by the Trump Administration’s Withdrawal from the TPP There are four scenarios regarding the future membership of the CPTPP (assuming China chooses not to join). Scenario 1 (CPTPP 11): Without any accession of new signatories or the United States’ return, the CPTPP will remain at its current size of 11 signatories. There are seven economies that may join the CPTPP, 14 Many scholars regard China’s accession to the TPP or the CPTPP is the ‘second accession to the WTO’, which is obviously inaccurate. China’s accession to CPTPP is more meaningful than the ‘second accession to the WTO’. It is a ‘reshuffle’ because it means that China will prepare for its participation in the reform of multilateral trade rules. 15 Dong Yan and Su Qingyi, “Unmasking the TPP: A Text-Based Analysis”, International Economic Review, Issue 1, 2016, pp. 37–57.

SHOULD CHINA JOIN THE CPTPP?

37

including Colombia, Korea, Indonesia, Thailand, the Philippines, the UK, and Taiwan (China). They all face difficulties in joining the CPTPP to varying degrees. For example, Korea may be blocked by Japan because of their political disputes, and Indonesia has difficulty in meeting the high-standard requirements of the CPTPP. Without overcoming these difficulties, it may take a long time for these countries to join. The United States may choose not to return to the CPTPP in the short to medium term due to its domestic political issues. Therefore, in this scenario, the CPTPP will maintain its current size of 11 signatories for a certain period of time. Scenario 2 (CPTPP 11 + X): Assuming the United States does not return, there may be smooth accession of new signatories in the next few years; this scenario is named CPTPP 11 + X (X = number of new signatories). Which and how many economies will join are uncertain. However, as long as the United States does not return, the accession of new countries will not change the basic pattern of the CPTPP. Scenario 3 (CPTPP 11 + U.S.): If the United States returns while the accession of other signatories is blocked, the CPTPP will return to the original 12 signatories of the TPP. Returning to CPTPP is in line with the governing philosophy of the Biden administration, and relevant officials of the Biden administration also expressed the idea of returning to CPTPP. Of course, it needs to reach a broad consensus between the two parties in the United States, it will take some time for the United States to return. Scenario 4 (CPTPP 11 + U.S. + X): In this scenario, the United States returns and new signatories join the CPTPP without difficulty. This is the smoothest and most desired scenario among the existing CPTPP signatories. All these scenarios are feasible. In the short term, although some economies may apply for accession, they need to complete specific accession procedures and negotiations, while the United States can hardly return in the next two years, so the CPTPP will maintain its current size of 11 signatories (Scenario 1). In the medium term, both Scenarios 2 and 3 are possible, i.e. either the United States will return to the CPTPP or the CPTPP will receive new signatories in the next five years or so. In the long term, Scenario 4 is likely, i.e., CPTPP 11 + U.S. + new signatories. The CPTPP rules were developed based on US-led negotiations and were designed to suit the United States, so the United States may well return in the next decade or so. Meanwhile, despite some difficulties, failing to

38

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absorb at least one new signatory is highly unlikely for the CPTPP in the long run. Among these, Scenario 4 is the most unfavourable to China, Scenario 3 may have a significant negative impact, Scenario 2 could have a minimal negative impact, and Scenario 1 is the most favourable. In other words, the United States’ return to the CPTPP will be detrimental to China regardless of whether the CPTPP absorbs new signatories. Scenario 4 (CPTPP 11 + U.S. + new signatories) implies the expansion of the CPTPP’s influence, which is most unfavourable to China; even Scenario 3 with only the United States returning would have a significant negative impact on China. If the United States does not return, the CPTPP’s strategic influence and pressure on China will be limited, regardless of its expansion of signatories. In terms of economic effects, according to the simulation results in Table 1, if the CPTPP maintains its current size of 11 countries, there will be no negative impact on China, instead, China will benefit because of increased division of labour in global value chains. These benefits are likely to increase with the accession of new CPTPP signatories. Conversely, if the United States returns to the CPTPP, the CPTPP will bring limited economic benefits to China if it expands, and in Scenario 3, where only the United States returns, China’s GDP will be damaged. In the long run, since the United States is bound to return, adversely affecting China, the optimal solution is to apply to join the CPTPP and maximise progress before the United States’ return. Given the small likelihood of the United States returning in the short term, China will have at least two years joining the CPTPP. If President Biden maintains the decision not to join the CPTPP, China will enjoy at least a six-year period of opportunity. China should leverage this rare opportunity to plan its accession to the CPTPP. (III) Accession Would Facilitate Resolution of China–US Economic and Trade Frictions The ongoing strategic economic and trade frictions between China and the United States occurred after Trump took office. These are different from ordinary economic and trade frictions for the following reasons: first, they are on a large-scale, involving tariffs on most goods traded. Second, they reflect changes in China–US relations, as the United States officially

SHOULD CHINA JOIN THE CPTPP?

39

views China as a competitor and the rise of China as a threat.16 Current bilateral trade negotiations are aimed at addressing mainly the US ‘Section 301 Investigation’, supplemented by other issues of concern to the United States Once an agreement is reached, whether China fulfils its commitments by making structural changes is the most concerning issue for the United States. Therefore, enforcement arises as a concern only after bilateral negotiations are concluded; the agreement will establish an enforcement mechanism. Meanwhile, with many overlaps between US demands and CPTPP rules, China’s improvements to meet CPTPP rules would facilitate better enforcement of any agreement with the United States. If China joins the CPTPP, CPTPP signatories will use its enforcement mechanism to monitor China’s enforcement of the agreement. Hence, China’s accession to the CPTPP could increase confidence in its ability to enforce any bilateral agreement between China and the United States.17 Further, just as the United States intended to use the TPP as a tool to strategically contain China during the Obama administration, the CPTPP could be used for the same purpose at any time after its return. Therefore, if China joins the CPTPP, the United States would lose this effective tool.18

Feasibility of China’s Accession to the CPTPP (I) Accession to the CPTPP Will Be Easier than Accession to the TPP Would Have Been

16 At the end of 2017, the White House released the National Security Strategy of the United States of America, officially describing China as a ‘competitor’. 17 Petri and Plummer (2019) also consider China’s accession to the CPTPP as a good solution to the China–US economic and trade frictions. It could help address US concerns and convince other countries of China’s reform. See: Peter A. Petri and Michael G. Plummer, ‘Why the CPTPP Could Be the Answer to the US–China Trade War’, January 11, 2019, Peterson Institute for International Economics website, available at: https:// piie.com/commentary/op-eds/why-cptpp-could-be-answer-us-china-trade-war [2019–06– 09]. 18 Even this day, there are still many American scholars regarding the Trump administration’s withdrawal from the TPP as a foolish decision and urging the return as soon as possible.

40

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As pointed out, the CPTPP has removed 22 provisions that were in the TPP, which lowers the standards of CPTPP rules and thus reduces the difficulty of accession negotiations. Furthermore, China is more able to meet high-standard rules than six years ago. Over the past six years, China has further deepened its reform and opening-up, with important improvements in many areas or plans and timetables for reform (Table 2). Examples are tariff and non-tariff barriers, intellectual property rights, foreign investment access, and opening-up in the services industry. According to Song Hong’s study, if China had decided to join the TPP in 2015, it would have taken about ten years to complete the accession procedure.19 Due to these improvements, negotiations to join the CTPP are likely to be quicker, and are estimated to take around six years. Of course, there are still some rules in the CPTPP that present difficulties for China, and this must be analysed. There are two dimensions for understanding China’s difficulties in accepting rules: the gap between China’s existing systems or policies and CPTPP rules and the difficulty in changing China’s existing systems or policies to meet rules. This is because even though some of China’s systems or policies are quite far apart from the CPTPP rules, they are relatively easy to reform. On this basis, CPTPP rules can be divided into four categories. The first is CPTPP rules that are easily acceptable (including those which pose only minor difficulty). The second is CPTPP rules which are moderately difficulty to accept, where it is not too difficult for China to align with them due to relatively manageable reforms or improvements in the relevant areas. The third is CPTPP rules which are very difficult to accept. Here, although there is a large gap, negotiations are still possible despite the need for potentially massive reforms or improvements. The fourth is CPTPP rules that could not be accepted or could only be accepted in the long term, which are mainly the provisions on cross-border transfer of information by electronic means (Electronic Commerce chapter) and freedom of association and the right to collective bargaining (Labour chapter). The risks these provisions pose to China’s systems and social stability can hardly be overestimated. Therefore, China is unlikely to accept them in the foreseeable future. Derived from the studies of Bai Jie and Su Qingyi, Petri, and

19 Song Hong, “China’s Accession to the TPP: How Long Will It Take?”, International Economic Review, Issue 2, 2016, pp. 57–70.

SHOULD CHINA JOIN THE CPTPP?

41

Plummer, and Schott et al., the classification of CPTPP rules is presented in detail in Table 3.20 As can be seen from Table 3, China has no difficulty in accepting many CPTPP rules. The majority of CPTPP rules would be moderately difficult for China to accept. They are ‘neutral’ rules that will not negatively impact China because they are in line with the already established direction of reform and opening-up or are less difficult for China to align with for whatever reason. China can fully accept these rules after a period of improvement. However, there are some rules that are quite difficult for China to accept, and some which are impossible, mainly contained in Electronic Commerce and Labour chapters. These will be analysed later. Therefore, on the whole, China does face difficulties in accepting the CPTPP rules, but the difficulties should not be overestimated. (II) The CPTPP Has Entered into Force and the Accession of New Signatories Is Under Consideration In order to expand its influence and increase the economic benefits it offers, the CPTPP will surely consider the accession of new signatories. The accession of new signatories was discussed at the first CPTPP Commission meeting held in Tokyo on January 19, 2019. And now CPTPP parties have decided to expand their members. According to available data, no signatories have openly expressed opposition to China’s accession. From various sources, including the author’s direct communication with officials and scholars in CPTPP signatory countries, most CPTPP signatories would welcome China’s accession. Simulation results (Table 1 and simulation by the Peterson Institute for International Economics) show that China’s accession would substantially increase benefits in social welfare, GDP, manufacturing employment, and imports

20 Bai Jie and Su Qingyi, ‘Rules, Impact and China’s Countermeasures: A Comparative Study of CPTPP and TPP’, International Economic Review, Issue 1, 2019, pp. 58–76; Peter A. Petri and Michael G. Plummer, ‘China Should Join the New Trans-Pacific Partnership’, Peterson Institute for International Economics Policy Brief 19–1, January 2019, available at: https://piie.com/system/files/documents/pb19-1.pdf [2019–06–09]; Jeffrey J. Schott and Zhiyao (Lucy) Lu, ‘China’s Potential for CPTPP Membership: Opportunities and Challenges’, The 8th CF40-PIIE Economists Symposium Conference Papers, 11 May 2019.

Import and export tariffs on some daily-use consumer goods have been lowered since January 1, 2016 Tariffs on 187 categories of consumer goods have been further reduced since December 1, 2017 There were four major tariff cuts in 2018, lowering China’s overall tariff level to 7.5% from 9.8% in 2017. In particular, tariffs on 1449 taxable items (daily consumer goods) and 1585 other taxable items were reduced on 1 July 2018 and 1 November 2018, respectively In April 2019, Xi Jinping pointed out in his keynote speech at the opening ceremony of the Second Belt and Road Forum for International Cooperation that China will further lower tariffs and remove various non-tariff barriers China has conscientiously fulfilled its obligations as a signatory under the WTO’s Trade Facilitation Agreement since it entered into force on 22 February 2017 In the past two years, the pre-establishment national treatment and negative list management system has been fully implemented. In March 2019, the Foreign Investment Law was adopted

National treatment and market access for goods

Investment

Non-tariff barriers

Progress in China’s reform and opening-up

Progress in China’s reform and opening-up since October 2015 and corresponding CPTPP rules

Corresponding CPTPP rules

Table 2

42 Q. SU

Electronic commerce

(continued)

At the end of June 2018, the National Development and Reform Commission and the Ministry of Commerce released the Special Administrative Measures (Negative List) for Foreign Investment Access (2018 Edition). They announced that the 2018 Negative List would enter into force from 28 July 2018. The 2018 Negative List has reduced the entries from 63 to 48 and launched a series of major liberalisation measures in 22 areas, such as banking, automobiles, trunk railway networks, power grids, and gas stations. Another entry refers to greatly expanding the opening-up of the service sector. For example, restrictions on the proportion of foreign capital in banking shall be lifted; the proportion of foreign capital invested in a securities company, a securities investment fund management company, a futures company, or a life insurance company can be up to 51%; and restrictions on the proportion of foreign capital in the whole financial sector shall be lifted in 2021 In recent years, China has further eased restrictions on the movement of natural persons, as part of FTA and bilateral FTA negotiations. In particular, the level of commitment on natural person movement in the China-Korea FTA is comparable to that in the CPTPP On 13 May 2019, China’s Proposal on WTO Reform was submitted to the WTO. The file proposes to advance open and inclusive negotiations on e-commerce issues

Services industry

Temporary entry for business persons

Progress in China’s reform and opening-up

Corresponding CPTPP rules

SHOULD CHINA JOIN THE CPTPP?

43

President Xi Jinping pointed out in his keynote speech at the opening ceremony of the Boao Forum for Asia Annual Conference 2018 that China will seek faster progress towards joining the WTO Government Procurement Agreement On 14 October 2018, Yi Gang, Governor of the People’s Bank of China, made remarks at the G30 International Banking Seminar, proposing to ‘consider treating state-owned enterprises with the principle of competitive neutrality’. This was the first time a Chinese official at or above the ministerial level took a positive stance on ‘competitive neutrality’ In March 2019, Premier Li Keqiang pointed out in the Report on the Work of the Government that China will follow the principle of competitive neutrality, so that when it comes to access to factors of production, market access and licenses, business operations, government procurement, public bidding, and so on, all enterprises will be treated equally In 2018, China reconstituted the State Intellectual Property Office of the People’s Republic of China (SIPO) in order to improve and increase enforcement efforts and significantly raise the cost of violations

Government procurement

Source Compiled by the author

Intellectual property

Competition policy and state-owned enterprises

Progress in China’s reform and opening-up

(continued)

Corresponding CPTPP rules

Table 2

44 Q. SU

SHOULD CHINA JOIN THE CPTPP?

Table 3

45

Classification of CPTPP rules by acceptance difficulty

Acceptance difficulty

Provisions (specific chapters of the CPTPP)

No difficulty

Rules of origin, textile and apparel goods, customs administration and trade facilitation, trade remedies, cooperation and capacity building, development, administrative and institutional provisions, dispute settlement, others Sanitary and phytosanitary measures, technical barriers to trade, cross-border trade in services, financial services, temporary entry for business persons, telecommunications, government procurement, competition policy, regulatory coherence, environment, small and medium-sized enterprises, transparency and anti-corruption National treatment and market access for goods, investment, state-owned enterprises and designated monopolies, intellectual property E-commerce (cross-border transfer of information by electronic means), labour (freedom of association and the right to collective bargaining)

Moderate difficulty

Serious difficulty

Impossible to accept

Note (1) There are 31 chapters in the CPTPP text (or 30 after excluding the Preamble). In order to simplify the analysis, Initial Provisions and General Definitions, Exceptions and General Provisions, Final Provisions, and Competitiveness and Business Facilitation are collectively referred to as ‘Others’, so there are 27 items in Table 3; (2) Each chapter of the CPTPP contains many provisions, among which the acceptance difficulty may vary. The classification in Table 3 is based on the most unacceptable provision in each chapter. Source Compiled by the author

and exports of the existing 11 signatories. Therefore, CPTPP signatories have no reason to oppose China’s accession from the perspective of economic benefits. Certainly, from the perspective of non-economic factors, some signatories may have doubts, which China must address. (III) Obstruction from the United States Is Less Likely If the Trump administration had accepted the Obama administration’s legacy by not withdrawing from the TPP, and had instead pushed for the TPP to enter into force, China’s accession to the TPP would largely have been decided by the United States Given its strategic intent to dominate the TPP, it is highly unlikely or even impossible that the United States would have agreed to China’s membership, at least in the short term. Even if the United States had agreed, the negotiation would have been tortuous due to the United States’ strong bargaining power. Now, China’s accession to the CPTPP does not need the consent

46

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of the United States, since it is not a CPTPP signatory, at least procedurally. Even though the United States intends to play a part, it could only do so by influencing the decisions of its allies, which is fundamentally different from having direct influence. Moreover, the Biden administration’s policy priority is its domestic economy, not regional trade negotiation. Conversely, the existing 11 CPTPP signatories will not have as clear reasons to oppose China’s accession as the United States does. Backed by the consent of CPTPP signatories, China will face substantially less difficult negotiations than it would have during the TPP period. (IV) Overlapping Rules Between the CPTPP and China–US Bilateral Negotiations The China–US economic and trade frictions started after the United States initiated a ‘Section 301 Investigation’ against China based on its domestic law. The full name of this ‘Section 301 Report’ is Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974. It focuses mainly on technology transfer, licensing restrictions, foreign investment, and cybersecurity. The United States and China have held 11 rounds of high-level consultations as of May 2019 in order to resolve bilateral economic and trade frictions. According to public coverage, the China–US negotiations have covered areas beyond the scope of the Section 301 Report, including all US concerns about China, such as technology transfer, intellectual property protection, non-tariff barriers, services sector, agriculture, trade balance (tariff barriers), exchange rates, state-owned enterprises, and subsidies. All these are included in the CPTPP except for exchange rates. Half of the 27 chapters in the CPTPP (after merging insignificant chapters) are covered in China–US negotiations (Table 4). Despite its withdrawal from the TPP, the Trump administration set requirements for economic and trade rules that are similar to those of the TPP; its successfully negotiated USMCA is highly consistent with the TPP’s standards. In summary, China has accumulated experience in negotiating most of the CPTPP’s high-standard economic and trade rules through its negotiations with the United States. Once its negotiations with the United States are completed (most aspects already are), China will find it much easier to negotiate its accession to the CPTPP.

SHOULD CHINA JOIN THE CPTPP?

47

Table 4 Overlaps between the China–US economic and trade negotiations and CPTPP rules CPTPP rules covered in the China–US negotiations

CPTPP rules not covered in the China–US negotiations

Tariff barriers (national treatment and market access for goods), non-tariff barriers (customs administration and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade), investment, services sector (cross-border trade in services, financial services, temporary entry for business persons, telecommunications), electronic commerce, competition policy, state-owned enterprises and designated monopolies, intellectual property

Rules of origin, textile and apparel goods, trade remedies, government procurement, labour, environment, cooperation and capacity building, development, small and medium-sized enterprises, regulatory coherence, transparency and anti-corruption, administrative and institutional provisions, dispute settlement, others

Source Compiled by the author

Difficulties Facing China’s Accession to the CPTPP and Countermeasures Despite the positive changes in the background context that tend to support China’s accession to the CPTPP, China will still face difficulties if it requests to join. After identifying these difficulties, countermeasures must be developed. (I) Not All CPTPP Signatories May Agree to China’s Accession As with the WTO, the CPTPP has a specific accession procedure.21 Aspirant economies must engage informally with all CPTPP members prior to submitting a formal request. If the Commission agrees, a working group to negotiate the accession of the aspirant economy will be established. At the first meeting of the Accession Working Group, the aspirant economy will demonstrate the efforts made to date or actions to be taken in order to comply with CPTPP standards. The aspirant economy

21 Jeffrey J. Schott and Zhiyao (Lucy) Lu, “China’s Potential for CPTPP Membership: Opportunities and Challenges”, The 8th CF40-PIIE Economists Symposium Conference Papers, May 11, 2019.

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then submits its market access offers, including the areas they want to be exempted from opening-up. Only when all CPTPP signatories agree on the offers can the negotiation process be formally launched. Negotiations will take place between the aspirant economy and the Accession Working Group and, if necessary, between the aspirant economy and CPTPP members. After finalising negotiations, the Accession Working Group will submit a written report to the Commission. Upon approval by the CPTPP Commission, domestic ratification by the aspirant economy and CPTPP signatories will proceed. When all signatories have approved it, the aspirant economy will become a formal CPTPP signatory. The CPTPP has decided to expand new members, and the United Kingdom has submitted its application to join CPTPP. If China decides to join the CPTPP and the CPTPP is open to accession of new signatories, the primary difficulty China faces is obtaining the consent of all 11 signatories, which is required in order for negotiations to commence. Although no CPTPP signatory has explicitly stated its opposition to China’s accession, it remains unclear whether China and signatories in support of China’s accession would be able to convince non-supporting signatories. Small countries are preferred as CPTPP signatories, rather than large countries that are generally more difficult to negotiate with. There is also concern that China’s accession would affect the chance of the United States returning. China also needs to reassure signatories that it can deepen reforms in order to meet CPTPP rules. In addition, some CPTPP signatories may have their own special considerations. For example, will Japan agree on China’s accession given its role in Asia–Pacific economic integration and its relationship with China? Will Canada agree given the damage to Chinese–Canadian relations following the Meng Wanzhou incident? Will Vietnam agree at the risk of undermining its strategy of balancing between the United States and China? To overcome these difficulties, in addition to taking practical actions to align with CPTPP rules, China needs to gain the support and trust of CPTPP signatories through diplomatic efforts and convince them it will enforce any agreement. Unilateral accusations by the United States have caused misunderstandings among some countries, which think China does not effectively fulfil its commitments. Examples include the US accusations that China has not fulfilled its WTO accession commitments and has broken rules on intellectual property and technology transfer as outlined in the ‘Section 301 Investigation’. To convince CPTPP signatories of its efforts to comply with CPTPP rules, China must show continuous and

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in-depth reforms, such as large-scale piloting of the relevant rules in free trade zones and their extension to the whole country as soon as possible. Furthermore, it should urgently implement the unaccomplished reform tasks proposed at the Third Plenary Session of the 18th Communist Party of China Central Committee. China also needs to gain the support of non-supporting CPTPP signatories through constant and committed communication. In addition, CPTPP signatories are concerned that China’s accession would have a negative impact on the likelihood that the United States will return. However, according to information the author learned from his exchanges with scholars and officials in CPTPP member countries, the conclusion of a bilateral trade agreement between China and the United States would facilitate their acceptance of China’s accession. This is because such an outcome not only implies the easing of China–US economic and trade relations (as the United States has recognised China’s efforts and plans to monitor their enforcement), but also means that China is willing to make improvements to meet most TPP rules. From this point of view, the conclusion of a bilateral agreement between China and the United States will act as a positive feedback mechanism facilitating China’s accession to the CPTPP. In turn, China’s accession to the CPTPP would convince the United States of China’s enforcement of rules and increase its willingness to reach a bilateral agreement. (II) Dealing with Potential Interference from the United States Despite not being a signatory of the CPTPP, it is possible the United States will try to hinder China’s accession in view of its huge economic and strategic implications. The United States can influence the decisions of CPTPP signatories, primarily by influencing the leading CPTPP party Japan and its allies. China’s accession to the CPTPP would be more feasible if it was unopposed by the United States. Further, there is the possibility that China being in a trade agreement with Canada and Mexico through the CPTPP would activate the ‘poison pill’ clause in the USMCA. Therefore, the consent of Canada and Mexico may require approval from the United States. The presidency of Joe Biden adds uncertainty to China’s accession to the CPTPP. The United States is more likely return to the CPTPP since the Biden administration has a more favourable attitude towards

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it than the Trump administration. However, any US return would be constrained by domestic politics. Regardless of whether the United States returns, the impact the United States exerts over CPTPP signatories will increase as the Biden administration works to manage relations with its allies. Hence, China’s accession into the CPTPP may become increasingly difficult. However, the increased difficulty does not mean that the CPTPP will completely refuse to accept China as a new signatory. In order to deal with the influence of the United States, China needs to maintain communication with the United States after applying to join the CPTPP. China could demonstrate that its joining the CPTPP may benefit the United States. First, China’s accession to the CPTPP would facilitate China’s compliance with high-standard international trade and economic rules, thereby reducing US complaints about Chinese non-compliance. Second, China’s accession to the CPTPP would facilitate China’s enforcement of the China–US trade agreement (if concluded), which is the issue of most concern to the United States. In addition to establishing an enforcement mechanism in the bilateral agreement between China and the United States, China will be monitored by all CPTPP signatories after its accession. Moreover, the CPTPP has its own dispute resolution and monitoring mechanism, which will effectively strengthen the monitoring of China, thus facilitating the enforcement of the US–China bilateral agreement. The impact of the USMCA’s ‘poison pill’ clause cannot be specifically assessed. Though targeting China and restricting USMCA signatories from negotiating FTAs with China, this clause has not been activated and its impact on China’s FTA negotiations with Canada and Mexico remains to be seen.22 (III) Addressing the Hardly Acceptable or Unacceptable Rules As mentioned above, the hardly acceptable or unacceptable rules relate to National Treatment and Market Access for Goods, Investment, StateOwned Enterprises, and Designated Monopolies, Intellectual Property, 22 Some argue that this clause may simply mean that when Canada and Mexico sign an

FTA with China, the successfully negotiated text should be submitted to the United States for review prior to signing, rather than denying their right to sign an FTA with China. See: Peter A. Petri and Michael G. Plummer, “China Should Join the New Trans-Pacific Partnership”, Peterson Institute for International Economics Policy Brief 19–1, January 2019, available at: https://piie.com/system/files/documents/pb19-1.pdf [2019–06–09].

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Electronic Commerce, and Labour. These six areas can be divided into two categories. The rules on Electronic Commerce and Labour are subject to a significant conflict with China’s laws and regulations and economic system, while the remaining four areas, though difficult to accept, conform with China’s future reform direction and are rules that will gradually spread to all organisational levels. In terms of Electronic Commerce, the CPTPP promotes the crossborder flow of information and prohibits data localisation requirements and disclosure of software source code, which directly contradicts the localisation requirements for critical information in the Cybersecurity Law of the People’s Republic of China. According to Article 37 of the Cybersecurity Law, ‘critical information infrastructure operators that gather or produce personal information or important data during operations within the mainland territory of the People’s Republic of China, shall store it within mainland China’. However, the Cybersecurity Law leaves some room, allowing for non-localisation when required: ‘Where due to business requirements it is truly necessary to provide it outside the mainland, they shall follow the measures jointly formulated by the State cybersecurity and informatisation departments and the relevant departments of the State Council to conduct a security assessment; where laws and administrative regulations provide otherwise, follow those provisions.’ Moreover, many WTO members, including China, are currently conducting negotiations on this issue. It remains to be seen whether allowing data to flow across borders will become the prevailing rule, depending largely on the gaming power of developed countries represented by the United States.23 To prepare, China should conduct pilot schemes in its free trade zones. In terms of Labour, the CPTPP allows for freedom of association and 23 In December 2017, the Joint Statement on Electronic Commerce was released at the WTO Ministerial Conference in Argentina. The statement was signed by 71 WTO members (including the EU and its 28 member states), in which the signatories committed to ‘initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce’. On January 25, 2019, following an informal meeting of ministers on electronic commerce held in Davos of Switzerland, China, together with other 75 WTO members including Australia, Japan, Singapore, the US, the EU, Russia, Brazil, Nigeria, and Myanmar, issued a Joint Statement on Electronic Commerce, confirming their intention to commence WTO negotiations on trade-related aspects of electronic commerce, building on existing WTO agreements and frameworks. The free flow of data was the focus of attention at the Leaders’ Special Event on Digital Economy held during the G20 Osaka Summit. There is a disagreement on the flow of data, with the United States being a proponent.

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collective bargaining, but China’s unions are under the leadership of the All-China Federation of Trade Unions. The author thinks this may be the most unacceptable rule to China. Therefore, the only way to resolve the conflict in Electronic Commerce and Labour requirements would be to establish a Chinese exception provision. In terms of National Treatment and Market Access for Goods, the zero-tariff rule for goods is most important. Like other high-standard economic and trade rules, the CPTPP sets tariffs at zero. Specifically, most goods are reduced to zero tariffs in the first year after the CPTPP enters into force, with a small amount allowed for a transition period of varying durations, while a minimal number of tariffs are allowed to remain. Australia, New Zealand, Brunei, Canada, and Chile will impose zero tariffs on more than 90% of goods, while Japan, Malaysia, and Peru will impose zero tariffs on more than 80% of goods. Mexico and Vietnam will impose zero tariffs on 76.99 and 64.22% of goods, respectively.24 Among Chinese FTAs, the China-Korea FTA features the highest Chinese tariff reduction, but only 57.02% of goods are tariff-free one year after its entry into force. China has lowered its tariffs to 7.5% on average and will continue to lower them, but reaching zero tariffs remains a great challenge. To address this, China should expeditiously expand its free trade zones to free trade ports and significantly increase the proportion of zero-tariff goods. A trade adjustment assistance mechanism should also be established to assist domestic industries that are hit by imported goods. In addition, China should strive for a zero-tariff rate for immediate implementation where possible and aim for a longer zero-tariff implementation period for other goods. Investment, State-Owned Enterprises and Designated Monopolies, and Intellectual Property have in fact been important elements of the bilateral trade and economic negotiations between China and the United States. Among them, China has promised to practise the principle of competitive neutrality and will strengthen the reform of state-owned enterprises. Meanwhile, state-owned enterprises are a topic of concern for many countries and will be an important element of future WTO reform. China should aim to prepare for this growing trend and ensure its state-owned enterprises behave in line with international rules. In terms of Intellectual Property, China will improve the likelihood of its acceptance 24 Dong Yan and Su Qingyi, “Unmasking the TPP: A Text-Based Analysis”, International Economic Review, Issue 1, 2016, pp. 37–57.

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to the CPTPP through bilateral economic and trade negotiations with the United States. In terms of Investment, China is expected to be able to accept the relevant rules given its experience in negotiating a bilateral investment treaty (BIT) with the United States and conducting ongoing negotiations on a BIT with the EU.

Conclusions and Recommendations The analysis in this paper suggests that China should urgently make a decision on joining the CPTPP given the changing domestic and international environment. Moreover, China’s accession to the CPTPP is both necessary and feasible, despite the difficulties it may pose. In order to resolve these difficulties, while effectively dovetailing with CPTPP rules by deepening reform, China should maintain communication with CPTPP signatories and the United States to gain their support. Overall, the benefits of joining the CPTPP outweigh the downsides. In order to gain the consent of the existing 11 CPTPP signatories and enter the negotiation process, China should set a timetable for accession and coordinate actions among the government, industries, and academia. China should demonstrate the feasibility of its accession and express its intent to accede to CPTPP signatories individually. After the CPTPP initiates accession of new signatories, China should informally submit relevant materials to signatories (as per CPTPP procedures) and then file a formal application. On the official and governmental levels, first, the Ministry of Commerce should commission think tanks to complete a feasibility study on joining the CPTPP as soon as possible; second, it should prioritise gaining the support of the dominant CPTPP party, Japan, by leveraging the opportunity created by normalisation of ChinaJapan relations; third, the support of 11 CPTPP signatories should be sought by maintaining constant contacts with them. Besides Japan, signatories that play a key role include Australia, Singapore, Vietnam, and Canada. Considering the serious impact of the Meng Wanzhou incident on Chinese-Canadian diplomatic and political relations, China may consider postponing contacts with Canada and waiting for the right opportunity. Meanwhile, government departments should solicit views on the pros and cons of accession from various industries. Government departments should also value the role of think tanks and demonstrate China’s attitude towards joining the CPTPP by commissioning them to hold CPTPP-related seminars and invite high-level think tank scholars and

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ambassadors from the 11 CPTPP signatories and aspirant countries. All of these actions should be taken as soon as possible. Of course, China should also prepare for refusal by the CPTPP. The prerequisite for joining the CPTPP is to agree to and comply with the CPTPP rules, and China should promote reforms based on both the high- and low-standard rules and its own reform and opening-up schedule. China may not obtain the consent of all 11 signatories or may be obstructed by the United States. In this scenario, the best choice is still for China is to continue to reform and open up in compliance with CPTPP rules. If the United States returns, China can only ease the pressure created by the CPTPP by negotiating other high-standard FTAs. If China aligns with high-standard rules from now on, it will be much easier for China to negotiate other high-standard FTAs in the future. In addition, many CPTPP rules will be reflected in WTO reform, thus evolving into multilateral rules. Therefore, China’s deepening of reform and opening-up in accordance with the requirements for joining the CPTPP would facilitate its participation in WTO reform and ability to accept future multilateral rules. Finally, it is important to note that although the author supports China’s accession to the CPTPP, in the current international and domestic situation, there are some scholars who oppose it, and the Chinese government has not yet made a decision. This paper aims to demonstrate that China should join the CPTPP but, more importantly, the author expects this paper to draw the attention of domestic government departments and scholars. China should discern the rare period of opportunity created by the United States’ withdrawal from the TPP and decide to accede to the CPTPP as early as possible. Even if China decides not to join the CPTPP, it should insist on aligning with international high-standard economic and trade rules and prepare countermeasures to cope with the return of the United States to the CPTPP. Whether China should join the TPP or the CPTPP has been a topic of great interest since the TPP was being negotiated. If China was not ready or the time was not ripe before, it is now high time that China should make a well-prepared decision.

Perceptions of ‘Great, Once-in-a-Century Transformations’ Yuyan Zhang

World history is a constant flow of change. In the last century, this planet saw many dramatic events: two world wars, followed by a cold war, an ongoing clash of civilisations between Islam and Christianity, and a kaleidoscope of amazing technological progress. However, even deeper changes are happening today. As Chinese President Xi Jinping said, ‘This is China’s best period of development in modern history. The world is undergoing the most profound and unprecedented changes in a century. These two tendencies have become increasingly intertwined and contentious.’1 In other words, the secular changes happening right now will have a greater impact on the future of humanity than all of the transformations of the twentieth century. President Xi recognised the importance of this critical moment in world history, and his analysis in a speech a little more than a year ago sparked vigorous discussion

1 ‘Guided by the Socialist Diplomatic Thought with Chinese Characteristics in the New Era, Strive to Create a New Situation for the Diplomacy Among Major Powers with Chinese Characteristics’, People’s Daily, June 24, 2018.

Y. Zhang (B) Beijing, China

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_3

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among China’s scholars and researchers.2 This article has catalogued eight dimensions in which we can identify the depth of these profound changes.

Balance of Power: Fundamental Shifts The most important variable in these secular changes is the balance of power among the world’s great powers. This has been shifting for the past 20–30 years, and the gradual changes are now accumulating to represent a qualitative shift in global power. There are many indicators that serve as a proxy for a nation’s strength or power; the most broadly applicable one remains the size of a country’s economy. By this measure, the pace of China’s development over the past 40 years has been dramatic. In 1978, China’s GDP per capita was just US$200; in 2018, it was nearly US$10,000. Particularly in the last decade or so, the speed of China’s economic growth has exceeded all expectations. At market exchange rates, China’s GDP was still less than half of Japan’s in 2005. By 2010, China’s GDP had overtaken Japan’s, and in 2015, it was twice the size. By 2010, China’s GDP had overtaken Japan’s, and in 2020, it was nearly three times as big. Forty years ago, China’s GDP was approximately 6.7% of America’s; by 2018, it was 66.7%. China is quickly closing in on the world hegemon in terms of economic size, and these two countries are pulling steadily further ahead of all other countries. This is the key frame through which we should understand the upcoming fundamental shifts in China–US relations.3 Some Chinese commentators see the two-thirds ratio as a crucial marker that heralds a turn for the worse in the relationship between the world’s two largest economies. China is not the first country to approach two-thirds of US GDP in the 70 years since the end of World War II. The economies of both the Soviet Union and Japan were equivalent to two-thirds of the United States’s GDP at the time. When each of those countries hit the two-thirds ratio, America’s policy posture towards them changed rapidly. In each case, the instruments used were different, as was the ferocity of implementation, but the results can be clearly seen for

2 Ibid. 3 ZHANG Yuyan, ‘Overcoming the Thucydides’s Trap’, World Economic and Politics,

No. 1, p. 1, 2018.

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both countries; in 2018, neither comes close to their former economic strength. Japan’s economy today is less than a quarter of the size of the United States’; Russia’s is just one-fourteenth. This is perhaps one of the reasons why the phrase ‘Thucydides’ Trap’ quickly became known around the world.4

Scientific Progress: A Massive but Unpredictable Factor One of the major components of secular change is fast-paced technological progress. Our technological landscape is changing daily, particularly with the lightning pace of development among Internet and digital technologies. In turn, these new tools drive chain reactions through production, distribution, resource allocation, and employment in every sector. Automation and production lines in the manufacturing sector created a large number of new jobs (for engineers). However, today’s digital technologies and artificial intelligence are likely to destroy jobs without creating new positions. These new problems have motivated a series of important publications from economists including Daron Acemoglu, the author of Why Nations Fail.5 McKinsey estimates that 800 million industrial workers will be replaced by robots by 2030. In theory, almost all jobs could one day be replaced, as the cost of using artificial intelligence continues to fall. While economic globalisation and international foreign policy affect the relative statuses of different countries, the advancement of technology will drive change within each economy, potentially exacerbating income inequality and holding down workers’ wages. In theory, new technologies should increase productivity. However, the reality has proved quite the opposite: in developed economies such as the US, the EU, and Japan, as well as in major emerging economies, the rate of efficiency improvement has continually slowed since the beginning

4 Graham Allison, Destined for War: Can America and China Escape the Thucydides’s Trap? Houghton Mifflin Harcourt, 2017. 5 Daron Acemoglu and Pascual Restrepo, ‘Modelling Automation’, February 2018, NBER Working Paper 24321; ‘Demographics and Automation’, March 2018, NBER Working Paper 24421; ‘The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand’, JEL, March 2019; ‘Automation and New Tasks: How Technology Displaces and Reinstates Labor’, NBER Working Paper 25684.

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of the twenty-first century. The contrast with the massive investment in R&D is stark. This phenomenon has been christened the ‘productivity paradox’ by economists, and it is undoubtedly creating a drag on the world economy. Furthermore, new technologies are starting to fundamentally alter the nature and form of warfare. An article in The Economist explains that digital military technology has led to the emergence of new, digital battle lines.6 Autonomous weapons are being developed and deployed in large numbers, which is changing our traditional understanding of what it means to be a soldier. This technology poses a new set of ethical questions, for example, can a smart weapon be a murderer? Military experts are also discussing ‘grey zone’ conflict, which involves strategic and coercive activities but avoids escalation towards major conflict. In layman’s terms, this involves taking actions where the target cannot precisely identify the aggressor, such as cyber-attacks and propaganda. It is also worth noting that the accelerated networking of the world has greatly affected the international power structure. While the Internet is clearly conducive to decentralisation, it paradoxically awards networkdominating countries such as the US enormous power due to network advantages such as ‘panopticons’ and ‘strike-points’ over other countries. Furthermore, these advantages are not only self-reinforcing but could also be used as a weapon by a network hegemon.7

Individual Interests: Increased Public Awareness One of the obvious results of the spread of the Internet has been a precipitous drop in the cost of communications, a massive expansion in the amount of content transmitted, and a great acceleration of information transmission. This has resulted in much greater access to information, new ideas, and communication. Today, people have a much clearer understanding of their own interests and how to protect their rights. This widespread awareness of personal rights and interests is one of the major forces currently driving changes in diverse societies around the world. 6 Salisbury Plain, ‘Autonomous Weapons and the New Laws of War’, The Economist, January 2019. 7 Henry Farrell and Abraham L. Newman, ‘Weaponized Interdependence: How Global Economic Networks Shape State Coercion’, International Security, Vol. 44, No. 1, pp. 42–79, 2019.

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At the same time, populism and nationalism are rearing their heads on the political stage in certain countries. In Europe, the Italian far-right is growing in strength. In Latin America, Jair Bolsanaro, a ‘Trumpista’, has taken the Brazilian presidency. These movements, which are seen as a worrying trend by observers of world politics, are in part a consequence of the way that digital technology has fragmented social cohesion. The information explosion precipitated by the Internet means that information now flows to users in a constant stream. As a result, they pay much less critical attention to the information they receive, and a new ‘paradox of plenty’ has developed.8 Internet users prefer to see and hear information that suits their own preferences, so various media sources compete by honing their selection algorithms to deliver highly customised data; even fake news can look convincing when it comes from one’s own online contacts. For example, the ‘yellow vest’ movement in France was the inevitable result of class groups only seeing and reading news from within their own grouping, without any exchange or communication across class lines. When the Speaker of the US House of Representatives says, ‘I don’t want to see [Trump] impeached. I want to see him in prison’ the polarisation of American politics and society is plain for all to see. Populist/nationalist parties and politicians taking the reins of power is a reaction by working classes who have been negatively impacted by globalisation and connected by the Internet revolution. Their political successes will accelerate the spread of populism/nationalism around the world. The strength of this global movement will also determine whether the transformation of the current international order is followed quickly by the construction of a new system, or whether a long period of disorder intervenes. Humanity has experienced two major information and networking revolutions: the first was the spread of new knowledge through Europe following the invention of movable type by Gutenberg in the 1440s; the second was the interconnection of humanity in the 1970s after the invention of the computer and the Internet. In The Square and the Tower, Niall Ferguson concludes that the election of Donald Trump, the rise of ISIS, and the 2008 financial crisis, as well as historical shifts such as the French 8 Joseph Nye, ‘American Soft Power in the Age of Trump’, May 6, 2019, https:// www.project-syndicate.org/commentary/american-soft-power-decline-under-trump-by-jos eph-s-nye-2019-05?barrier=accesspaylog.

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and American revolutions and religious reform movements, all occurred during periods of expanding networks.9 The connected world is always in danger of descending into the chaos of anarchy.

Demographics: Crucial but Complex Demographic changes can be analysed as changes in population age and ethnic or racial groupings. The major developed nations are all experiencing some level of population ageing; it is most pronounced in Japan and Europe. Population ageing has also begun in certain developing nations, including China. An ageing population creates numerous connected challenges, such as the sustainability of welfare systems, issues of macro policy, maintaining a balance between savings and investments, and the political attitudes of older people. However, ageing populations are not the only problem; young populations in many emerging economies also present major challenges. In Africa, the Middle East, and India, there has been a population explosion. In some countries, 40–50% of the population are under the age of 25. Such a young population inevitably results in serious youth unemployment. Therefore, a booming population can breed social instability and take a heavy toll on resources. Compared with age-based demographic trends, ethnic or racial population shifts can have a more direct effect on a country’s social cohesion, political stability, and foreign policy. According to a survey report published in November 2017 by the Pew Research Center, the number of Muslim citizens in the EU rose from 19.5 million in 2016 to 25.8 million in 2017, accounting for 4.9% of the EU’s total population.10 Given a moderate rate of immigration growth, this ratio is predicted to increase to 11.2% in 2050; if a high growth rate is maintained, Muslim citizens will account for 19.7% of Germany’s population by 2050. Currently, more than half of babies born in the United States do not have European ancestry. By 2024, half of the population under 20 will be non-white. Given these statistics, it is not difficult to understand the

9 Niall Ferguson, The Square and Tower: Networks, Hierarchies and the Struggle for Global Power, Allen Lane, 2017. 10 https://www.pewresearch.org/fact-tank/2017/11/29/5-facts-about-the-muslimpopulation-in-europe/.

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reason behind the ‘Muslim ban’ that Trump tried to impose soon after he came to power. Frequently, ethnically diverse societies result in the reinforcement of ethnic identity. Eric J. Hobsbawm, in Nations and Nationalism Since 1780, points out that ‘one of the basic features of group or ethnic identity is to determine who the victims and the villains are.’11 In this view, the ‘villains’ are those to be held accountable for ‘our’ suffering. ‘They’ cause the anguish, disappointment, anxiety, and the sense of loss ‘we’ live with as a group. ‘They’ do not belong to the groups of ‘us’; they are strangers, and thus are our enemies. Minority groups that are in constant conflict tend to reject the goodwill and tolerance of other groups. It may even be politically expedient to intentionally identify enemies in order to ensure the in-group’s effectiveness, unify its members, and ensure that these members remain conscious of their unity. In his book The Clash of Civilizations and the Remaking of World Order, renowned American political scientist Samuel Huntington describes extreme situations in which we see the rise of ethnic identity and conflict within one nation, or between nations.12

Post-WWII Dollar Economy: Nearing a Crossroads A new round of diversification, or de-dollarisation, in the world economy has gained momentum and attracted wide attention in recent years. At market exchange rates, the United States represents 22% of the world economy; measured by purchasing power parity, it is 15%. However, the US dollar accounts for half or more of cross-border invoicing, settlements, reserves, liquidity, and funding. In an article titled ‘Trump’s Policies Will Displace the Dollar’, Professor Jeffrey Sachs notes that the United States reaps many benefits from the dollar’s role as a reserve currency.13 For example, it can collect exorbitant seigniorage on dollar reserves, avoid exchange rate risk, easily sell banking services to other countries 11 E. J. Hobsbawm, Nations and Nationalism Since 1780: Programme, Myth, Reality

(Canto Classics), 2nd Edition, Cambridge University Press, 2012, Chapter 6. 12 Samuel Huntington, The Clash of Civilizations and the Remaking of World Order, Xinhua Publishing House, 2010. 13 Jeffrey D. Sachs, ‘Trump’s Policies Will Displace the Dollar’, https://www.projectsyndicate.org/commentary/trump-policies-undermining-the-dollar-by-jeffrey-d-sachs-201 8-9-3.

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worldwide, minimise the cost of financial transactions, affect the pricing of commodities, and exercise significant influence over other countries’ policies, particularly those that use the dollar extensively. The creation of the euro and the increased international use of the renminbi following the 2008 financial crisis both increased diversity in the international monetary system. Many major economies are now even more determined to end their reliance on the dollar as a result of Trump’s trade wars, America’s ballooning budget deficits, and the use of the dollarbased SWIFT settlement system to monitor global financial activities and apply economic sanctions. For example, in 2018, Turkey began to divest its US dollar assets. Iran has announced that it will price its oil in euros rather than dollars. Russia sensed that the dollar was now a risky currency for conducting international transactions, and has started to increase its use of the euro, ruble, and even the renminbi. The Shanghai International Energy Exchange has launched a renminbi-denominated crude future product, and its trading volumes are steadily growing. Meanwhile, China’s Cross-Border Interbank Payment System (CIPS), an international settlement system using the renminbi, has now scaled up beyond its original limited rollout. Furthermore, reforming the international monetary system is a perennial topic at BRICS summits, and the world has seen the establishment of the BRICS Contingent Reserve Arrangement (CRA) and the New Development Bank. This group may well launch its own cryptocurrency. The Instrument in Support of Trade Exchanges (INSTEX) is a highly significant new development. This instrument was set up by the United Kingdom, France, and Germany to enable trade with Iran, and uses the euro to circumvent US sanctions. In an article titled ‘Trump’s Economic War of Choice’, published at the end of 2018, Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK Treasury Minister, wrote, ‘At some point, the dollar’s status as a global means of payment and reserve currency could be challenged.’14 The international monetary system is a large, complex force. Its actions directly impact the international status of the US dollar, one of the pillars of US hegemony. However, it also plays a role in global economic stability and long-term growth and is directly

14 Jim O’Neill, ‘Trump’s Economic War of Choice’, Lianhe Zaobao, December 15, 2018.

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implicated in the fate of digital currencies, such as Diem (formerly Libra), issued by technology giants.

Multilateral System: Time for Dissolution and Reconstruction One of the symptoms of secular change will be the dissolution and reformation of the existing multilateral order. The Trump administration withdrew the United States from the Paris Agreement, the Trans-Pacific Partnership (TPP), and the UN Human Rights Council; it terminated the Iran nuclear accord and the Intermediate-Range Nuclear Forces (INF) Treaty; the Trump administration also considered leaving the World Trade Organization, and has sharply attacked NATO and even the UN. Under Trump, the United States appeared to be voluntarily abandoning the post-war international order that it so painstakingly built. There are some who locate the causes of the transformation of the current order in the failure of the United States’s democratic system and its consequent decline, the swift rise of China, and the revival of Russia. However, from the perspective of liberal theories—still the dominant school in international relations—the formation of international alliances is a crucial pillar in the story of America’s success. Trump’s unilateralism and protectionism threatened to destroy this success.15 From an economic perspective, trade wars have no winners (at least in the short to medium term). Because of this, many have said that Trump’s behaviour was irrational, but his policies did have their own internal logic. Over the last 40 years, American GDP per capita has risen by more than US$50,000. One of the primary drivers of this growth has been China’s enthusiastic engagement with the process of globalisation, despite the fact that it was dominated by developed nations. Supporting globalisation effectively means supporting the international system that has been carefully planned and constructed by the United States since World War II. The underlying cause for America’s abandonment of an international system that has massively benefitted it is the rise of a new power: China.

15 Fareed Zakaria, ‘The Self-Destruction of American Power: Washington Squandered the Unipolar Moment’, Foreign Affairs, July/August, Vol. 98, No. 4, 2019.

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China is threatening America’s dominant position within the global order. Size is a unique and vital factor in the rough-and-tumble of international relations. Major powers seek not only an economic edge over other countries but also political superiority. The fundamental difference between international politics and economics is that, in economic terms, you can choose to align and seek shared benefits for all; in international politics, you always seek to put the greatest possible distance between yourself and your competitors. The worsening global situation has highlighted a global governance deficit, which shows an objective and pressing need for major improvements in the international order. Our planet’s environment is one of the aspects most overlooked by global governance. According to the IUCN Red List 2018 update, of the 100,000 species assessed, more than 28,000 species are threatened with extinction (i.e. 28%).16 Since 1970, the number of vertebrates on the planet has decreased by 60%; only 30% of the original bluefin tuna population still exists because of overfishing in the Pacific Ocean. Studies have also shown that the current species extinction rate is 100–10,000 times the normal rate. If humanity refuses to take collective action and stop mass extinction, then the very existence of humanity will be threatened because of the collapse of the food chain. Despite the fact that the multilateral order has started to disintegrate, new ideas for global governance are continually emerging. The gradual institutionalisation of the Belt and Road Initiative launched by China can be seen as a representative example of a new approach to international order-building.

The United States: A Superpower in Decline Charles Calomiris writes that the 2008 financial crisis in some senses revealed how ossified US systems have become, and the severity of the damage that this inflexibility can cause.17 In the United States, financial crises and credit scarcity are not randomly distributed, but are the result of political competition and negotiations. Additionally, the banking system is an outcome of political horse-trading. The interests of various stakeholders in the political process determine how banking policy is shaped,

16 The IUCN Red List of Threatened Species 2018: https://www.iucnredlist.org. 17 Charles Calomiris, Fragile by Design, Princeton University Press, 2014.

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including all aspects from the issuing of banking licenses to the parameters of branches, the allocation of credit, regulatory arrangements, and banking relationships. In America, Compromised, Lawrence Lessig is concerned not with assigning blame to individual villains, but with how American institutions foster corruption and ultimately create harmful outcomes.18 He sees institutions in the financial, legal, media, healthcare, and research sectors as all being corroded by the wrong standards and incentives. In turn, they corrode other industries. That is, problems are structural rather than deriving from the selfish behaviour of specific actors. Furthermore, Steven Brill argues that: The First Amendment became a tool for the wealthy to put a thumb on the scales of democracy. America’s rightly celebrated dedication to due process was used as an instrument to block government from enforcing job-safety rules, holding corporate criminals accountable, and otherwise protecting the unprotected. Election reforms meant to enhance democracy wound up undercutting democracy. Ingenious financial and legal engineering turned our economy from an engine of long-term growth and shared prosperity into a casino with only a few big winners … lobbyists were able to get riders or exemptions worth billions inserted into [almost all] legislation … the country [has been split] into two classes: the protected and the unprotected. The protected overmatched, overran and paralyzed the government. The unprotected were left even further behind … voter turnout … and respect for basic institutions, especially the government – are far below what they were … For adults in their 30s, the chance of earning more than their parents dropped to 50% from 90% 40 years ago.19

Nepotism is also much more widespread in the United States than is commonly imagined. An article in The Economist reported that the son of a state governor was 600 times more likely than an average male baby boomer of becoming a governor; the son of a senator was 8,500 times more likely to become a senator than an ordinary person.20

18 Lawrence Lessig, America, Compromised, University of Chicago Press, 2018. 19 Steven Brill, ‘How Baby Boomers Broke America’, The Times, May 28, 2018. 20 Cover Story, ‘Dynasties: The Power of Families’, The Economist, April 18, 2015.

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Many signs show that the United States is on the way to becoming a country with high welfare expenditure; a large majority of Americans support increased welfare spending. If the health insurance that is not currently paid for by the government was added, then total US government expenditures would amount to 48% of the country’s GDP— virtually the same level as Sweden, the poster child of European welfare states. Many worry that this could put a permanent squeeze on America’s capacity for growth. Despite the recent run of 122 straight months of positive GDP growth—breaking the previous record set between 1991 and 2001—this period has only seen a growth of 25%. This is far lower than the 43% total growth achieved between year–year.

Increasing Tension: Confinement and Countermeasures ‘Power politics’ traditionally refers to the jockeying of major powers for advantage, which sometimes includes the ruthless subjugation of another country, even at one’s own expense. Many of the reasons for the secular changes occurring today can be boiled down to a single one: China’s rapid development of its own high-tech industries. However, China–US relations have not yet begun a new cold war. During the Cold War, the United States’s posture towards the Soviet Union was one of isolation and containment. To the greatest extent possible, it avoided any trade or private engagement with the Soviet Union and its allies. Ultimately, this forced the Soviet Union into a spiral of inefficiency, which gradually stifled it. During the Cold War and for the following decade or more, America’s policy towards China was one of engagement. At its core was the aim of drawing China into the America-dominated international system to induce it to take on certain obligations, and thus to influence China itself. Though there are now voices in America calling for disengagement with China, and ultimately a new policy of containment, the United States would find it almost impossible to truly isolate China and, in fact, it does not need to do so. It would be impossible because isolating China would require coordinated action by all of the world’s major economies and a large number of developing economies. Furthermore, even if this was possible, it would be ineffective because the threat posed by China towards the United States and other developed nations comes from the

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possibility of overtaking them in high-tech sectors, not from the low-end competition. The vital core of US policy towards China is to continue enjoying the benefits of having China occupy the low end of global value chains in manufacturing, while preventing China from catching up in hightech sectors, particularly in digital technologies. This fundamental policy towards China can be described using a single, simple word: confinement.21 There are two goals of this confinement policy: one is to use international rules to limit China’s ability to act in high-tech sectors; the other is to lock China into the low end of global supply chains, and to maintain or even widen the technological gap between China and the United States. The United States’s frequent application of its own internal laws to its trade partners is motivated mainly by the fact that the current multilateral system is not constraining China as America would like it to. The most obvious example is the 301 Report published by the US Trade Representative in March 2018.22 This report focused entirely on technology-related questions, including alleged issues of technology theft, forced technology transfer, and intellectual property protection. The same objective motivated the joint statement issued by the US, EU, and Japan, calling for a reform of WTO rules and demanding transparency from the Chinese government on subsidies. As Bloomberg News reported in an article titled ‘Tech Cold War Will Force World to Choose’ on 26 May 2019, ‘the digital Iron Curtain will force political leaders to decide whether they’re Team China or Team America.’23 In other words, the tussle between the United States and China, as they attempt to confine and break the bonds created by the other, has become a contemporary form of Thucydides’ trap, and the rest of the world is already feeling the impact.

21 Zhang Yuyan and Feng Weijiang, ‘From Contact to Confinement: Four Prospects of

the U.S. Strategic Intention towards China and the Bilateral Game’, Tsinghua Financial Review, No. 7, 2018. 22 Refer to: https://ustr.gov/issue-areas/enforcement/section-301-investigations/tar iff-actions. 23 Tim Culpan, ‘The Tech Cold War Has Begun’, https://www.bloomberg.com/opi nion/articles/2019-05-20/huawei-supply-freeze-points-to-u-s-china-tech-cold-war.

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Constants Hold True Amid Secular Change There are always constants within change; constancy holds the seeds of change. The explosion of the first atomic bomb instantly changed the course of human history. In Why the West Rules —For Now, Ian Morris observes that neither great individuals nor ‘bungling idiots’ can change the course of history.24 At most, they can accelerate or slow the turning of its wheels. However, after 1945, in the era of the atomic bomb, political leaders were able to change history. In the past, the consequences of any human error would be restricted to the decline or collapse of a particular community. Now, we have the capacity to commit errors that would bring about the end of our species. Since then, we have remained firmly in the nuclear age, which is a constant among the current widespread changes. The Stockholm International Peace Research Institute (SIPRI) estimates that there are now over 15,850 nuclear warheads worldwide.25 The United States and Russia have approximately 6,550 and 6,850, respectively. This is sufficient to destroy all of humanity ten times over, and means that humankind continues to live in the shadow of death. The continued existence of nuclear weapons places a hard upper limit on any conflict between the US, Russia, and China because an all-out war between nuclear powers would undoubtedly result in the destruction of humanity. Another constant is that interdependence between nations is at an all-time historical high. This interdependence is seen in the high levels of national specialisation and deep trade links spanning the globe. In an article titled ‘Five Myths about Globalization’, Steven Altman offers evidence that globalisation—measured based on flows of trade, capital, information, and people—rose to a record high in 2017.26 The world is bound closely together in global chains of supply and value. While it is still true that the ‘systems integrators’27 who occupy the very highest links of the value chain are mainly to be found in North America, Europe, and Japan, the cost of disengagement between the major developed and 24 Ian Morris, Why the West Rules—For Now, CITIC Press Group, 2011. 25 SIPRI Yearbook 2018, https://www.sipri.org/yearbook/2018. Besides the U.S. and

Russia, France has listed No. 3 with 300. 26 Steven Altman, ‘Five Myths About Globalization’, Washington Post, February 12, 2019. 27 Peter Nolan, Is China Buying the World?, Polity, 2013.

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developing nations has risen to a level that the world could not afford. Worldwide, the benefits of global trade have helped dampen the inevitable public and political backlash within each country and tend to cancel out any anti-globalisation movements. Overall, there has been no reversal of globalisation, at most, there has been a temporary hiccup in its progress. Economic globalisation is a major historical process that does not always proceed serenely and smoothly. Its path is inevitably winding and bumpy. The Trump administration, with its unilateralism, protectionism, and hectoring tone, was just one manifestation of the twists and turns of globalisation.

Looking Back a Century Hence In a hundred years time, when future historians look back on this particular period of the human experience, they are likely to see this moment of secular change as one step in the rise of the East, particularly China, and the West’s ongoing response to it, led by the United States. They will see two major powers, China and the United States, one swiftly rising, one still holding on to a slightly tired superpower status; one grasping for global status to match its strength, the other reluctant to share power with any other state; one driven by the deep Eastern social and political traditions, the other a product of Western enlightenment and Christian inspiration. It is only natural that two such powers should bump heads, rub against each other, even find themselves in collision and conflict. However, from another perspective, we can clearly see that many of the global issues that humanity faces require the world’s two biggest powers to work together. These two largest stakeholders in the common affairs of humanity must jointly take responsibility to meet our challenges. The necessary first step on this path is for both China and the United States to apply their wisdom and courage, and to resolve their misunderstandings, tensions, and conflicts.

China–US Competition and the Staged Attributes and Goals of the Belt and Road Initiative Cheng Gao

The Belt and Road Initiative (BRI), in its sixth year, has yielded initial results. However, differences and ambiguities still persist in academic and policy circles on the BRI’s essential issues, including its attributes and goals. Based on these nascent outcomes, the BRI could be advanced in a more targeted, effective manner after discussing and giving clearer answers to fundamental questions. Established in the ultimate aspiration of rejuvenating the Chinese nation, this paper studies the BRI from the angle of alleviating the primary dilemma facing China by analysing indepth the main external environments that affect the global landscape and China’s rise, especially China–US relations and the US-led international system. This approach facilitates breaking away from interdisciplinary, interdepartmental biases and differences to make an objective, prudent judgement on the fundamental attributes and goals of the BRI.

The Chinese text of this paper was originally published in World Economics and Politics, Issue 4, 2019. C. Gao (B) Chinese Academy of Social Sciences, Beijing, China

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_4

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The Questions No consensus or conclusion has been reached on the BRI’s core issues, namely its attributes and goals since it was proposed. Is the BRI an economic policy or a strategic deployment? Is it an economic or political goal? Is it mainly an economic instrument to support the realisation of strategic aims, or a non-economic instrument to serve economic interests? How do the different levels of interests rank and compare with each other? These questions have no clear answers. Diverse fields and policy sectors have their own interpretations of the above questions. Theoretically, existing research on the BRI covers a wide range of disciplines including the humanities, the social sciences, and the natural sciences, among which the most relevant and most closely discussed are economics and international relations (IR). It is difficult for economics and IR scholars to reach a consensus on the BRI’s attributes and goals from their own respective views. In terms of policy practice, different policy implementation departments—influenced by their business scope and thinking inertia—make their own interpretations of the nature and positioning of the BRI, and promote the BRI on such a basis. Failure to clarify these issues in terms of doctrine and policy may deviate the BRI’s development from its original intent of being a top-level design, and hardly foster synergy in the process of promotion. Numerous departments may be in conflict with each other in their respective practices, offsetting the implementation effect of the BRI. Economics scholars have mainly explored the BRI at the micro level. They usually perceive the BRI a priori as a purely economic issue and see it as a policy instrument that serves China’s cooperation in foreign trade, finance, investment, and industry, and assists Chinese enterprises in earning money abroad. These scholars either address specific issues in specialised fields such as industry, trade, finance, technology and energy,1 1 Wei Long and Wang Lei, ‘From Embedding Global Value Chains to Leading Regional Value Chains: The Economic Feasibility Analysis of the Belt and Road Strategy’, Journal of International Trade, Issue 5, 2016, pp. 104–115; Peng Peng and Li Jiayi, ‘OFDI and Bilateral Moving Up in the Global Value Chain: An Empirical Study on the Belt and Road Initiative’, Industrial Economics Research, Issue 6, 2018, pp. 75–88; Li Yujuan, ‘Research on the Foreign Development of China’s Cultural Industry under the Belt and Road Strategy’, Reformation & Strategy, Issue 6, 2017, pp. 67–69; Chen Hong and Yang Chengyu, ‘Study on International Economic Effects of the Belt and Road National Strategy Based on the CGE Model’, Journal of International Trade, Issue 10, 2015, pp. 4–13; Zhao Jiayan, ‘China’s Foreign Trade and Foreign Investment and Financing under the Belt and

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or focus on China’s economic cooperation with certain regions and countries,2 mostly examining only a small part of the BRI. IR scholars have focused more on macro-level issues pertaining to the BRI and have primarily considered it as a policy platform to serve China’s diplomatic layout and strategy implementation. The content of their work either centres on a certain macro issue area, such as global and regional governance, international security, foreign aid, and international organisations,3 starting from the perspective of specific countries and regions4 or Road Strategy’, Reformation & Strategy, Issue 6, 2017, pp. 186–188; Song Shuang and Wang Yongzhong, ‘China’s Financial Support for the Belt and Road Initiative: Characteristics, Challenges and Policy Implications’, International Economic Review, Issue 1, 2018, pp. 108–123; Ding Yifan, ‘Let Financial Innovation Pave the Road for the Belt and Road Strategy’, International Economic Review, Issue 4, 2015, pp. 35–38; Zhou Wuqi, ‘The Direct Investment Distribution along the Belt and Road and Its Challenges’, Reform, Issue 8, 2015, pp. 39–47; Xu Qiyuan, Yang Panpan and Xiao Lisheng, ‘Building of Investment and Financing Mechanism for the Belt and Road Initiative: How China Can Participate More Effectively’, International Economic Review, Issue 5, 2017, pp. 134–148; Zhang Zhongyuan and Shen Minghui, ‘Building of Financing Mechanism for the Belt and Road Initiative–Bond Financing as an Example’, Asia–Pacific Economic Review, Issue 6, 2018, pp. 5–14. 2 Xie Guo’e, Xu Yaojia and Yang Fengmin, ‘Comparative Study on Investment Environment of Southeast Asia and Central and Eastern European Countries in the Context of the Belt and Road’, World Economy Studies, Issue 11, 2018, pp. 89–98; Gu Heqiang, ‘The Belt and Road and the Development of China-ASEAN Economic and Trade Relations’, Southeast Asian Studies, Issue 1, 2018, pp. 115–133; Xie Xiangwei and Gong Xiuguo, ‘Exploration of China-India Capacity Cooperation in the Context of the Belt and Road’, South Asian Studies, Issue 4, 2018, pp. 112–153. 3 Qin Yaqing, ‘A New Global Governance Perspective and the Practice of the Belt and Road Cooperation’, Foreign Affairs Review, Issue 2, 2018, pp. 1–14; Chen Weiguang and Wang Yan, ‘Building the Belt and Road Together: An Analytical Framework Based on Relationship Governance and Rule-based Governance’, World Economics and Politics, Issue 6, 2016, pp. 93–112; Zhang Wenmu, ‘Grasping China’s Maritime Security as a Whole: Security Assurance, Key Links and Power Allocation of the Western Pacific Route of the Maritime Silk Road’, Journal of Contemporary Asia–Pacific Studies, Issue 5, 2015, pp. 88–106; Qi Kai and Liu Le, ‘Maritime Security and China’s Role in the Construction of the 21st Century Maritime Silk Road’, Journal of Contemporary Asia–Pacific Studies, Issue 2, 2017, pp. 132–155; Bai Yunzhen, ‘The Belt and Road Initiative and China’s Foreign Aid Transformation’, World Economics and Politics, Issue 11, 2015, pp. 53–71; Liu Jianwen, ‘Foreign NGOs and China’s International Regional Cooperation in the Context of the Belt and Road’, Foreign Affairs Review, Issue 5, 2016, pp. 1–30; Tang Xiaosong and Zhang Zichu, ‘China’s Public Diplomacy to the Neighboring Countries along the Belt and Road’, Teaching and Research, Issue 6, 2016, pp. 50–58. 4 Zhang Ji and Chen Zhimin, ‘China-EU Cooperation under the Belt and Road Initiative: from a Two-level EU Perspective’, World Economics and Politics, Issue 11, 2015,

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embarks on a macro strategy and top-level diplomatic design.5 Compared with relevant economics research, the study of the BRI in the field of IR features a broader vision. pp. 36–52; Niu Xinchun, ‘China’s Middle East Strategy under the Belt and Road Initiative’, Foreign Affairs Review, Issue 4, 2017, pp. 32–58; Bi Haidong, ‘Geopolitical Risks Facing the Belt and Road in Southeast Asia and China’s Policy Choices’, Journal of Strategy and Decision Making, Issue 2, 2016, pp. 54- 68; Jiang Longfan, ‘The Crisis Management from the Perspective of Belt and Road Initiative and the Construction of Security Cooperation Mechanism in Northeast Asia’, Northeast Asia Forum, Issue 3, 2018, pp. 45–58; Liu Zuokui and Chen Siyang, ‘The Risks of the Belt and Road Initiative in the Construction of the Eurasian Economic Corridor’, International Economic Review, Issue 2, 2017, pp. 28–35; Jiao Yiqiang, ‘From Cognitive Differences to Cooperative Consensus: A Study on the Cooperation of China-Russia “One Belt, One Alliance”–Based on Asymmetric Interdependence’, Journal of Contemporary Asia–Pacific Studies, Issue 4, 2018, pp. 51–85; Ouyang Xiangying, ‘Russia and China: Dislocation and Docking–Problems and Ways Out in the Docking with “One Belt, One Alliance”’, International Economic Review, Issue 2, 2017, pp. 49–61; Kon Serayshkin, ‘The Concept of the Silk Road Economic Belt and Its Impact on Central Asia’, Russian, East European and Central Asian Studies, Issue 4, 2015, pp. 13–24; Ye Hailin, ‘Modi’s Attitude Towards China, “Issue Diplomacy” and the Prospect of India’s Participation in the Belt and Road Initiative: The Belt and Road Initiative and South Asia’, Contemporary Asia–Pacific Studies, Issue 6, 2017, pp. 24– 47; Ye Hailin, ‘India’s Policy Regarding South Asia and Its Impact on China’s Pushing Forward of the Belt and Road Initiative’, Indian Ocean Economic and Political Review, Issue 2, 2016, pp. 4–15; Lin Minwang, ‘Indian Perceptions of the Belt and Road and China’s Policy Choices’, World Economics and Politics, Issue 5, 2015, pp. 42–57; Tu Bo, Jin Taiwan and Zhang Yuan, ‘On India’s Strategic Dilemma under China’s Belt and Road Initiative: “Marginal Man” as Theoretical Basis’, Journal of Contemporary Asia–Pacific Studies, Issue 6, 2017, pp. 48–66; Zhu Cuiping, ‘Strategic Directions for the Belt and Road Initiative in South Asia: Geo-politics, the Difficulty of India and Possible Paths for Progress’, South Asian Studies, Issue 2, 2017, pp. 1–28; Li Xiao, ‘India’s Dilemma in the Implementation of the Belt and Road Strategy–The Dilemma and Countermeasures of Chinese Enterprises to Invest in India’, International Economic Review, Issue 5, 2015, pp. 19–42. 5 Men Honghua, ‘Strategic Thinking on the Belt and Road Rule-making Power’, World Economics and Politics, Issue 7, 2018, pp. 19–40; Zhou Fangyin, ‘Risks and Challenges Facing the Belt and Road Risks and its Response’, International Review, Issue 4, 2015, pp. 61–72; Chu Yin and Gao Yuan, ‘China’s Belt and Road Initiative: Three Questions To Be Answered’, International Economic Review, Issue 2, 2015, pp. 90–99; Wang Junsheng, ‘The Belt and Road and China’s Peripheral Strategy in the New Period’, Shandong Social Sciences, Issue 8, 2015, pp. 50–56; Xue Li, ‘Diplomatic Risks Facing China’s Belt and Road Strategy’, International Economic Review, Issue 2, 2015, pp. 68–79; Du Zheyuan, ‘The Belt and Road and the Construction of China’s Peripheral Tri-Ring Diplomacy System’, Southeast Asian Studies, Issue 1, 2018, pp. 48–64; Theresa Fallon and Zhang Xiaotong, ‘The Belt and Road and Geopolitical Theory Innovation’, Foreign Affairs Review, Issue 3, 2016, pp. 1–24; Zhou Qiang, Yang Yu, Liu Yi, and Zhai Kun, ‘Progress and Prospects of China’s Belt and Road Geopolitical Research’, World Regional Studies,

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On the whole, when interpreting and studying the BRI, the two disciplines focus on their respective fields and thus lead to differences. Pure economics research often overlooks the globality of the BRI as a toplevel design, while pure IR research tends to highlight the BRI’s strategic necessity and long-range plan, leaving insufficient attention to the feasibility and cost analysis of China’s advancement of the BRI at a particular stage. In reality, the construction of the BRI will necessarily involve interactions between economic demands and non-economic interests (such as diplomacy and strategy); this requires a comprehensive, balanced consideration of research at both the micro and macro levels. However, in some interdisciplinary policy circles, economics and IR scholars often see the relationship between the BRI’s economic and strategic goals and strategies as opposing—or even negating—each other. No single field or perspective is sufficient for the BRI’s advancement, so disciplinary boundaries and perspective limitations should be broken in scrutinising the BRI. In recent years, many economics and IR studies have analysed the BRI from a strategic, macroeconomic angle, covering vital, cross-cutting economic issues that the BRI cannot avoid at the strategic level, such as global and regional production networks, regional cooperation, the internationalisation of China’s currency (the RMB), and the comprehensive measurement of the BRI.6 These studies’ findings also

Issue 6, 2018, pp. 1–10; Ling Shengli, ‘The Belt and Road Strategy and the Remodeling of Periphery Geopolitics’, Journal of International Relations, Issue 1, 2016, pp. 79–91; Zhao Yang, ‘Analysis of the Institutional Competition between China and the United States–Taking the Belt and Road as an Example’, Journal of Contemporary Asia–Pacific Studies, Issue 2, 2016, pp. 28–57; Chen Xiaoding and Ma Ru, ‘Shanghai Cooperation Organization’s Roles and Path Options in the Construction of the Silk Road Economic Belt’, Journal of Contemporary Asia–Pacific Studies, Issue 6, 2015, pp. 63–81. 6 Feng Yongqi and Huang Hanting, ‘Level of the Dependence of Countries Along the Belt and Road on the Chinese Product Market and China’s Policies’, Journal of Contemporary Asia–Pacific Studies, Issue 3, 2017, pp. 128–156; Piao Guangji, ‘Belt and Road Initiative and East Asia’s “Westward Expansion”: A Perspective of Asia’s Construction of Regional Economic Growth Mechanism’, Journal of Contemporary Asia–Pacific Studies, Issue 6, 2015, pp. 37–62; Yang Yishuang, ‘A Leap Forward Development: The 21st Century Maritime Silk Road and Expanding Boundaries of Asian Production Networks’, Journal of Contemporary Asia–Pacific Studies, Issue 1, 2017, pp. 26–43; Li Xiangyang, ‘The “Absence” of Asian Regional Economic Integration and the Development Orientation of the Belt and Road’, Social Sciences in China, Issue 8, 2018, pp. 33–43; Li Xiangyang, ‘The Belt and Road Initiative: Regionalism or Multilateralism’?, World Economics and Politics, Issue 3, 2018, pp. 34–46; Li Xiangyang, ‘A Comparative Study of TPP and the Belt and Road Initiative’, World Economics and Politics, Issue 9, 2016,

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contain global economic strategic thinking, such as on the transformation of China’s economic diplomacy based on the practice of the BRI,7 and cross-disciplinary research in the framework of the BRI.8 These studies

pp. 29–43; Li Xiangyang, ‘Relations To Be Prioritized in China’s Belt and Road Initiative’, International Economic Review, Issue 1, 2015, pp. 54–63; Li Xiangyang, ‘On Diversified Cooperation Mechanisms of the Maritime Silk Road’, World Economics and Politics, Issue 11, 2013, pp. 4–17; Sheng Bin and Guo Ting, ‘The Belt and Road Initiative and APEC Regional Economic Cooperation’, Asia–Pacific Economic Review, Issue 2, 2017, pp. 5–10; Zhu Caihua and Han Jianfu, ‘The Current Situation of FTAs along the Belt and Road and China’s FTA Strategy’, Asia–Pacific Economic Review, Issue 4, 2015, pp. 44–50; Lin Lefen and Wang Shaonan, ‘The Construction of the Belt and Road Initiative and the Internationalization of the RMB’, World Economics and Politics, Issue 11, 2015, pp. 72–90; He Fan, Zhu He and Zhang Qian, ‘The 21st Century Maritime Silk Road: Current Situation, Opportunities, Challenges and Countermeasures’, International Economic Review, Issue 5, 2017. pp. 116–133; Lu Feng, Li Xin, Li Shuangxiang, Jiang Zhixiao, Zhang Jieping and Yang Yewei, ‘Why China? The Economic Logic behind the Belt and Road Initiative’, International Economic Review, Issue 3, 2015, pp. 9–34; Piao Guangji, Guo Xia, and Li Fang, ‘Political Mistrust and Paths for Energy Cooperation, The Belt and Road Initiative and Regional Energy Cooperation in Northeast Asia’, Journal of Contemporary Asia–Pacific Studies, Issue 2, 2018, pp. 68–91; Gu Chunguang and Zhai Kun, ‘The Belt and Road Trade and Investment Index: Progress, Challenges and Prospects’, Journal of Contemporary Asia–Pacific Studies, Issue 6, 2017, pp. 4–23. 7 Song Guoyou, ‘The Strategic Concept of the Belt and Road and the New Develop-

ment of China’s Economic Diplomacy’, International Review, Issue 4, 2015, pp. 22–34; Gao Cheng, ‘Strategic Nature of the Belt and Road from the Perspective of China’s Economic Diplomatic Transformation’, International Review, Issue 4, 2015, pp. 35–48; Sun Can and Hong Yongsheng, ‘The Belt and Road Initiative in the International System: From the Perspective of the Balancing Tactics used in China’s Economic Diplomacy’, Foreign Affairs Review, Issue 6, 2016, pp. 1–21; Huang Yiping, ‘China’s Belt and Road Initiative in the New Strategy of Economic Diplomacy’, International Economic Review, Issue 1, 2015, pp. 48–53. 8 Li Xiao and Li Junjiu, ‘The Belt and Road Initiative and China’s Geopolitical and Economic Strategy Reconstruction’, World Economics and Politics, Issue 10, 2015, pp. 30– 59; Wu Zelin, ‘Functional Logic of the Belt and Road Initiative: A New Interpretation Based on Geo-Economics’, World Economics and Politics, Issue 9, 2018, pp. 128–153; Feng Weijiang, ‘Analysis from International Political Economy on the Silk Road Economic Belt Strategy’, Journal of Contemporary Asia–Pacific Studies, Issue 6, 2014, pp. 73–98; Zhong Feiteng, ‘The Belt and Road, New Globalization and Great Power Relations’, Foreign Affairs Review, Issue 3, 2017, pp. 1–26; Sun Yiran, ‘AIIB’s Belt and Road and China’s View of International Order’, Foreign Affairs Review, Issue 1, 2016, pp.1– 30; Fu Yuheng and Li Yiping, ‘The Belt and Road Initiative in the Structural Crisis of the Capitalist World System: Reflections on the Changes in Asian Order and China’s Experience of Modern State Building’, Journal of Contemporary Asia–Pacific Studies, Issue 4, 2017, pp. 4–38; Huang He, ‘The Belt and Road: from a Perspective of Public Goods’, World Economics and Politics, Issue 6, 2015, pp. 138–155.

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reflect a comprehensive, interdisciplinary view in the investigation of the BRI, and provide inspiring reflections on the reference and coordination among various disciplines and policy areas. The BRI was included in the Constitution of the Communist Party of China (CPC), as well as in the report at the 19th CPC National Congress as a major national long-term policy. The BRI is a comprehensive, crossdisciplinary, top-level design that aims to rejuvenate the Chinese nation, to drive the shared growth of China and countries along the BRI’s route, and to establish a new international order that is just and reasonable. As a long-term national policy, the BRI is a global plan for coordination among the economy, politics, diplomacy, the military, the culture of central and local governments, business, and society. It is only in this way that the BRI can take on the special mission given to it by the CPC’s Central Committee. The realisation of such an ambitious vision requires promotion in stages; moreover, there are different core issues and strategic choices to be addressed at each stage. The BRI was born out of shifts in the international environment and offers an innovative model for China’s economic and diplomatic transformation in the twenty-first century. The determination of its staged attributes and goals is also based on the said background and constraints of the times. However, before clarifying its attributes and goals, we must define the current phase of China’s rise, China’s relationship with the USled international system, as well as the primary scenarios, strategic options, and general trends that China faces in such a relationship. By placing the BRI’s construction in the context of China’s economic rise, this paper discusses how China—which is in a development dilemma designed by the United States and the US-led international system—should perceive the BRI’s staged attributes and goals from both strategic and economic angles, how to choose its economic advancement strategy around the goals, how to determine the limits and priorities of implementing the BRI’s policy, and how to harness the BRI in protecting China from US influence and the US-led international system in the medium term. Next, this paper attempts to propose policies for making the BRI a pillar to support the stability around China in the long run. The rest of the paper is structured as follows: Part II examines the trajectory of China’s rise and China’s relationship with the US-led international system. Part III focuses on the main dilemmas facing China at this stage in the context of the US-China game, summarises the four scenarios of economic competition between major countries throughout

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history, and points out China’s current strategic choices and policy risks. Part IV discusses the BRI’s staged attributes, the positioning of economic and strategic goals and their interrelationships, and the limits and priorities of the paradigm concept, an organisational model, content limitations, geographic expansion, and promotion methods.

China’s Rise and Relationship with the US-Led International System The international situation and US–China relations have become clearer since Xi Jinping proposed construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road in 2013. To discuss the relationship between the BRI’s current economic and non-economic goals, and to assess its functions and effectiveness, two questions need to be answered: (1) In which stage is China’s present development? (2) How is the relationship between the BRI and the established US-led international system? (I) China is in the Initial Stage of its Rise China’s economic scale is 63% that of the United States by standard gross domestic product (GDP).9 However, economic aggregate alone cannot be used as a basis for judging the stage of a major country’s rise. In the late nineteenth and early twentieth centuries, Germany’s economic scale nearly equalled that of Britain, then the world’s dominant power, while the United States surpassed Britain as the world’s leading industrial power in the 1890s, and its economic scale was nearly twice that of Britain in the early twentieth century.10 At that time, structural contradictions determined the Anglo-German conflict and the process of power transfer on the verge; the United States could continue to ‘bide its time’

9 For data source, see World Bank, https://data.worldbank.org/indicator/NY.GDP. MKTP.CD?locations=CN&name_desc=false&view=chart, accessed on 17 March 2019. 10 H.N.Scheiber, H.G.Vatter and H.U.Faulkner, trans. Peng Songjian et al., American Economic History, Beijing: China Social Sciences Press, 1983, pp. 10–13, 32. For a comparison of relevant data, see Angus Maddison, The World Economy, Volume 2, Historical Statistics, Paris: OECD, 2007, pp. 426–427, p.465.

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in the established international system.11 Although their economic aggregates reached 50%–60% that of the United States after World War II,12 the Soviet Union and Japan were at completely different stages of development. The Soviet Union was a polar opposite in the world’s bipolar landscape, while the United States stopped Japan in its tracks at the beginning of its economic rise. Therefore, economic scale is only one indicator of a major country’s rise; a nation’s stage of development must be judged in combination with other, more important factors, on which basis its foreign policy priorities could be determined. Both the Soviet Union after World War II and Germany before World War I enjoyed a relatively independent position in the global economic system. The Soviet Union, in its heyday, when its economic scale was closest to that of the United States, had an independent international security, political, and economic system anchored by the Warsaw Pact and the Council for Mutual Economic Assistance against the US-led system. Before World War I, Europe was Germany’s primary market. As its economic power expanded, Germany attempted to consolidate its own international economic system abroad. Even though Germany failed to 11 See Gao Cheng, ‘Market Expansion and Grand Strategy of Rising Powers’, Quarterly

Journal of International Politics, Issue 3, 2011, pp. 1–43. 12 The heyday of the Soviet economy, which was closest in scale to the U.S., was in the mid-1970s. The Soviet Union’s economic data at the time could only be estimated in combination with different versions of data, since statistics were not fully disclosed to the public and were of a different caliber compared to Western countries. According to the World Bank, the Soviet Union’s GDP in the 1970s was about 50% of that of the U.S., while according to the Soviet Union’s Central Statistical Office, its economic aggregate was about 70% that of the U.S., and peaked at 78% in 1975. In terms of compromise, the Soviet Union’s GDP in its economic heyday was roughly 60% that of the U.S. See the editorial team’s comments in Foreign Economic Statistics: 1949–1978 (Beijing: China Statistics Press, 1981, p. 14; ‘National Accounts–Analysis of Main Aggregates (AMA)’, https://unstats.un.org/unsd/snaama/Index, accessed on 31 March 2019). It is commonly believed that the heyday of the Japanese economy was in the mid-1980s, around the signing of the Plaza Accord. According to the International Monetary Fund (IMF), Japan’s economic aggregate was closest to that of the U.S. in 1995, when its GDP was 71% of the U.S.’s GDP. However, in the decade following the signing of the Plaza Accord in 1985, the Japanese yen was forced to continue to appreciate, and Japan’s economic scale was grossly overestimated. From the 1980s until the signing of the Plaza Accord, Japan’s economic scale was in fact significantly underestimated, even though IMF data show that its GDP was only about 40% that of the U.S. at the time. In terms of balance, Japan’s true economic scale was reasonably estimated at more than 50% that of the U.S. in the mid-1980s.

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fully succeed, Germany had more strategic and tactical options than China does today. In contrast, China’s intervention and gaming in core regions and central international politics have not yet reached the level of Germany at the end of the nineteenth century (not to mention that of the Soviet Union during the Cold War). The competition for power, especially for leadership, between China and the United States in IR in the realism sense, has not yet been placed on the agenda. The traditional core area of competition for leadership is comprised of military security and the alliance system, and the gap between China and the United States is even greater than that between Russia and the United States based on the strength of this area and the ability to use such strength. Russia, the world’s only super nuclear military power that can guarantee mutual destruction of the United States, has military bases in Central Asia and the Middle East, and quasi-allies in Central Asia, the Middle East, and Europe. Russia has also established the Collective Security Treaty Organization, a regional military alliance system among the Commonwealth of Independent States (CIS). Hailed as a ‘super player’ in Europe and the Middle East, the ‘heartland’ of global strength boasts robust gaming power. In contrast, China pursues a non-aligned diplomatic policy, so few countries follow China in terms of security. China’s foreign policy of ‘hiding capacity and biding time’ over the years has also limited its involvement in core international and regional political issues. To sum up, China’s rise has not yet entered the power shift phase, but is still in its infancy, with a focus on the economy. China is similar to Japan in the 1980s by economic strength and stage. Without their own economic systems, both China and Japan are subjected to an asymmetric, vulnerable dependence on high-end US industries in the US-led international system. Both countries are simultaneously trying to achieve economic gains within the US-led international economic system, and to catch up with the United States through economic (rather than military) security and international political advantages. (II) Economic Potential is the Core of US-China Competition As a rising country that relies on the international system (which is dominated by a conservative major nation), and which is trying to catch up economically within it, China must correctly judge its relationship

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with the established international system; this is a prerequisite for developing an effective strategy of economic rise. In practice, China places top priority on maintaining a stable diplomatic relationship with the United States For this reason, China’s official diplomatic language often avoids dominance in the US–China relationship. The US–China relationship is authoritatively interpreted as being rooted in ‘mutual respect and cooperation, rather than confrontation and conflict’.13 This implies objective competition between China and the United States, and expresses the hope that China and the United States will establish a benign relationship led by cooperation. Whether competition or cooperation propels the China– US relationship is a realistic, inevitable, fundamental question. Without a clear determination of the dominance and direction of the China–US relationship, it is difficult to strategically determine the ranking of national interests in China–US interactions. Moreover, the construction of cooperative relations is the outcome of interactions between the two sides and does not hinge on China’s unilateral goodwill. China needs to clearly understand how the United States views the nature of the US–China relationship in order to effectively assess the possibility and feasibility of its future cooperation with the US-led international system. The Trump administration gave a definitive answer in characterising US-China relations. On 18 December 2017, the White House released Trump’s first National Security Strategy, which interpreted the US–China economic and trade relationship at the level of a national security strategy, and explicitly referred to China as a ‘rival’ of the United States.14 Later, in his first State of the Union Address in 2018, Trump described China as 13 This official interpretation began with Xi Jinping’s meeting with President Barack Obama on 12 November 2014, and was stressed in a written interview with the Wall Street Journal on 22 September 2015, prior to Xi’s state visit to the U.S. See ‘Xi Jinping: Put the Principle of Mutual Respect and Cooperation, Rather Than Confrontation and Conflict, into Practice’, http://world.huanqiu.com/article/2014-11/5200222.html, accessed on 19 March 2019; ‘Xi Jinping’s Interview with The Wall Street Journal’, http://www.xin huanet.com/world/2015- 09/22/c_1116642032.htm, accessed on 19 March 2019. It can also be found in a number of official statements from the Ministry of Foreign Affairs, the Xinhua News Agency, and Guangming Daily. See ‘Mutual Respect and Cooperation, Rather Than Confrontation and Conflict’, Guangming Daily, 22 September 2013; ‘Ministry of Foreign Affairs: The Right Way for China and the U.S. to Get Along: Mutual Respect and Cooperation, Rather Than Confrontation and Conflict’, http:// www.xinhuanet. com/2017–03/22/c_1120676126.htm, accessed on 21 March 2019. 14 ‘National Security Strategy of United States’, https://www.whitehouse.gov/wp-con tent/uploads/2017/12/NSS-Final-12-18-2017-0905-2.pdf, accessed on 21 March 2019.

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a ‘rival’ that challenges the interests, economy, and values of the United States.15 Chinese IR and policy scholars recognise cooperation based on economic interdependence as the mainstream of US-China relations. On this issue, mainstream discourse and policy practice in China and the United States diverge on the dominance of the two countries’ bilateral relationship. During Obama’s presidency, although China was not explicitly defined as a rival in official public language, both the Obama administration’s policy push for Asia–Pacific rebalancing and the deployment of strategic resources showed that the United States had de facto perceived China as its major rival in the Asia–Pacific region and in the global arena. After Trump took office, US bipartisan and policy elites solidified a consensus on suppressing China’s rise, as reflected in policy practices in many areas like economics, security, and politics. The United States identifies the dominance in China–US relations as competition. Thus, what is the core of competition between China and the United States? The core competition between a hegemon and a rising country is often viewed as international leadership by realists, the dominance of international rule by liberal institutionalists, and the right to shape international norms (including dominant international values) by constructivists. Ultimately, the latter two can still be seen as components and manifestations of international leadership. From a long-term historical angle, the power shift between major countries may eventually be reflected in a change in international leadership, but China and the United States have not yet developed a realistic rivalry in this sphere. As noted earlier, especially in the military and international political realms, China is far from being a rival of the United States. China’s potential to build a military alliance or strategic partnership system that could threaten US global leadership in the near future is not a primary concern of the United States. The United States views China’s potential economic power and its influence as the core area of competition. China’s economic momentum makes the United States feel threatened and pressured. Before a shift in world power occurs, the usual necessary stage is a contest between major countries around economic status, and economic power is the material basis of competition for international leadership. Although the United 15 ‘President Donald J. Trump’s State of the Union Address’, https://www.whitehouse. gov/briefings-statements/president-donald-j-trumps-state-union-address/, accessed on 21 March 2019.

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States has not yet sensed substantial threats and pressure from China in the security and political domains, the United States is concerned that as China continues to catch up in terms of economic power, it will have the material capacity to threaten and challenge US military security and economic development patterns. Some domestic scholars have interpreted the Trump administration’s trend in political conservatism as the United States relinquishing its international leadership; these scholars have even begun to imagine that the United States would accept a transfer of power between China and the United States based on mutual benefits and reciprocity, or recognise the model of major country cooperation within the US-led international system. We need to break down the US international leadership into three levels: (1) leadership in the sense of power distribution in the global landscape, primarily reflected in politics and traditional security (including the alliance system built by the United States); (2) dominance in global public governance, mostly manifested in economics and non-traditional security (including US leadership in various multilateral organisations); and (3) moral high ground above ideology, reflected in values (i.e. the United States’s role as the leader of the so-called ‘free world’). The Trump administration’s conservatism claim means that the United States will undoubtedly remain the strongest superpower, ‘taking advantage of other countries’ as much as possible while prudently and conditionally playing the role of ‘world policeman’ and ‘leader of the free world’. The US-dominated Western world is in relative decline. Further, due to its social resistance to the so-called universal ‘political correctness’ and impact of China’s development model, some US conservatives (including Trump) think it is not worthwhile to transform the world based on ideology, so they are not interested in maintaining leadership at the third level. The United States is also losing the will and ability to remain dominant at the second level out of ‘load shedding’. During the Obama administration, US performance in global governance was ‘lip service’; the Trump administration’s negative attitude towards global governance was even more apparent, especially in maintaining the stability of the financial system, global trade liberalisation, and global climate governance. The United States is losing the willingness and ability to maintain its position as a world leader in global governance and universal values, but this does not mean that it intends to give up its leadership in the world’s power landscape. Moreover, for quite some time to come, China and

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other countries will hardly become effective rivals for international leadership in the distribution of power in the international political landscape. Compared with the distribution of power and interests in the international political landscape, power in global governance—especially in terms of economic governance—is more about the distribution of responsibilities among countries and the sharing of costs for public goods.16 The trend in US conservatism in foreign policy is essentially an attempt to separate power from responsibility, thereby shirking the responsibility to provide public goods in global governance while remaining a leader in the distribution of power. The United States’ negative attitude towards military alliances, such as the North Atlantic Treaty Organization (NATO), chiefly aims to raise the price for allies to pay more monopolistic ‘protection fees’ to the United States. In addition, the fact that US leadership is weakening in global governance and values does not mean that it will sit back and watch China ‘fill the vacuum’.17

Pressure on the Rise and Strategic Choices The United States has identified China as its key rival in the US-led international economic system. As the power gap narrows, it will exert more pressure on China. We need to determine where the pressure on China’s rise is coming from in order to form an effective response, and to reasonably guard against policy risks resulting from misjudgement of the situation and improper strategies. (I) The ‘Economic Pressure Trap’ Some Chinese scholars and policymakers have attributed China’s suppression by the United States to China’s inability to convince the United States that it will not challenge the US-led international order for lack of sufficient strategic mutual trust. China and the United States are

16 Yan Xuetong, ‘The Impact of Trump’s Administration on China’s Rise’, http://news. sina.com.cn/w/2017-01-05/doc-ifxzkfuh5443465.shtml, accessed on 24 March 2019. 17 See Gao Cheng, ‘A Re-examination on “Stable Development of China-U.S. Relations” from the Perspective of China-U.S. Competition’, Journal of Strategy and Decision Making, Issue 2, 2018, pp. 14–25.

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suspicious of—and in conflict with—each other due to ‘strategic suspicion’. The two sides should build strategic mutual trust and develop a constructive, major country relationship by learning more about each other’s true thoughts and motives through communication and dialogue.18 Guided by the above logic, China has repeatedly made clear to the United States that it is a peace-loving country with no intention of challenging the US-led international order and leadership, and has been highly restrained in international politics and security due to fear of the United States’ strategic suspicion. Unfortunately, these efforts are ineffective, failing to dispel the United States’ perception of China as a competitive threat. The bottleneck in the development of US-China relations cannot be broken through efforts to form strategic mutual trust because China–US structural contradictions truly matter, and do not represent a misjudgement of each country’s motives. China–US structural contradictions stem from the shift in economic power between the two countries and the US response, which is grounded in pessimistic expectations of such a trend. The US response is not based on China’s behaviour at the moment. While the United States has engaged in preventive repression given the objective power trends of both countries and China’s potential capabilities, China has focused on demonstrating to the United States that it has no subjective motive to challenge the United States and the US-led international order. China’s attempt to increase strategic mutual trust and to make concessions to the United States will clearly not improve China–US relations or move the general direction of US policy towards China. China will inevitably come under pressure from the United States and the US-led system; this will not change whichever model of major country relations China tries to construct with the United States. The structural contradictions between China and the United States have not yet manifested as competition for international leadership, but rather as a contest for the world’s future strongest economy, so the pressure exerted by the United States and the US-led system is first seen in the economic sphere. Although the United States has taken the initiative to weaken its international leadership in some areas, the United States will not sit back and watch China gradually acquire the objective material capacity to fill the ‘leadership vacuum’ or to share this position with 18 Wang Jisi and Li Kanru, China-U.S. Strategic Mutual Doubt: Analysis and Response, Beijing: Social Sciences Academic Press, 2013.

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China. In the interactions between a hegemon and a rising country, the power shift theory in realism centres more on the competition for power in the security field, while the investigation of the ‘rising dilemma’ mostly revolves around the possibility of military conflict between a hegemon and a rising country. The power shift theory argues that the main source of pressure on a rising country comes from the ‘Thucydides trap’ in the security field.19 The obsession with the Thucydides trap—a hot topic among IR scholars in recent years—has influenced China’s diplomatic practice towards the US Commentaries on the Thucydides trap, which have entered China’s official diplomatic discourse. Official Chinese media have repeatedly planned and organised special discussions among domestic scholars and diplomats to propose countermeasures for China to avoid falling into the Thucydides trap.20 However, Chinese IR scholars seem to have overlooked a certain fact: China’s main dilemma is not avoiding the Thucydides trap of major country military conflict; instead, the risks of China–US competition and pressure on the Chinese system lie primarily in the economic sphere, and not in the realm of military security. While thinking about how to get out of its predicament and ease tensions with the US-led international system, China has focused excessively on how to avoid the Thucydides trap that Germany and the Soviet Union once fell into, somewhat ignoring the pressure on its rise, including the ‘economic pressure trap’ when catching up economically with the hegemon; this often occurs before becoming a victim of the Thucydides trap. China’s economic catch-up with the United States is a key element in determining whether China will gain international leadership in the

19 A. F. K. Organski, World Politics, New York: Alfred A. Knopf, 1958; Yan Xuetong, Sun Xuefeng, et al. The Rise of China and Its Strategies, Beijing: Peking University Press, 2005; Sun Xuefeng, China’s Rise Dilemma, Beijing: Social Sciences Academic Press, 2011. 20 Wang Yi said at the 2017 China Development Forum: ‘Today, the future prospects of different countries are closely intertwined. As the interests of rising powers and established ones deeply converge, there will be no winner should a conflict break out between them. Therefore, China and the U.S. could fall into a “Thucydides trap”’. See http://language. chinadaily.com.cn/2017-03/21/content_28626784.htm, accessed on 27 March 2019. On 17 April 2016, People’s Daily published a full-page set of articles around correctly understanding the ‘Thucydides trap’. On 8 May 2016, People’s Daily again published a full-page series of articles focusing on how to cross the ‘Thucydides trap’. On 10 December 2017, People’s Daily published another full-page set of articles on how to break the ‘Thucydides trap’. See People’s Daily, edition 5 from 17 April 2016, edition 5 from 8 May 2016, and edition 5 from 10 December 2017.

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future. The first thing the United States will do is to preventively undermine the sustained trend of China’s economic power accumulation, with the intention of disqualifying China from competing for international leadership. As China faces the economic pressure trap and interacts with the United States and the US-led international system, there are large differences in the perceptions of the role that bilateral economic relations play in political ties between the United States and China. The mainstream view in China holds that economic interdependence between China and the United States plays an important role as a ‘ballast’ in the bilateral political relationship,21 tending to continue to deepen bilateral economic connections. In contrast, US policymakers—especially the conservative forces represented by the Trump administration—perceive the current China–US economic relationship as a prominent manifestation of the structural contradictions between the two countries. China is counting on its close bilateral ties in the economic realm to stabilise and improve bilateral political relations, and believes that the China–US relationship (unlike the historically confrontation-based, competitive relationship between the United States and the Soviet Union) is essentially more cooperative than competitive. Because the US ‘Cold War’ policy to contain the Soviet Union’s influence was premised on the artificial isolation of economic contact with the Soviet Union, China and the United States are each other’s most important trading partners. However, there is a limit to the role of economic interdependence as a ‘ballast’ in China–US relations. While economic interdependence may somehow lower the likelihood of falling into the Thucydides trap and triggering a military conflict (the nuclear balance between China and the United States is more significant in terms of avoiding direct military conflict than economic interdependence), close economic and commercial ties between China and the United States cannot alleviate the economic pressure trap facing China’s 21 For the official formulation of a ‘ballast’, see ‘Before Xi Jinping’s Visit to the United States: Consolidating the New Model of China-U.S. Major-Country Relationship with Economic and Trade Ballast’, http://news.cri.cn/gb/42071/2015/09/17/8211s5106 202.htm, accessed on 27 March 2019; ‘Economic and Trade Cooperation is the Stabilizer and Ballast of China-U.S. Relations–Vice Finance Minister Zhu Guangyao Explains the Achievements of U.S.-China Cooperation in the Economic Field’, http://www.xinhuanet. com/mrdx/2017-11/11/c_136744008.htm, accessed on 28 March 2019; ‘Chinese and Foreign Sources: Economic Cooperation Remains the “Ballast”’,http://news.163.com/ 17/0318/21/CFRDR71T000187V5.html, accessed on 28 March 2019.

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rise, let alone reverse the negative trend in China–US political relations. US policymakers view the China–US economic and trade relationship, to a large extent, as the crux of the structural contradictions between the two countries. They believe that the closer the economic relationship between China and the United States, the greater the trade imbalance between them, the faster China’s economic catch-up with the United States, and the more prominent bilateral structural contradictions will be. This is why the Trump administration repeatedly pressured China in the economic and trade arenas and even raised the China–US trade issue to a strategic level in the National Security Strategy.22 (II) A Model of Strategic Choice in Major Country Economic Competition Under the US economic pressure trap—which aims to preventively hinder China’s long-term economic growth—China may face a policy risk arising from misjudgement of the situation. Further, if not handled properly, there is a risk of reversing the momentum of China’s ongoing wealth accumulation and prematurely aborting the process of China’s rise. Since modern times, the economic aggregate and influence of the weaker side (Germany and the United States in the late nineteenth and early twentieth centuries, the Soviet Union in the 1970s, Japan in the 1980s and 1990s, and China today) in major country economic competition have put pressure on the established country when catching up with or overtaking it, resulting in a competitive relationship. They are subjected to varying relationships with the traditional, country-led economic system and different external environments during the initial stage of rising, so their pressure and difficulty in achieving economic rise differ greatly. This paper extracted two indicators: (1) the degree of asymmetric dependence on the rival-led international economic system— which examines the vulnerability of the rising economy in comparison to the asymmetric dependence of the competing country-led economic system23 —rather than the closeness of economic ties between the two 22 See Gao Cheng, ‘A Re-examination on ‘Stable Development of China-U.S. Relations’ from the Perspective of China-U.S. Competition’, Journal of Strategy and Decision Making, Issue 2, 2018, pp. 14–25. 23 The nature and asymmetry-related degree of interdependence hinges on the sensitivity and vulnerability to dependence on the other party. Vulnerability dependence, as

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Whether to be suppressed by one’s rival at the initial stage of economic rise

Yes

No

China, Japan (Unnatural state) Strong Dependence on the rival-led economic system Weak

(Greatest pressure on rise) Germany, the Soviet Union (Strongest conflict with the rival-led system)

U.S. (Least pressure on rise)

Fig. 1 Matrix of a Major Country’s Economic Competition and Rise Situation (Source Compiled by the author)

sides; and (2) whether the rising country is suppressed by its rival in the initial phase of economic rise. Based on these two indicators, theoretically, there are four scenarios. Please note: No scenario in the matrix of Fig. 1 is static, but subject to a dynamic possibility of mutual transformation. Scenario 1: The rising country has a high degree of asymmetric dependence on the rival-led economic system, and is suppressed by its rival at the beginning of its economic rise. This applies to Japan in the 1980s and China today. Neither China nor Japan has developed a dominant economic system but is dependent on high-end industries in the United States and other Western nations in the US-led economic system. The United States began to suppress both countries when their economies approached or exceeded half the size of the United States in the US-led economic system. Relatively speaking, this scenario puts the most pressure on a major country’s economic rise. Scenario 2: The rising country has a high degree of asymmetric dependence on the rival-led economic system, but is not suppressed by its rival at the beginning of its economic rise. This is an idealised scenario, but is almost impossible to achieve consistently and naturally. The major defined by Robert O. Keohane and Joseph S. Nye, is the extent to which, after one actor makes a change, it costs the other actor to adjust and respond to that change. It measures the cost that an actor needs to pay to terminate a relationship. See Robert O. Keohane and Joseph S. Nye, trans. Men Honghua, Power and Interdependence, Beijing: Peking University Press, 2002.

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country, in a strong position, may naturally adopt a policy of preventive repression against a (potential) rival that is highly dependent on the economic system it leads; such preventive repression is often more effective than against a rival with a parallel system due to the rival’s vulnerable dependence on the economic system it leads. Scenario 3: The rising country has a low degree of asymmetric dependence on the rival-led economic system, and is suppressed by its rival at the beginning of its economic rise. Typical examples are Germany from the late nineteenth century until World War I and the Soviet Union after World War II. Germany, with its primary market and economic ties in Europe, was largely independent of the British-led colonial economic system and tried to establish its own economic colonial system abroad (this ended with the failure of the war). The Soviet Union was able to compete with the US-led Western system through a parallel system based on the Council for Mutual Economic Assistance and the Warsaw Pact. This scenario saw the strongest conflict between a competing major country and the international system. Scenario 4: The rising country has a low degree of asymmetric dependence on the rival-led economic system, but is not suppressed by its rival at the beginning of its economic rise. In this scenario, the competing country is under the least pressure regarding its rise, and its goal of rise is relatively easy to achieve. The United States, in the late nineteenth century and the first half of the twentieth century, is a typical case. The United States had a relatively complete production and sales market in America. Although it traded closely with Britain, the hegemon at the time, the relationship was of reciprocal dependence and the United States was not subjected to a vulnerable asymmetric dependence on Britain throughout the production chain. The United States rose to become the world’s largest economy in the late nineteenth century, during which Britain did not strongly interfere with the United States In this scenario, the transfer of power between the United States and Britain took place. China, still at the initial stage of its economic rise, has been suppressed by the United States while attempting to achieve an economic rise in the US-led economic system, forming a competitive relationship dominated by the zero-sum game, which is meant to avoid exacerbating China’s situation at the risk of being kicked out of the US-led economic system. How should China respond? China must consider its strategic choices to alleviate the pressure on its rise in the current stage within the above

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framework, so as to avoid reversing the rising process due to misjudging the circumstances or using improper strategies. First, China should avoid misjudging the situation so that it has options at the time of the United States’ rise, and thus count its sustained economic growth and wealth accumulation in the US-led economic system, lacking bottom-line thinking and the necessary preparation for the potential ‘decoupling’ from the US-led economic system. This misjudgement has led Chinese scholars to be overly optimistic about China–US relations in the past few years, especially with unrealistic expectations about the ‘ballast’ role of China–US economic ties. In Scenario 4, the United States has effectively defused the pressure on the rise by ‘making a fortune in silence’. However, the United States crossed the initial stage of its economic rise at the end of the nineteenth century, when Britain and other European powers did not have time to suppress and exclude it. Besides, the United States had considerable independence in its vicinity and the Americas, even after leaving the British-led economic system. China, in Scenario 1, does not have the same conditions as when the United States rose to power, so China could not achieve economic rise simply by passively delaying and consuming goods along with the United States. Second, China should avoid repeating the failure of Japan’s economic rise. Japan, subjected to Scenario 1, was under huge pressure from the United States and other Western countries when it about to achieve economic rise. Japan could not change its highly vulnerable dependence on the US-led system under the economic suppression from its rivals, and hoped to resolve economic conflicts with its rivals through compromises, so it tried to turn to Scenario 2. Unfortunately, its attempts failed and ended with the blockage of its economic rise. Japan signed the Plaza Accord under pressure from the United States and other Western nations, and in the following years it was compelled and pressured by the United States to back down in the economic realm. The yen was forced to appreciate continuously. Japan’s manufacturing industry flowed to the capital market after heavy losses. The full opening of the capital market to Wall Street in a short time led to the rapid bursting of its domestic capital bubble. This period marked a critical turn in the reversal of Japan’s economic growth momentum. External pressure was not the only factor, however; the Japanese government’s policy choices played a key role in the process of the ‘economic Waterloo’. Eventually, after more than 30 years of economic expansion, Japan encountered a near

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standstill in economic growth. Japan’s real economic scale was more than 60% that of the United States in its heyday, but is now only 25% of that of the United States.24 Japan gave up on economic rise in exchange for continuing to survive and thrive within the US-led system. Japan’s experience serves as a warning to China that the US hindrance of China’s rise is primarily meant to block China’s economic growth, and not necessarily by military means (such as provoking military conflict or waging a preventive war of hegemony). It may be wiser to induce China to make economic policy concessions at the expense of damaging its economic development based on its eagerness to stabilise China–US relations and fear of a full US containment. China must be aware of the greater difficulty it faces in its rise compared to Japan’s rise. Japan was able to remain in the US-led international system after its economic momentum to catch up with the United States was interrupted since it is a military and political ally of the United States. However, today’s elite US policymakers view attempts by liberal institutionalists to integrate China into the US-led economic system as a failure. The club-like institutional arrangements advocated for by the liberal establishment—represented by the Trans-Pacific Partnership (TPP) and the Trump administration’s fervent ‘one-on-one’ zero-sum game—suggest that the United States no longer tolerates China’s continued growth within the US-led economic system, which is being endorsed by its Western allies. Third, in Scenario 1, China is better equipped and more likely than Japan was to change its vulnerable dependence on the US-led economic system, and will thus face the policy risk of increasing conflicts with the United States Failing to be self-sufficient militarily, Japan is highly dependent on the United States for security, and its domestic politics are somehow subjected to US influence, since it can hardly compete economically with the United States from the perspective of its national strategy and interests. Japan can only try to avoid conflict with the USled economic system at the expense of giving up on its economic rise.25 Compared with Japan, China is militarily, politically, and diplomatically 24 Data from the IMF. See https://www.imf.org/external/pubs/ft/weo/2018/02/ weodata/weorept.aspx?pr.x=89&pr.y=10&sy=1985&ey=2019&scsm=1&ssd=1&sort=cou ntry&ds=.&br=1&c=158%2C111&s=NGDPD%2CPPPGDP&grp=0&a = . The ratios were compiled by the author. 25 See Yoichi Funabashi, trans. Yu Jie, Managing the Dollar: From the Plaza to the Louvre, Beijing: CITIC Press, 2018.

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autonomous, and can game with the United States in the economic sphere based solely on its own strategies and interests. Hence, China can change its vulnerable dependence on the US-led economic system, a strategic option that Japan did not have. This should be the direction of China’s efforts to deal with the pressure on its rise. China should also maximally avoid falling into Scenario 3 to turn competition into an outright zero-sum game by creating an exclusive parallel system, as Germany and the Soviet Union once did. China’s foreign economic policy at this phase should aim to hedge against the risk of ‘decoupling’ from the US-led system, rather than to create a system that may replace and compete with the existing economic order.

Staged Attributes and Goals of the BRI China, at the initial stage of its economic rise, is attempting to catch up within the US-led economic system, and is thus suppressed by the United States The China–US competitive relationship with a zero-sum game is unavoidable, and China is at risk of ‘decoupling’ from the US-led economic system. This is the international context in which we discuss the BRI’s goals and implementation strategies. How to alleviate the pressure on, and ensure the sustainability of, economic rise should be preferred in determining the BRI’s staged attributes and goals, and should also form the basis for defining the BRI’s limits and priorities. (I) The Current Positioning of the BRI Now we return to the questions proposed in Part I. Is the BRI an economic or political goal? Is it mainly an economic instrument to realise strategic goals, or a non-economic instrument to satisfy economic interests? How do the different levels of interests rank and compare with each other? The answers remain as they are, based on the stage of China’s rise and its fundamental relationship with the United States and the US-led international system. The BRI was shaped amidst major shifts in the international arena, and developed in the profound transformation of China’s economic diplomacy in the new era; hence, the BRI’s staged attributes and goals should be determined by them and their constraints.

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China’s ranking and implementation policy of foreign economic and strategic goals in different historical periods feature the distinctive characteristics of the times. From 1949 to the end of the Cold War, China’s foreign economy served to establish the legitimacy of the People’s Republic of China (PRC) in the world. This was fully reflected in China’s economic assistance to neighbouring and so-called ‘third world’ countries, mainly to gain recognition of China’s legitimate status in international organisations (such as the United Nations) from most countries. In the more than 30 years since reform and opening up, China has been accumulating wealth; its diplomacy aims to attract foreign investment, and to expand the energy and resource markets. In both historical periods, China’s external objectives, and the relationship between its economic and strategic goals, were subordinated to the general landscape, playing a critical epochal role in providing China with a firm foothold in the international community, and the necessary material accumulation for China’s economic rise, respectively. With the repositioning of China as a major country, the evolution of the international landscape, and the shift in the nature of China– US relations, China’s external objectives are bound to be given new content. The BRI should continue to promote and help enterprises expand their overseas interests as a national policy ‘umbrella’ for them. However, since China has entered the initial stage of its economic rise, the purely profit-oriented market expansion has increasingly exposed its lack of consciousness in aligning with national economic planning; the pursuit of short-term economic interests in the ‘pre-economic rise stage’ has occasionally become an obstacle to China’s long-term development and external economic layout in the new era. The spontaneous accumulation of wealth has almost been replaced by the sustainable accumulation of wealth, guided by national strategies. Therefore, as a top-level design of national foreign strategy, the BRI should function as a ‘baton’ in addition to being an ‘umbrella’ for Chinese enterprises. In the long run, if the BRI is seen as a long-term national policy to revive the Chinese nation, its ultimate goal should be to effectively use the market and other economic tools to advance China’s diplomatic strategy and build a more just, reasonable international order in line with longterm national interests. Notwithstanding, this is a visionary goal for after

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China has crossed the initial stages of its economic rise. The competition between China and the United States for leadership, and the comprehensive construction of regional and international order, have not yet been placed on the agenda, so the BRI should not be implemented in full competition with the United States and the US-led international system. Under great pressure caused by the US ‘economic pressure trap’, China is unlikely to achieve economic rise within the system simply by passively delaying consumption. China should be defensively prepared to ‘decouple’ from the US-led economic system. Internally, China should accelerate the promotion of industrial upgrading, and increase investments in core technology and independent innovation; externally, it should move to adjust the development mode of the overseas economy through the BRI. Judging from the context of China–US competition, the BRI should be, first and foremost, a long-term development initiative to relieve the pressure on China’s rise, and to facilitate China’s transition to the initial phase of economic rise. Hence, economic and strategic goals are not mutually antagonistic and require trade-offs, but are rather ‘two sides of the same coin’. Based on long-term economic interests, the BRI should serve to create sustainable environmental conditions for China’s economic rise, with its primary goal being to escape from the US-designed ‘economic pressure trap’ to ensure sustainable economic growth, so that China’s wealth accumulation (required for economic rise) can proceed without a high degree of dependence on the US-led economic system. This could be achieved by creating a more autonomous, healthy regional economic structure around China through the BRI to reduce China’s vulnerability to the United States and other Western countries, thus protecting China’s sustainable economic expansion. The BRI’s implementation should focus on reducing vulnerability as an intermediate market between developed and neighbouring countries, and improve its position as a market for final consumer goods (FCGs) in neighbouring nations. The process might not be smooth and may be temporarily uncomfortable, but China must persevere to transform its economic development model, and to increase security and autonomy in line with its long-term interest in economic rise. In this sense, the BRI’s economic performance cannot be measured by short-term economic indicators or even profits.

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(II) The Limits and Priorities of the BRI First, in terms of the paradigm concept, at this stage, the construction of the BRI aims to hedge against the risk of ‘decoupling’ from the USled economic system, rather than fully replacing the existing economic system and competing with it. China has not yet been able to produce its own version of the Marshall Plan; that is, forging strategic ties with other countries through exclusive economic alliances to make them cooperate with China’s foreign strategy. Moreover, it is not in China’s interest to be trapped in competition with the United States for leadership at the initial stage of economic rise. Therefore, the paradigm concept of the BRI should be oriented towards the pursuit of openness, inclusiveness and symbiosis, and the creation of an economic development model that coexists with the US-led international economic system and established regional organisations. Second, in terms of organisational arrangements, the BRI should be used to mollify resistance to China’s economic rise quietly and effectively, and should not become a project for China to express hubris. In particular, the BRI should not become a platform for China to lead the so-called ‘new globalisation’. The weakening of US willingness to lead in global governance ostensibly provides an opportunity for China to replace the United States in the US-led global governance system, which is why some scholars have tried to interpret the BRI as a means for China to gain leadership in world governance. However, China must be aware that it does not have the military hegemony, political alliance system, or dollar dominance of the United States, without which China’s excessive assumption of practical responsibility for global governance will not win commensurate international leadership. This is why China was refused when it offered to cooperate with Europe—which also advocates for globalisation—against the Trump administration’s ‘anti-globalisation’ policy. In fact, the United States (which is trying to ‘shake off its burden’ in the global public sphere) is pleased to see China take on the responsibility of global governance. Regarding its current participation in global and regional governance, China should aim to increase its international involvement and take the moral high ground, rather than unrealistically intend to ‘take over’ US international leadership. The BRI—which is of special concern in the international sphere—should neither be endowed with the content of competition for leadership in global governance, nor

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invested with excessive resources that may consume too much national power. The BRI’s organisational model needs to focus more on the bilateral and subregional levels, rather than the global and multilateral levels. The BRI should establish mature bilateral subregional cooperation (instead of attempting to lead globalisation), promote multilateral integration, and foster ties with regional countries through regional multilateral mechanisms. The BRI offers an alternative to the traditional package of multilateral cooperation that has been stalled by the US strategic layout for the Asia–Pacific region and the obstruction of competing countries, such as India. This innovative model is designed to bypass the interference of major nations such as the US, Japan, and India to prevent potential reverse globalisation, and to break the long-term stalemate in the existing regional integration mechanisms. As Li Xiangyang pointed out, China must consider not only a necessity, but also feasibility when endowing the BRI with an attribute. Given existing constraints, it is not feasible to assign multilateralism to the BRI in its early stages.26 Compared with multilateral organisations, the BRI is innovative and flexible because its ‘self-centred’ attribute allows China to accept mature cooperation partners in an orderly, progressive manner to form an overall network based on bilateral relations and mature subregional cooperation. The above path is a pragmatic, flexible, and effective organisational model for the construction of the BRI. Third, in terms of connotation limits, the BRI needs to follow market rules, but as a long-term development initiative, it requires top-level design and integrated planning at the national level, instead of spontaneous expansion completely oriented by short-term profits; hence, the BRI should also be different from the general development of economic and trade exchanges regarding content. Therefore, only regions, countries and projects that are heavily invested based on long-term growth and strategic value should be included in the BRI’s framework. If the BRI’s connotation and extension are infinitely generalised, content is ambiguous, and hierarchy is unclear, the BRI will evolve into a general initiative for the development of economic and trade relations with other countries. Before the BRI was proposed, China still had to build economic and trade ties with other countries. Once its concept and 26 For details, see Li Xiangyang, ‘The Belt and Road Initiative: Regionalism or Multilateralism’?, World Economics and Politics, Issue 3, 2018, pp. 34–46.

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connotation are generalised, the BRI may deviate from its long-term goals and not function effectively. Fourth, in terms of constraints on geographic expansion, China needs to control its impulse to expand the BRI, should maintain an appropriate scale, and ensure the centralised allocation of strategic resources. The principles of openness, inclusiveness, and sharing do not imply an indiscriminate expansion of the BRI. In the past few years, China has widened the geographic scope of the BRI (at the stage of full-scale promotion) and created many ‘scattered points’, and has also broadened the BRI’s scale and reputation. In the next stage, the BRI should be appropriately restrained in terms of geographic expansion, should be focused according to China’s long-term development goals, and should not continue to attract—at high cost—the participation of countries that are not necessary or that are structurally contradictory. China must place a geographic limit on the resources to be invested at stages of further promotion and remain focused on neighbouring regions. While Western economies are important to China’s economy, China cannot unilaterally count on the prospect of cooperating with them, so it is not appropriate to make thirdparty cooperation a priority under the BRI’s framework. China should gradually reduce its vulnerable dependence on the US-led international economic system and the markets of developed Western nations to ensure the security of its future economic rise. Therefore, continuing to align (in-depth) China’s future interests with developed countries may pose systemic risks. Moreover, it will do more harm than good to aggressively pursue marginal interests in traditional spheres of influence and in the core interests of the United States and Russia. China’s neighbouring countries comprise its geo-economic and geopolitical support belt. Their strategic significance to China’s economic rise is greater than China’s economic importance to them, so they should be the main targets of the BRI’s key business region. The geopolitical belt, radiated by the strength of a major country, is often of primary concern. European allies and Japan are crucial to the United States, as these alliances form the foundation of the United States’ global hegemony; for Russia, its neighbouring CIS countries are vital, especially the trilateral alliance among Russia, Belarus and Kazakhstan, which make up the cornerstone for Russia to maintain its status as a regional major country. China’s current economic, political and military strength extends mainly to its neighbouring regions. Optimising China’s sustainable development

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model in the vicinity is both a bottom line, hedging against ‘decoupling’ from the US-led system, and a necessary condition for China’s continued economic rise. In the long run, China will form the basis to cooperate and game on an equal footing with the United States and the US-led international economic system, but only if it effectively manages its neighbourhood. China’s connectivity with its neighbours under the BRI is often interpreted as an attempt to absorb China’s excess capacity. However, to position the BRI as a long-term development initiative, China should proactively protect against its vulnerable dependence on the US-led international economic system and the markets of developed Western countries while taking into account the sustainable development of neighbouring states and absorbing more of their growing productive capacity. To do so, China must consciously provide more FCG markets for neighbouring countries, thereby winning the initiative to optimise its economic structure and shape its neighbouring economic development model. China still serves as an intermediate market between developed and neighbouring countries. China’s trade with neighbouring regions has grown rapidly since the start of the twenty-first century, and China has become the largest trading partner of almost all neighbouring states.27 However, trade is focused on importing primary products such as raw materials, which are processed domestically and then exported to developed markets such as the US, Europe and Japan. The role of the intermediate market segment makes it difficult for China to not only fully channel its large market size into influence over neighbouring countries, but also to transform its relationship with the lower end of the industrial chain, as orders for FCGs at the source of the chain remain in the hands of the United States and other developed Western states, leading to China’s vulnerable economic dependence on the markets of developed nations.28 In the long run, China can create a fairly independent and healthy regional economic structure and reduce its dependence on the US-led international economic system and the markets of developed states, but only if it dominates the neighbouring regions relative to the United States as an FCG market segment.

27 Zhao Jianglin, eds. Economic Growth and Strategic Adjustment in Asia in the PostCrisis Era, Beijing: Social Sciences Academic Press, 2013, pp. 18–21. 28 Gao Cheng, ‘The US Strategic Adjustment of Rebuilding the International Order from the Perspective of Rules’, World Economics and Politics, Issue 12, 2013, pp. 81–97.

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Thus, China will be able to use economic instruments more effectively to influence neighbouring countries. The US and Japan retain a clear share of dominance in the FCG market in East Asia. The US and Japan together account for one-third of the FCG market in East Asia, while China occupies less than 10%. For the majority of countries along the BRI, China still lags far behind the United States in terms of end-market provision. In 2015, among the 41 countries along the BRI, the United States had a higher FCG market provision index than China in more than 30 countries, while China had a higher FCG market provision index than the United States in only eight countries. At present, China’s FCG market provision index is only greater than the United States in Mongolia, while the US FCG market provision index is greater in 10 out of 12 countries, mainly in Southeast Asia and South Asia around China, where its FCG market provision index is greater than China’s in 20 states, including the Philippines, Vietnam, Indonesia, Cambodia, India, Pakistan, and Sri Lanka, which are all highly dependent on the US FCG market. The United States, as a provider of FCG markets in countries along the BRI, has declined since 2000; China has also been quite slow in boosting its provision index. In addition to maintaining its dominance over the United States in the provision of FCGs in Russia and Central Asia, only Singapore, Thailand, the Philippines, Indonesia, and Malaysia saw significant improvements in their FCG market provision indexes from 2000 to 2015. This is both a result of China’s conscious management of its neighbouring regions in recent years, and a sign that they are still the main battlefield for China to transform and play a shaping role in its external economic structure. China’s import sources of external consumer goods markets are mostly concentrated in the United States, Western European countries, and Japan; the long-term, low share of import demand for Chinese consumer goods (out of total import demand) is the primary reason for the limited scale of China’s FCG market provision to neighbouring countries.29 Changing this status quo is also the direction of China’s efforts to optimise its external economic structure and reduce its dependence on the United States and other developed Western economies through the BRI. With the accumulation of domestic wealth and the growth of purchasing power 29 See Feng Yongqi and Huang Hanting, ‘The Dependence of Countries Along the Belt and Road on Chinese Product Markets and China’s Countermeasures’, Journal of Contemporary Asia–Pacific Studies, Issue 3, 2017, pp. 144–145.

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and consumption demand, China should focus on providing an FCG market for neighbouring states while strengthening production capacity cooperation with them through the BRI. Doing so would help increase the relative independence of East Asian production networks, reducing China’s vulnerable dependence on the US-led international economic system, and transforming its economic power into regional influence to a greater extent. Fifth, in terms of promotion manner, China needs to use the BRI to target limited goals and face up to the constraints of using economic means to achieve non-economic goals. Economic means cannot address all foreign issues. Most political security and diplomatic matters need to be resolved through political security and diplomatic means, as they cannot rely solely on economic exchanges. Therefore, the BRI requires other political and security means to complement its responsibilities, which the BRI cannot perform on its own. China’s mindset, centring on economic construction for more than 30 years, has also influenced its foreign engagement, resulting in an over-reliance on economic means to develop political and diplomatic relations and to achieve its rise. China’s mainstream diplomatic theory and practice likewise over-emphasise that economic relations are the top priority in all state-to-state relations, and can be used as leverage to shape neighbouring relationships, forming a new model of major-country ties and a new type of international relationship. Yet in IR, the economy is a low political sphere, and it is difficult to obtain high political goals through low political means, so there are obvious limitations of such economic diplomacy. It is especially difficult to achieve China’s diplomatic and strategic goals through economic means alone when dealing with neighbours’ affairs along the BRI. The effective use of economic means via the BRI requires security and political tools to support it. In the past 30 years, China has primarily used diplomatic and political resources to attract investment and obtain external resources, but it is now time for Chinese capital to ‘go global’. It is urgent to study how to flexibly use existing military, political, and diplomatic means to maintain and expand China’s overseas economic interests, as well as to improve its international status and political influence. In recent years, China has invested more economic resources in promoting the BRI and has experienced many burdens, but this does not mean that China’s overall strategic resources are ‘overspent’. In contrast to the economic sphere, China has not invested enough strategic resources in the non-economic realm, especially in high political arenas

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(the military, security, diplomatic, and political fields), thus failing to effectively translate its existing power into political influence and international standing with other countries.30 In the security sphere, China’s strategic resources are still inadequate in terms of how to provide security within its means to some neighbouring countries, which regard security as an important concern, and how to provide necessary overseas security for Chinese enterprises abroad. The asymmetrical dependence in the security realm is often stronger and more durable than in the economic sphere; especially when a country faces a security threat, security and political considerations may take precedence over economic aspirations. When China cooperates with these countries under the BRI, if their concerns about opposition to—and sabotage of—competing countries for the BRI cannot be eliminated (particularly when such cooperation may lead to political punishment and security intimidation by other major countries), the cooperation and subsequent maintenance of the BRI may face many hidden dangers and challenges. In the political arena, it is important to protect China’s overseas interests and to promote its long-term development layout by improving and harnessing its political influence over BRI partner countries. Failure to value the accumulation and use of political influence over other countries may hinder China from realising its neighbouring strategic goals when making investments abroad and pursuing neighbourhood diplomacy. On the one hand, in addition to traditional security conflicts, China’s neighbours and countries along the BRI are suffering from non-traditional security problems, such as the spread of religious extremism and rampant crime, making it difficult to effectively protect and promote China’s interests and strategic economic investments without local political influence. On the other hand, regime changes in China’s neighbouring countries along the BRI are likely to result in large shifts in their policies towards China due to factors such as obstruction from major countries, bringing uncertainty to the BRI’s long-term construction. The lack of political influence on the political situation and decision-making groups of these countries will pose a greater risk to the sustainability and stability of China’s future neighbourhood operations. China should enhance its political involvement in relevant nations, coupled with the economic means to protect the BRI’s construction and ensure the long-term 30 See Gao Cheng, ‘An Analysis of China’s ‘Strategic Overdraft’ as a Rising Country’, Journal of Strategy and Decision Making, Issue 2, 2017, pp. 49–55.

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stability of the national strategic layout. An over-reliance on economic means may lead to the risk of ‘overdraft’ in China’s economy. Thus, more efforts should be made in the security and political spheres to better balance the allocation of strategic resources for mutual promotion and optimisation, which facilitates the realisation of the BRI’s short-term and long-term goals.

Global Governance Changes and China’s Response—The Supply of Global Public Goods Lin Ren and Bo Peng

Theoretically, ‘global economic governance is the provision of a global public good’1 and this good is embodied as the global governance order, which encompasses rich connotations including global, regional, trans-regional, and other emerging mechanisms and their related orders. Grounded on the understanding of its primary connotations and characteristics,2 this paper attempts to analyse the new characteristics and 1 Pei Changhong, ‘Global Economy Governance, Public Goods and China’s Opening

Up’, Economic Research Journal, Issue 3, 2014, pp. 4–19. 2 A public good features two main characteristics: first, its unique ‘non-competitiveness’ and ‘non-exclusivity’ generates ‘free-rider’; second, affected by governance cost, player characteristic, stake-holding intensity, among others, it often presents different characteristics in supply and demand, resulting in governance equilibrium, limited governance, governance imbalance, etc.

The Chinese text of this paper was originally published in International Economic Review, Issue 1, 2020. L. Ren (B) · B. Peng Chinese Academy of Social Sciences, Beijing, China e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_5

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systemic dynamics of current global governance and China’s response to these by constructing a ‘supply–demand’ analytical framework of public goods. This framework features three dimensions. First, ‘supply’ contains both ‘supply capacity’ and ‘supply willingness’. A nation’s ‘supply capacity’ includes hard power, such as economic, military, and technological power, as well as soft power, such as political, cultural, and norm-shaping power. A nation’s ‘supply willingness’ is not only constrained by its ‘supply capacity’ but also depends on its stake-holding intensity perceived in a particular area of governance. Depending on ‘supply capacity’ and ‘supply willingness’, countries perform differently in global governance, with ‘supply differences’ to varying degrees. Second, the ‘demand’ for global governance order is manifested in countries’ need for the representativeness, effectiveness, openness, and legitimacy of governance mechanisms in different fields. Based on distinct player characteristics and stake-holding intensities, countries are subject to ‘demand differences’ at varying degrees when participating in global governance. Third, the strategies and policy games adopted by countries (especially major countries) in global governance reflect the process of interactive matching between the above-mentioned ‘supply differences’ and ‘demand differences’. This matching may result in various situations regarding the provision of public goods and thus affects the influence of global governance, including governance equilibrium, limited governance, and governance imbalance. Moreover, such matching not only leads to new characteristics and issues in global governance but also brings about dynamics of the global governance system at different levels, which inspires us to speculate about China’s response.

New Characteristics of Global Governance In recent years, the ‘supply’ and ‘demand’ of global and regional public goods in countries (especially major countries) have been changing. The ‘supply differences’ and ‘demand differences’ in the global governance order between developed and developing countries, between the North and the South, and between established and emerging market countries are becoming evident. Specifically, multilateralism is challenged, the dominant country’s withdrawal aggravates governance deficits, the intensified game among major countries exacerbates contradictions in supply, and global governance is in urgent need of reform.

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(I) Multilateralism is Challenged According to the ‘supply–demand’ analytical framework of public goods, to transfer domestic conflicts and cater to populist voters, some major countries represented by the United States have chosen to reduce the ‘supply willingness’ of the global governance order, resulting in many negative spillover effects that directly or indirectly challenge the spirit of multilateralism as the pillar of global governance. Firstly, established major countries have internationalised their domestic politics, and their foreign policies are heavily tinged with anti-globalisation. To divert domestic contradictions, some developed countries have internationalised their domestic political and economic issues. As a result, anti-globalisation often appears in their foreign policy, which somehow hinders the effective operation of global governance. The Trump administration stressed so-called ‘reciprocal trade’ but acted assertively in international trade, ignoring the global value chain with high interdependence among economies shaped by economic globalisation, showing obvious signs of anti-globalisation. On the one hand, the Trump administration practised ‘withdrawal diplomacy’ and advocated ‘America First’ to avoid assuming massive international responsibilities and to reduce its cost of global governance; on the other hand, it sought re-election through domestic political support by diverting domestic economic and social contradictions. The widening gap between the rich and the poor brought about by globalisation has made US citizens feel that they are suffering because of globalisation. As a result, a social basis for anti-globalisation has been shaped among them. The Trump administration’s adoption of anti-globalisation approaches was towards seeking re-election by taking advantage of American citizens’ anti-globalisation sentiments. Secondly, Trump, with a background in business, values financial interests rather than contractual spirit, and prefers bilateral games to multilateral cooperation. In his foreign policy, he executed ‘America First’, even acquiring bullying tactics such as ‘Maximum Pressure’. Both ‘America First’ and trade bullying have reflected that the United States is no longer keen on ‘supplying’ the multilateral systems, maintaining open and free markets, and ensuring the normal functioning of the global governance order. Instead, the United States has ignored the basic needs of other countries (including its traditional allies) for such public

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goods, which led to a governance deficit. As the main founder and leader of the current global trade governance system, the United States, to achieve its goal of ‘America First’, has used domestic laws (such as the Section 301 Investigation) as the basis for debunking the economic and trade policies of other countries, even taking unilateral retaliatory actions, disregarding multilateralism and the spirit of contract. The United States has also substituted multilateral negotiations with bilateral trade negotiations and put pressure on China, the EU, and Mexico through tariffs. Its occasional ‘trade bullying’ undermines the core spirits of international trade and global governance, such as justice, reciprocity, transparency, and freedom.3 (II) Dominant Country’s Withdrawal Aggravates Governance Deficits Following a string of withdrawals from the Trans-Pacific Partnership (TPP), the Paris Agreement, the United Nations Educational, Scientific, and Cultural Organization (UNESCO), the United Nations Human Rights Council (UNHRC), the Universal Postal Union (UPU), and the Iran Nuclear Deal in 2017 and 2018, in the first half of 2019, the United States, the dominant country then and now in the global governance system, announced its suspension of the Intermediate-Range Nuclear Forces (INF) Treaty and withdrawal from the Arms Trade Treaty (ATT). Once again, uncertainties were added to regional and global security.4 After having withdrawn from a series of international organisations and agreements, the United States threatened to withdraw from the World Trade Organization (WTO) and other fundamental institutions of global governance to reshape its ‘America First’ landscape, ignoring global public interest and worsening global governance which is in a gruelling governance deficit. In the context of its weakening superiority in power and institutional resources, the United States is attempting to cut off other countries’ benefits from institutional spill over effects, reduce the consumption of power resources brought about by its commitments, and

3 Ren Lin, ‘2018, The Fall of Global Governance?’, World Affairs, Issue 21, 2018, pp. 50–51. 4 Ma Xiaocheng, ‘U.S. Withdrawal from INF Treaty Might Open “Pandora’s Box”’, February 2, 2019, http://www.xinhuanet.com//world/2019-02/02/c_1124080928. htm [2019-08-01].

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shrink the space for negotiations through means of institutional balancing such as withdrawal and threat of withdrawal,5 without acknowledging the negative impact it may cause on existing global governance. Notably, the United States did not intend to abandon the current global governance order through a series of withdrawals but rather to reshape it through withdrawal or threat of withdrawal. With an increasing number of countries benefiting from established international regimes, the institutional spill over effects and the United States’s consequent power-consuming effects are increasingly obvious. The United States has begun to reconsider and recalculate the ‘supply–demand’ benefit ratio of providing such public goods. With the economic development of other countries and the increase in their ‘supply capacity’ for such public goods, the United States intends to adjust the current order and redistribute the cost of governance according to the ‘demand differences’ among countries. However, the United States has deliberately downplayed its gains from the established order and ignored the blow struck by governance deficits to the interests of other countries, attempting to maximise its stake and re-establish its authority through the means of withdrawal or threat of withdrawal. However, one thing is certain, the United States is the dominant country in the established global governance system, and its practice of maximising its own interest while overlooking international responsibility and morality has produced extremely negative effects. Its sudden irresponsible withdrawal may lead to a mismatch between the ‘demand’ and ‘supply’ of global and regional public goods among countries in a short time, thus aggravating the global governance deficit, destroying a certain tacit agreement among countries in the current global governance system, placing countries in a trust deficit again, and increasing the difficulty of raising governance costs for global governance. Therefore, compared with the impact brought about by the United States’s withdrawals on the effectiveness of global governance, the United States’s adoption of their ‘pulling the plug’ policy has further shaken the legitimacy of the global governance idea and threatened the stability and normal operation of the global governance order.

5 Ren Lin, ‘“Exit Diplomacy” and the Global Governance Order - An Analysis of Institutional Realism’, Quarterly Journal of International Politics, Issue 1, Vol.4, 2019, pp. 84–115.

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(III) Intensified Game Among Major Countries Exacerbates Contradictions in Global Governance Supply There is a certain contradictory interaction between major country relations and global governance. To overcome global difficulties, major countries must cooperate to provide global public goods, allowing the realistic demands of global governance to provide the impetus, opportunity, and platform for shaping the benign interaction among major countries. The relationship among major countries also has a profound impact on the promotion and improvement of global governance, determining whether global governance can function in an orderly way, whether the governance costs can be adequately provided, whether the governance performance can be achieved, and so on. Hence, coordinating major country relations is also a core task to ensure the normal operation of global governance. The development of the US–China relations, the most important bilateral relationship in the world today, largely determines the future landscape of global governance. The United States is the largest developed country in the global North, and established country of the existing order, while China is the largest developing country in the global South, and emerging country. Their difference in status will lead to ‘supply differences’ and ‘demand differences’ between them in global and regional public goods. Both sets of differences will have a significant and far-reaching impact on the development direction and pattern of global governance. The US trade bullying and protectionism have not only undermined the existing basic principles of global governance but also deliberately ignored China’s supply of global governance order as a public good and its consideration regarding a reasonable match between supply and demand. Thus, the United States attempts to exclude China from the process of the future construction of global governance, creating a ‘decoupling situation’ and shaping a so-called ‘parallel system’. China’s absence, however, will pose a serious threat to the legitimacy and effectiveness of global governance, not conducive to the financing of governance costs, the provision of global public goods, and the achievement of the stated objectives of global governance. An effective mediation between the two major economies is expected to add certainty to a world full of uncertainties. In June 2019, China’s and the United States’ heads had an important bilateral meeting at the G20 (Group of Twenty) Osaka

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Summit. On December 13, 2019, China and the United States reached a phase-one economic and trade agreement. The agreement covers intellectual property, technology transfer, food and agricultural products, bilateral assessment, and dispute settlement, and so on. (IV) Global Governance Reform Needs to Be Advanced Urgently Facing the above threats and challenges, global governance is in urgent need of reform. This paper suggests that the key to effectively reforming global governance is to comprehensively consider and appropriately adjust the ‘supply differences’ and ‘demand differences’ in global and regional public goods to stabilise the global governance order. In other words, the effective reform of global governance needs to fully reflect the positive interaction and reasonable match between ‘supply differences’ and ‘demand differences’ in the global governance order in terms of effectiveness and legitimacy. While pursuing this effectiveness of the mechanism, the impairment of its legitimacy caused by institutional non-neutrality and hierarchy should be minimised. Conversely, while pursuing the legitimacy of a mechanism, the impairment of its effectiveness caused by the lack of coordination and governance performance should be minimised. Firstly, there is an urgent need to reform the established multilateral governance mechanisms in terms of their effectiveness and legitimacy. For example, although the UN and the WTO, which boast a broad membership base, perform better than other global governance mechanisms in representativeness and legitimacy, they need to be reformed further for higher governance effectiveness. The arrears of major countries have further exacerbated the governance deficit of the established multilateral systems. There is a US$ 1.5 billion shortfall in the UN peacekeeping budget and a $492 million hole in its regular budget. As the largest developed country, the United States has accrued the largest arrears in peacekeeping funding, totalling $852 million.6 Second, while the current governance mechanism has certain problems, maintaining a rules-based order does more good than harm for most countries. The G20 Osaka Summit 2019 in Japan adopted the

6 ‘U.N. Warns of Budget Crisis and Largest Debtor U.S. Owes Over $800 Million’, June 6, 2019, http://world.people.com.cn/n1/2019/0606/c1002-31122810. html [2019-07-30].

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G20 Osaka Leaders’ Declaration, with a pledge to support the spirit of multilateralism and realise a free, fair, non-discriminatory, transparent, predictable, and stable trade and investment environment.7 Specifically, countries emphasise the importance of keeping markets open and commit to modernising the global governance system rather than abandoning the rules-based multilateral trade order. Additionally, the WTO reform is a topic that has been paid much attention to in the past two years. Trump has taken a tough stance against the WTO since he took office, strangling the selection of Appellate Body members several times and undermining the global trade governance order. US unilateralism and protectionism have seriously threatened the cornerstone principles and survival of the WTO. In response, members such as China and the EU have implied that it is necessary to effectively guarantee the normal operation of the dispute settlement mechanism and maintain the effectiveness and authority of the multilateral trading system.8 The WTO was created in the twentieth century, surely some of its rules are somehow obsolete or fail to reflect the current needs of trade governance. For example, the WTO has not yet outlined mature rules to follow regarding e-commerce, an emerging economic and trade activity. Therefore, there is an urgent need for the reforming and modernising of the relevant rules to adapt to the changing environment, instead of abandoning the existing system and rules altogether.

Dynamics of Global Governance System The ‘supply differences’ and ‘demand differences’ of the global governance order have produced new problems and characteristics in global governance and, more importantly, the interactive matching between them has had a profound impact on the international governance mechanisms and institutional arrangements at all levels. In the next section,

7 ‘G20 Osaka Leaders’ Declaration: Committed to Realizing a Free and Fair Trade and Investment Environment’, June 30, 2019, http://www.xinhuanet.com/world/2019-06/ 30/c_1124689173.htm [2019-07-30]. 8 Department of Commerce, ‘Trump “Threatens” Not to Recognize China as a Developing Country without a WTO Reform in 90 Days’, July 29, 2019, http://chinawto.Mofcom.gov.cn/article/ap/q/201907/20190702885666.shtml [2019-07-30].

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the impacts on global multilateralism, regional governance, cross-regional multilateralism, and international economic order are sorted and analysed. (I) Global Multilateralism Global multilateralism experiences the most obvious ‘supply differences’ and ‘demand differences’ of global public goods. The interaction between the two differences also features a high degree of mismatch. On the one hand, the United States has reduced its ‘supply willingness’ of the global multilateral (trade) governance mechanism, specifically, it questions the legitimacy of the WTO; on the other hand, economies (e.g. China, the EU, Japan, and India), with a high demand for global multilateralism, have increased their ‘supply capacity’ and ‘supply willingness’, which could not be effectively demonstrated due to the United States’s strong suppression (through various forms of trade restrictions) and threat to withdraw from the WTO. This high degree of mismatch mainly stems from the controversies over the selection of Appellate Body members, the proper functioning of the WTO dispute resolution mechanism, the status of ‘developing countries’ and ‘special and differential treatment’, among others. On January 15, 2019, the Trump administration took advantage of the developing country issue and submitted the document An Undifferentiated WTO: Self-Declared Development Status Risks Institutional Irrelevance (WT/GC/W/757),9 demanding the elimination of the ‘special and differential treatment’ enjoyed by a large number of developing countries; on July 26, Trump issued a statement declaring that, without substantial WTO reform regarding the dichotomy between developed and developing countries within 90 days, the United States will no longer recognise the special status of any developing country. The United States consistently denied the foundational position of the Principle of Common

9 General Council of World Trade Organization, ‘An Undifferentiated WTO: Selfdeclared Development. Status Risks Institutional Irrelevance’ (WT/GC/W/757), 16 January 2019, https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E& CatalogueIdList=251397,251285,251141,251004,251003250912&CurrentCatalogueId Index=5&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanis hRecord=True [2019-07-31].

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but Differentiated Responsibilities in the WTO, which has caused strong dissatisfaction among developing countries and emerging countries. Emerging countries have been actively seeking to reform and maintain the WTO’s role as the core global trade governance mechanism. On February 26, 2019, ten developing countries including China and India submitted an analytical paper titled The Continued Relevance of Special and Differential Treatment In Favor of Developing Members to Promote Development and Ensure Inclusiveness (WT/GC/W/765/Rev.1)10 to the WTO, pointing out that the current threats to the relevance, legitimacy, and effectiveness of the WTO are deriving from the proliferation of protectionism and unilateralism, the blockage of Appellate Body member selection, and the impasse of the Doha Development Round, not from the self-declared development status of members from developing countries. Following the release of China’s Position Paper on WTO Reform in November 2018, on May 13, 2019, China submitted China’s Proposal on WTO Reform, further clarifying its position on WTO reform and specifying four areas for concrete actions: resolving the crucial and urgent issues threatening the existence of the WTO; increasing the WTO’s relevance in global economic governance; improving the operational efficiency of the WTO; enhancing the inclusiveness of the multilateral trading system.11 The WTO reform in 2019 was more urgent than in 2018, with its Appellate Body (AB) in an impasse due to the United States’s continued blockage of justice selection. Global trade governance was battling and discussions on WTO reform among major economies became more frequent. On March 26, 2019, China and France issued the Joint Statement on Jointly Safeguarding Multilateralism and Improving Global Governance. Both countries support a much-needed reform of the WTO to enhance its effectiveness and authority, calling for further discussions 10 General Council of World Trade Organization, ‘The Continued Relevance of Special and Differential Treatment in Favor of Developing Members to Promote Development and Ensure Inclusiveness’ (WT/GC/W/765/Rev.1), February 26, 2019, https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E& CatalogueIdList=253388,252995,252732,251955,251793,251801,251619,251580,251 556,251511&CurrentCatalogueIdIndex=4&FullTextHash=&HasEnglishRecord=True& HasFrenchRecord=True&HasSpanishRecord=True [2019-07-31]. 11 Ministry of Commerce, ‘China’s Proposal on WTO Reform’, May 13, 2019,

http://images.mofcom.gov.cn/sms/201905/20190514094326062.pdf [2019-07-31].

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on strengthening the WTO’s three key functions: dispute settlement, monitoring, and negotiation and stressing the need for support for the work carried out by the EU-China working group on WTO reform to make progress and enhance the modernisation level of the global governance system.12 In summary, as the most important global multilateral trade governance system, the WTO is significant in the world economy because it can create a low-cost environment for international economic and trade cooperation and stabilise market development expectations.13 However, in 2019, the global multilateral trade governance system was being impacted by US unilateralism and trade protectionism. Coupled with the Trump administration’s repeated threats to withdraw from the WTO, this posed a challenge to the maintenance of the WTO mechanism, making it more difficult to reach consensus, carry out reforms, and maintain the global economic and trade order among all parties. (II) Regional Governance Regional governance is an important part of global governance; regional governance order is an organic part of global governance order. In 2019, the progress in regional governance order was mainly made in North America, the Asia–Pacific region, and East Asia. The dynamics of these governance systems differ, reflecting the interactive features between ‘supply differences’ and ‘demand differences’ among countries in each regional governance order. First, in North America, there are certain supply–demand differences in regional governance order among its major countries (the United States, Canada, and Mexico); there is a certain ‘supply–demand’ mismatch in regional public goods. Relevant countries showed distinctiveness in supply willingness and capacity regarding the replacement of the North American 12 Ministry of Commerce, ‘Joint statement by the French Republic and the People’s Republic of China on Jointly Safeguarding Multilateralism and Improving Global Governance’, March 26, 2019, http://coi.mofcom.gov.cn/article/y/gjdt/201904/20190402849009.shtml [2019– 07-31]. 13 Zhou Mi, ‘Principle Common but Differentiated Responsibilities Is the Important Basis for International Multilateral Economic and Trade Cooperation’, August 1, 2019, http://opinion.china.com.cn/opinion_88_211888.html [ 2019–08-03].

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Free Trade Agreement (NAFTA) with the United States-Mexico-Canada Agreement (USMCA). On 30 November 2018 led by the United States, the leaders of the US, Canada, and Mexico signed the USMCA, replacing the NAFTA, in Buenos Aires, Argentina. The USMCA not only contains a ‘poison pill’ clause that is exclusive and targets other extraterritorial major countries but also exerts strong pressure on Mexico and Canada. By a vote of 114 in favour to 4 against, Mexico’s Senate passed the USMCA in June 2019 despite the United States’s maximum pressure and the construction of the US–Mexico border wall. On 10 December 2019 US Trade Representative Robert Lighthizer, Mexican Deputy Foreign Minister Jesus Seade, and Canadian Deputy Prime Minister Chrystia Freeland signed the revised USMCA. On December 20, 2019, the US House of Representatives passed the USMCA by a 385 to 41 vote and sent it to the Senate for a vote. The new protocol strengthens the enforcement of labour practices and increases requirements in areas such as patent protection and automotive steel. The United States’s maximum pressure urged the conclusion of the USMCA, but the fairness of the new protocol is questionable, with Canada and Mexico indicating that the USMCA ‘gives the United States a tool to impose tariffs and close the market’.14 The Trump administration’s reset of regional order is asymmetrical, highlighting the principle of ‘America First’, directly or indirectly leading to a mismatch between supply and demand in regional agreements. Second, in the Asia–Pacific region, despite the frequent regional and multilateral uncertainties created by the Trump administration, the regional multilateral governance is becoming increasingly tighter, indicating that there are no significant supply and demand differences among regional countries that can overcome these limited differences and work out appropriate matching solutions through consultation and communication. The initiative and promotion of the Regional Comprehensive Economic Partnership Agreement (RCEP) is a good example of such appropriate matching. In August 2019, the 8th Ministerial Meeting of RCEP was held in Beijing, at which ministers presented a strong willingness to negotiate, stating that negotiations would be concluded by the end of 2019. In November 2019, 15 of the 16 members of the RCEP announced the conclusion of negotiations via the mega-regional trade 14 ‘Interpretation of the New USMCA: Controversy Enhancement on Labor Enforcement Triggered Strong Reactions in Mexica’, December 12, 2019, http://finance.ifeng. com/c/7sM2zycTQI4 [2019-12-28].

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agreement. In the meanwhile, RCEP also faces challenges. For example, the small Association of Southeast Asian Nations (ASEAN) countries and the leader of the RCEP cannot effectively coordinate the relations among major countries in the region (China, Japan, Korea, and India). Ultimately, this manifested in India’s abandonment of the RCEP. However, participating countries agreed that under the current global landscape, the RCEP is essential for promoting trade development; maintaining an open, inclusive, and rules-based trading system; and creating a regional policy environment conducive to trade and investment development in the Asia–Pacific region. The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) is another high-profile regional public good in the Asia–Pacific region. Unlike the previous US-dominant TPP, the CPTPP has not attracted enough ‘supply willingness’ from the United States. This does not reflect a decline in US willingness to supply public goods to the region, instead, the issue of ‘who is the dominant power’ matters. Simultaneously, the ‘demand’, ‘supply capacity’, and ‘supply willingness’ for such public goods of other major countries in the region are on the increase. While continuing the comprehensive, high-level, and high-standard rules of the TPP, the CPTPP considers intra-regional differences. The CPTPP further relaxes the conditions for entry into force and deletes 22 provisions in the TPP. These 22 provisions mainly cover trade facilitation, investment, intellectual property, financial services, and so on. Generally, countries in the Asia–Pacific region have, to some extent, realised effective matching between ‘supply differences’ and ‘demand differences’ through the CPTPP. Therefore, if advanced well, the CPTPP is expected to become the critical architecture of the regional governance order which would play an important role in the formulation of international economic and trade rules.15 Finally, in East Asia, the technical issues of the China-Japan-ROK Free Trade Agreement (FTA) have largely been resolved after lengthy consultations, reflecting the small divergences among the three countries in ‘supply differences’ and ‘demand differences’ in the regional governance order. Historical and political issues may sometimes be a disruptive variable in the ‘supply–demand’ relationship of regional governance order. On 4 July 2019, less than a week after the G20 Osaka 15 Bai Jie and Su Qingyi, ‘Rules, Impact and China’s Countermeasures: A Comparative Study of CPTPP and TPP’, International Economic Review, Issue 1, 2019, pp. 58–76.

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Summit, the Japanese government set trade restrictions against Korea due to the unsettled labour compensation during World War II, announcing tighter controls on three raw materials for Korea’s semiconductor industry and the exclusion of Korea from its ‘white list’ for preferential trade. Korea promptly retaliated, leading to long-term and more frequent JapanKorea trade friction. Although the trade dispute between Japan and Korea has cast a shadow over the tripartite FTA negotiations, the ‘supply– demand consistency’ between them for regional governance order cannot be negated. The sixteenth round of negotiations for an FTA among Japan, China, and Korea was held in Korea from November 27 to 29, 2019. Driven by the successful RCEP negotiations, China, Japan, and Korea actively communicated on deepening liberalisation and the facilitation of trade and investment towards building ‘RCEP + ’. (III) Cross-Regional Multilateral Governance In 2019, the cross-regional governance mechanisms of developed countries, represented by the Western-led Group of Seven (G7), showed certain mismatches between the supply and demand of governance order; while the BRICS Group led by emerging market countries performed well despite some intervening variables due to the political shift in Brazil. As a cross-regional multilateral governance mechanism led by developed countries, the G7 has long been the subject of internal disagreement. For a long time, the governance pattern of the G7 has been characterised by ‘a common position of major countries dominated by the will of the United States, a collective response of major countries in response to international crises, a recognition of the identity of the United States by other major countries, and an assignment of governance tasks by the United States to other major countries’.16 In this pattern, the United States is in a relative match with other G7 members in the ‘supply–demand’ relationship of public goods; this governance order was once favourable to the Western group thus maintaining its dominant position in the world system. However, a series of US foreign policy actions in the past two years have shown a decline in its ‘demand’ for and ‘supply

16 Wang Lei and Zheng Xianwu, ‘The Construction of a Mechanism for Coordinating Relations between United States and New Major Countries: Perspectives from the G7’, Journal of Contemporary Asia–Pacific Studies, Issue 2, 2012, pp. 6–25.

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willingness’ towards G7 as a group. For example, the United States had not consulted with other G7 members adequately and effectively before adopting unilateralism in declaring the recognition of Jerusalem as the ‘capital’ of Israel, the recognition of Israel’s ‘sovereignty’ over the Golan Heights, the withdrawal from the Iran Nuclear Deal, and other actions. The United States has been widely criticised for ignoring the rules and interests of other members. The United States’s imposition of steel and aluminium tariffs on its traditional allies Canada and the EU further increased divisions and weakened cohesion within the G7. For another example, on April 6, 2019, the G7 Foreign Ministers’ Meeting in France failed to reach a consensus on major issues such as tariffs, trade, and climate change.17 These facts highlighted the mismatch between ‘supply differences’ and ‘demand differences’ among the G7 member states, and the Trump administration’s aggressive behaviour amplified such differences. In 2019, the BRICS cross-regional cooperation mechanism led by emerging market countries was a mixed blessing, but positive on the whole. Known as the ‘Brazilian Trump’, Bolsonaro, after being elected as Brazil’s new president, decided to renounce Brazil’s ‘developing country’ status and its ‘special and differential treatment’ in exchange for US support for its membership in the Organization for Economic Cooperation and Development (OECD). This has had a certain impact on ‘supply differences’ and ‘demand differences’ within the mechanism, and the degree of supply–demand matching among the five member states may be subject to a decline. However, unlike the matching weakness shown by the G7, the BRICS countries have not yet experienced a mismatch of ‘supply and demand differences’. On the one hand, BRICS countries maintain a holistic stance on upholding multilateralism. In July 2019, the BRICS ministers met in Rio de Janeiro, Brazil, where they pointed out that ‘unilateralism undermines international rules and challenges the international rule of law, which exacerbates the instability and uncertainty of the world’.18 They also emphasised the need to jointly defend

17 ‘G7 Foreign Ministers’ Meeting: Little Consensus Was Reached’, April 7, 2019,

http://www.xinhuanet.com/world/2019- 04/07/c_1124335198.htm [2019-08-07]. 18 Zhou Zhiwei, ‘China-Pakistan Relations and BRICS Cooperation Returned to

Normal Track’, July 31, 2019, http://world.people.com.cn/n1/2019/0731/c1002-312 67184.html [2019-08-07].

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multilateralism and support the central role of the United Nations to safeguard the common interests of and room for manoeuvres of emerging markets and developing countries.19 On the other hand, while intending to enhance its international clout by hosting the 2019 BRICS Summit, Brazil strived to contribute wisdom and strength to global governance by cooperating with other emerging market countries in science and technology innovation, digital economy, and combating transnational crime.20 (IV) G20 and International Economic Order The establishment of the G20, the most important platform for international economic cooperation in the post-crisis era, mirrors the efforts of developed countries and emerging market countries to seek a dynamic balance between supply and demand in the global governance order. Compared with the above three levels of public goods (especially in relation to formal international organisations), although less formal and less binding, the G20 offers a solution of compromise for governance deficit caused by the ‘supply–demand differences’ of public goods with unique superiority, especially under global changes. First, the G20’s unique superiority lies in its functional positioning under global changes. Rather than getting bogged down in discussions of specific issues and minutiae of governance rules and standards, the G20 is concerned with the overall coordination of the global governance system.21 Specifically, the G20 can air its opinion on issues such as ChinaUS economic and trade friction and WTO reform, aiming to maintain the global governance system and the international economic and trade order. Unlike formal international institutional arrangements such as the United Nations, the World Bank, and the WTO, the G20 features flexible institutional settings, allowing representative developed, developing, and emerging market countries to provide insight into the international 19 ‘BRICS Countries Emphasizes on Safeguarding Multilateralism’, July 27, 2019,

http://www.xinhuanet.com/world/2019-07/27/c_1124805680.htm [2019-08-07]. 20 ‘Brazilian Ministry of Foreign Affairs: 2019 BRICS Summit to Be Held in Brasilia

in November’, March 14, 2019, https://www.thepaper.cn/newsDetail_forward_3134324 [2019-08-07]. 21 Ren Lin, ‘Rethinking the G20: A Systemic Crisis Demands a More Systemic Response’, World Affairs, Issue 13, 2019, pp. 14–16.

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economic order and seek consensus and direction for solving worldwide problems. Therefore, the G20 is more concerned with directional issues than solving technical issues. Only when the general direction is grasped, can the implementation plan be more feasible and effective. Thus, the G20 plays a crucial and irreplaceable role in leading global economic governance and maintaining multilateralism. Second, the G20 furnishes a platform for communication and coordination among major countries and creates opportunities for dialogue and communication among major economies. There are 164 WTO members, but a consensus on the direction of some major issues related to WTO reform cannot be reached among them. Mediating among major economies is a unique role and advantage of the G20.22 In particular, the G20 Osaka Summit provided an opportunity for dialogue and played a positive role in easing economic and trade frictions between China and the United States and coordinating the improvement of China–US relations. Under efforts from both countries, China and the United States have reached a phase-one economic and trade agreement, marking the entry of China–US economic and trade friction into a stage of mitigation; the Trump administration has accepted the China–US relations based on coordination, cooperation, and stability as proposed by President Xi Jinping at the 2018 G20 Buenos Aires Summit and the United States has replaced ‘strategic rival’ with ‘strategic partner’ to define China and China–US relations. As the US election approaches, candidates are likely to mention China–US relations, so the potential risk of continued volatility in bilateral relations remains. However, it is still optimal to place China–US relations within the framework of established international rules through multilateral platforms, where the G20 functions as a predictable and important platform and the core mechanism of global economic governance. Nevertheless, as an informal dialogue mechanism, the G20 is subject to poor enforcement, the lack of a punishment mechanism, and limited binding. As a result, the United States reneged on its G20 commitments, including announcing a 10% tariff increase on US $300 billion worth of Chinese imports from September 1, 2019, and listing China as an ‘exchange rate manipulator’. These unexpected issues do not negate the significance of the G20 as an important communication platform; 22 Su Qingyi, ‘China-U.S. Economic and Trade Friction, WTO Reform and the G20’, World Affairs, Issue 13, 2019, pp. 18–20.

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however, if the G20 is to play its role in leading global economic governance and maintaining systemic stability and international economic order, enhancing its executive power may be a critical breakthrough for strengthening its governance capacity.

Countermeasures and Advice for Participating in Leading Global Governance in the New Era As above-mentioned, this paper attempts to understand the dynamic changes of the existing global governance system at different levels through the ‘supply–demand’ analytical framework of public goods. On this basis, the authors believe that China’s efforts of further involvement in promoting global governance and constructing a new global governance system are divided into three aspects: advancing the reform of multilateral mechanisms through mediation among major countries, leveraging the momentum of global governance through regional cooperation, and alleviating the pressure of rules through cross-regional cooperation. (I) Mediating Among Major Countries to Narrow Differences for CoConsulting Order Major countries remain the primary providers and maintainers of global and regional public goods and their interaction and game in the field of public goods have the most profound impact on the realisation of global governance. Therefore, actively mediating the relationship among major countries is still key to building the future global governance system. Especially, as the Trump administration’s protectionism, unilateralism, and bullying have impacted the stability of the world economy in recent years, emerging market countries represented by China should leverage benign interactions among major countries to avoid conflicts, build healthy competitive relations, enhance trust, narrow the differences in the supply and demand of public goods, and promote consensus in key areas of global governance reform. First, China should maintain its strategic composure to further strengthen the foundation of China–US economic and trade cooperation and narrow the supply and demand differences of public goods in an open free market. The trade protectionist tariff war launched by the

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United States has not only seriously affected the international community’s expectations for world economic growth, but has also reflected a decline in the United States’s ‘supply willingness’ towards maintaining the global trade governance order as a global public good. With the escalation of the trade war, the international community’s call for a stable global economic governance order will receive more support; at the same time, the United States is bound to generate a domestic counterforce against Trump. For this reason, China should maintain its strategic composure and strengthen its capability of mastering the situation. On the one hand, China should not take the initiative to escalate the trade war but should prevent exacerbating the ‘supply and demand differences’ between China and the United States for global public goods. On the other hand, China should actively negotiate with the United States on the premise of adhering to its sovereign bottom line, promote itself to be integrated into the global industrial chain, bolster the foundation of China–US economic and trade cooperation on the basis of preventing the decoupling of China and the United States,23 and improve the degree of ‘supply and demand’ matching of public goods between the two countries. Second, China should be aware that strengthening China–EU economic and trade relations can foster a certain counterforce to the United States and increase its leverage with the United States in the next round of negotiations. Under the strong negative impact brought about by the Trump administration’s trade war, China and the EU, both important trade partners of the United States and major economies of the world, feel significant pressure and recognise the importance of strengthening mutual ties and cooperation to alleviate external pressure and maintain the global governance order. China should seize this opportunity to strengthen China-EU economic and trade cooperation, further narrow the differences, and work collaboratively towards a healthy global economic and trade governance order. For example, by making substantial progress in the investment agreement negotiations and consolidating a consistent position on WTO reform, China and the EU have jointly resisted the negative effects of the trade war and the breakup of global

23 Yu Yongding, ‘Prospects for the US-China Trade War’, Speech at the Ninth CF40NRI Finance Roundtable, https://baijiahao.baidu.com/s?id=1635549003384559985& wfr=spider&for=pc [2019-08-05].

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value chains,24 maintaining a rules-based global economic and trade order. China should also seek to build a constructive cooperative relationship among China, the United States, and the EU. With the strengthening of bilateral economic and trade relations between China and the EU and the negative impact of the trade war being increasingly felt by the United States, the United States may review the benefits and costs of its tariff and trade wars. If China could seize this opportunity and actively seek cooperation with the United States and the EU on global governance and other issues, the deadlock may be broken. Finally, China should deepen its reform and opening-up policies, including strengthening and improving the protection of intellectual property rights, eliminating various market distortions, and implementing the principle of competition neutrality.25 Following this, it may receive international recognition for its market economy status and gradually participate in the formulation of high-level governance rules, thus seeking better involvement in leading global economic governance. (II) Strengthening Regional Order to Relieve External Pressure In the context of the prevalent isolationism and bullying and failures of effectively matching the supply and demand of public goods at the global level, China may shift some of its attention to regional cooperation. Taking regional governance as a breakthrough helps alleviate external pressure from the United States and reform the global governance system by offering more development momentum for global governance through the provision of regional public goods. Specifically, China may leverage the strategic space left by the US withdrawal from the TPP, timely promote CPTPP negotiations, and accelerate the accomplishment of the RCEP.

24 Xu Qiyuan and Lu Ting, ‘Breakout from the U.S.-China Conflict with China-EU Economic and Trade Cooperation’, Caijing Magazine, August 5, 2019. 25 Yu Yongding, ‘Review and Prospects of the China-U.S. Trade War’, New Finance Review, Issue 3, 2018, pp. 1–28.

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First, Trump announced the withdrawal from the TPP at the beginning of his presidency, and Japan became the leader of the Asia–Pacific regional rules negotiations, shifting its focus from the TPP to the CPTPP. Although the Japan-led CPTPP still upholds high-standard rule requirements, the absence of the United States has axed its original geo-economic strategic curb on China. In this context, China should take advantage of this platform to bridge Japan’s ‘supply and demand differences’ in regional public goods and reduce both trust deficit and governance deficit in the region. This move could also counterweight the Trump administration’s Indo-Pacific strategy. Additionally, the CPTPP’s higher-level rules have the potential to develop as global rules, which will help China and regional member states be connected to high-level international rules and improve their ability to participate in global multilateral governance. The CPTPP has suspended 22 provisions from the TPP but, basically, continued the spirit of comprehensive, high-level, and high-standard rule-making of the TPP which will challenge China’s trade rule-making. In response, while identifying its various degrees of acceptance of the relevant CPTPP rules and provisions, China should also promote the further deepening of domestic reform and dovetail with some of the existing high-level rules to gradually break the ‘confinement’ from developed countries in trade rule-making and enhance its ability to participate in global governance. Furthermore, the RCEP cooperation should be tamped to promote the establishment of multilateralism with the help of regional integration. The RCEP is also an effective measure for countering unilateralism and trade protectionism that undermine the global order at the regional level. The successful RCEP negotiation has not only demonstrated China’s ‘supply capacity’ and its ‘supply willingness’ to take the initiative to shape regional public goods but also reflected the willingness of regional economies to strengthen cooperation, which will help satisfy the need for the optimal allocation of resources in the region and hedge the risks posed by the deficit of governance order outside the region. The RCEP negotiation features strong economic complementarity among member countries and little difficulty in integration based on existing bilateral and multilateral consensuses. But the different demands between developed and developing members of the RCEP (especially the temporary withdrawal of India) should also be paid attention to and actively guided.

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(III) ‘The Belt and Road’: New Regional and Cross-Regional Attempts Pursuing global development through the ‘Belt and Road’ Initiative is a driver for China’s involvement in leading global governance changes in the new era. This paper believes that, in the context of global governance, China’s Belt and Road Initiative (BRI) can help foster a benign match between supply and demand differences of relevant countries for the governance order. In other words, while providing necessary public goods to benefit the economic development of countries along the Belt and Road, ensuring the representativeness and legitimacy of these public goods is expected to reach an equilibrium state between supply and demand. After more than six years of development, the BRI has played a positive role in achieving such an equilibrium state. On the one hand, the BRI has provided institutional increments for advancing regional and cross-regional multilateral cooperation and economic and trade investment governance. Under the BRI framework, China and its neighbouring countries have jointly built six economic corridors, promoting regional economic cooperation towards a bilateral and multilateral mixed mode. Based on its ‘supply capacity’ and ‘supply willingness’, China has provided the international community with multilateral investment governance mechanisms such as the Asian Infrastructure Investment Bank (AIIB) and the BRICS New Development Bank (NDB) under the framework of the BRI, providing critical multilateral financing channels for the construction of regional and cross-regional infrastructure with large financing gaps. China’s commitment to upholding and practising the global governance concepts of ‘consultation, contribution, and shared benefits’ helps ensure the representativeness and legitimacy of the BRI and effectively bridge the differences in demand for this public good among countries along the Belt and Road. For example, the strengthening of communication and cooperation between AIIB and other multilateral development banks such as the World Bank proves the necessity and feasibility of this concept. The proposal of such ideas as ‘Community of Shared Future for Mankind’, ‘New Type of International Relations’ and the correct idea of moral and profit also demonstrates China’s efforts to contribute its

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wisdom to the world and actively shape and improve global governance under the framework of the Belt and Road.26 Finally, besides making a big push for regional and cross-regional governance mechanisms that better represent the interests of developing countries, China should actively participate in high-standard crossregional governance mechanisms led by developed countries to dovetail with the high-standard rules of the international community, alleviate the pressure of rules exerted on China by Western countries, and echo further reform and opening up at home, thereby truly aligning domestic governance with global governance, and strengthening the internal and external linkage effect of China’s participation in global governance.

26 Ren Lin, ‘The Belt and Road’: Providing a Platform and Momentum for Reforming the Global Governance System’, World Affairs, Issue 9, 2019, pp. 12–21.

The UN’s ‘Big Agenda’: Building an Inclusive Global Cooperation Framework Dongyan Li

Introduction The Charter of the United Nations authorises the United Nations (UN) as a universal international organisation to safeguard international peace and security and to promote international cooperation in economy, society, culture, human welfare, and protection of fundamental human rights. UN agencies undertake the mission of formulating a global agenda on relevant issues. Since the UN’s establishment, a large number of international agendas have been proposed and promoted through the UN every year, including the 2030 Agenda for Sustainable Development. The UN is expected to achieve global goals by adopting and advancing the global agenda, reaching consensus on participation among global actors, and building a global partnership framework, which can also reflect the values and role of the UN.

The Chinese version of this paper was originally published in the 6th issue of World Economics and Politics in 2020. D. Li (B) Institute of World Economics and Politics, Chinese Academy of Social Sciences, Beijing, China

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_6

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The UN ‘agenda’ adopted in this study refers to the formal arrangements included in the agenda of the UN General Assembly, UN Security Council, among other UN bodies, and supported by relevant documents. The UN ‘topic’ generally refers to various issues that are the focus of attention and are discussed and promoted by various UN agencies, including the UN agenda. Some UN agendas are comprehensive agendas, such as sustainable development, international human rights, peace and security, international law, and international cooperation. Others are devoted to a certain field, such as peacekeeping operations, industrial development, land reform, women, children, and people with disabilities. There are also some agendas focusing on a specific topic, such as girls’ education, protection of children in armed conflict, and trafficking of women and girls. The UN Documents Search System (Chinese) divides UN declarations and conventions into 28 topics: Acquired Immunodeficiency Syndrome (AIDS), disarmament, people with disabilities, children, women, international law, international cooperation, international humanitarian law, law of the sea, peace and security, environment, disaster reduction, health, economy and trade, sustainable development, terrorism, labour, the UN, refugees and migrants, youth, human rights, outer space, health, criminal justice, drug control, race, sovereignty, and culture.1 It can be seen that UN agendas cover a wide range of topics, which are interconnected and have cross-cutting features. For example, according to the classification of UN conventions and declarations, the Global Compact for Migration is classified under both ‘human rights’ and ‘migrants and refugees’. During his tenure as Secretary-General, Kofi Atta Annan referred to human rights, security, and development as ‘three pillars’ that are inseparable and mutually promoted. Therefore, there are references to ‘cross-pillar issues’ and ‘pillar issues’ in UN documents.2 Each pillar issue also covers subtopics. In the early days of the UN’s establishment, its agendas mostly covered a single area, with specific and concise content on a small scale. In the late 1960s, the cross-field convergence and integration of UN agendas began to emerge, and they also became more comprehensive. After the end of 1 The UN Official Documents System, https://www.un.org/zh/documents/treaty/byt opic/index.shtml, last accessed: April 21, 2020. 2 Peacebuilding and Sustaining Peace, Report of the Secretary-General, A/72/70S/2018/43, https://www.un.org/peacebuilding/zh/content/report-secretary-generalpeacebuilding-and-sustaining-peacel, last accessed: April 21, 2020.

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the Cold War in 1989, the phenomenon of the big agenda progressed rapidly, especially for cross-pillar convergence and integration among the three pillars. This study aims to analyse the causes and effects of the big agenda and its prospects. In addition to reviewing and analysing the agenda documents of UN agencies, such as the UN General Assembly and the UN Security Council, this study also surveys government attention paid to UN agendas during the Statement at the General Debate of the 73rd Session of the UN General Assembly in 2018.3 This study seeks to reveal the role and influence of the big agenda, as well as the attention and attitude of member governments.

The Expansion of UN Agendas A distinctive feature of the development of UN agendas is their orientation towards the big agenda. Specifically, a number of small-scale agendas that focus on a single field expand into a cross-field, cross-sectoral comprehensive agenda with multiple actors through convergence and integration. I. Phenomenon of the ‘Big Agenda’ Before the late 1960s, UN agendas were mostly single-field or smallfield agendas with specific content, concentrated goals, and small scale, such as technical assistance, refugee relief, refugee status, narcotics, slavery, employment, and women’s participation in politics. Moreover, the UN pushed forward some dual-field agendas, such as economic development and migration (1948) and the economic and social consequences of

3 Those surveyed are the first 100 government representatives of member states who spoke in the Statement at the General Debate of the 73rd Session of the United Nations General Assembly from September 25 to October 1, 2018 (29 from African countries, 22 from American countries, 26 from Asian and Pacific countries, and 23 from European countries). To survey the attitudes of the permanent members of the United Nations Security Council, the Group of Seven, and the BRICS (Brazil, Russia, India, China, and South Africa) countries, this study chooses China, Russia, India, Germany, and Canada as a supplement to those surveyed. The survey is concerned with the UN topics to which government representatives paid attention during their speeches. See https://gadebate. un.org/zh/sessions-archive, last accessed: May 10, 2020.

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disarmament (1960). From the late 1960s, the trend of cross-field convergence and integration of UN agendas began to appear, characterised by the growing number of comprehensive agendas covering multiple topics. Significant progress was made in cross-field agendas on human rights in the late 1960s. After continuous integration and expansion, the UN human rights agenda has been connected and combined with the UN agendas on development and security. The Universal Declaration of Human Rights, which was adopted in 1948, contains universal human rights. Since the adoption of the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights in 1966, topics on human rights have shown a crosscutting and mainstream trend. The right to self-determination and the right to dispose of natural wealth and resources are included in issues on human rights. Besides the two above-mentioned international conventions on human rights, the UN General Assembly has also adopted relevant documents, such as Human Rights and Scientific and Technological Development (1968), Respect for Human Rights in Armed Conflict (1968), and the Declaration on the Elimination of Discrimination against Women (1967). The agenda for the First UN Development Decade, which took effect in 1961, was very concise and focused on specific development issues. In 1969, a resolution on the promotion of fundamental human rights during the Second UN Development Decade, which started in 1970, was passed at the UN General Assembly. It included the promotion of ‘political, economic, social and cultural rights’.4 The Declaration on Social Progress and Development adopted in 1969 further emphasised the ‘interdependence and mutual influence’ among human rights, international peace and security, social progress, and economic development.5 From the perspective of development, small agendas on specific issues, such as development assistance, technical assistance, land reform, and food shortages, have been gradually integrated into a comprehensive sustainable development agenda covering multiple areas. In the 1960s, as environmental issues were placed on the UN agenda, links between the 4 Promoting the Respect and Observance of Human Rights and Fundamental Freedom during the Second United Nations Development Decade, A/RES/2586(XXIV), https:// www.un.org/zh/ga/24/res/, last accessed: April 25, 2020. 5 Declaration on Social Progress and Development Declaration, A/RES/2542(XXIV), https://www.un.org/zh/ga/24/res/, last accessed: April 25, 2020.

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development agenda and environment agenda were gradually established. The UN Conference on the Human Environment (Stockholm, 1972) and the Declaration of the United Nations Conference on the Human Environment clearly linked environment and development, emphasising that countries should match development with the need to protect and improve the human environment when formulating development plans.6 The Declaration of the United Nations Conference on the Human Environment not only included environmental issues in the development agenda, but also made it clear that environmental goals and society, economy, human rights, and peace goals should be achieved through coordinated efforts. The declaration laid the groundwork for the sustainable development agenda. The Declaration on the Right to Development adopted in 1986 formally confirmed that ‘the right to development is an inalienable human right’,7 and elevated this right to the same level as the two international conventions on human rights, marking the extension of the development agenda to the human rights agenda. The Rio Declaration on Environment and Development (1992) and Agenda 21 are milestone achievements for the big agenda in the field of development. The achievements integrate topics on economy, society, and environment, among others into a big agenda with sustainable development as the mainstay, covering the roles of different groups, such as women, children, youth, indigenous people, communities, non-governmental organisations (NGOs), trade unions, science and technology, the business community, and farmers.8 With the end of the Cold War and the rise of neoliberalism, globalism, and cosmopolitanism, there was been a growing trend towards international cooperation and global governance in the late 1980s. In this context, the cross-field integration and expansion of UN agendas became more prominent. As the three pillars of human rights, security, and development are further integrated across pillars, the sub-agendas contained in the agenda also show a growing trend towards integration and expansion. The cross-cutting and mainstream features of human rights have been 6 Declaration of the United Nations Conference on the Human Environment, http:// www.un-documents.net/unchedec.htm, last accessed: May 10, 2020. 7 Declaration on the Right to Development, A/RES/41/128, https://www.un.org/zh/ ga/41/res/, last accessed: May 10, 2020. 8 Agenda 21, https://www.un.org/chinese/events/wssd/agenda21.htm, last accessed: June 3, 2020.

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further strengthened, and in particular, the security agenda is oriented towards human rights. Since the 1990s, such topics as children, women, and sexual violence have been put on the Security Council’s agenda. New concepts, such as human security and the responsibility to protect, have been proposed, and these reflect the orientation of the security agenda towards human rights and humanisation.9 In addition, the security agenda is more closely linked with the development agenda, which is reflected in the concepts of peacebuilding and sustaining peace. In the field of development, the 2030 Agenda for Sustainable Development has confirmed 17 main goals and 169 specific goals, covering wider fields on a larger scale than before. Meanwhile, the agendas on specific issues, such as refugees and migrants, disaster prevention and mitigation, road traffic safety, public health, and health, are also developing in the direction of the big agenda. II. Basic Elements and Characteristics of the ‘Big Agenda’ The cross-field integration and expansion of UN agendas show three distinctive features. First, the most obvious characteristic is mutual convergence and extension of the agendas on the three pillars of human rights, development, and security. The cross-cutting convergence and integration of agendas is based on mutual connections, mutual promotion, and inseparable links across fields. It is necessary to comprehensively balance and coordinate the goals of each field with an overall plan so that relevant issues can be resolved through a comprehensive approach to jointly realise the goals of the agendas. This is reflected in the details of comprehensive agendas. For example, the human environment is emphasised as essential to human well-being and the enjoyment of basic human rights, and even the right to life itself10 and ‘peace, development and environmental protection are interdependent and indivisible’.11 9 For details about the term ‘humanization of security’, refer to Thomas G. Weiss

et al., UN Voices: The Struggle for Development and Social Justice, Bloomington: Indiana University Press, 2012, p. 295. 10 ‘Declaration of the United Nations Conference on the Human Environment’, http://www.un-documents.net/unchedec.htm, last accessed: May 10, 2020. 11 ‘United Nations Conference on Environment and Development’, A/CONF.151/26 (Vol. I), http://www.un-documents.net/rio-dec.htm, last accessed: May 10, 2020.

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The second distinctive feature of UN agendas is that cross-actor and cross-sectoral integration facilitates participation by all and the formation of global partnerships. The big agenda covers the concerns of all groups and promotes the formation of global partnership that involves all relevant parties, which has become a traditional feature of the UN global agenda. At the domestic level, the agenda requires the participation of governments at all levels, various government bodies, all stakeholders, and the public, including the private sector, civil organisations, and NGOs. At the international level, besides cooperation between countries, emphasis should be placed on regional cooperation, North–South cooperation, and South–South cooperation, especially on the role of regional organisations. At the global level, building a global partnership is an indispensable element. Global partnership means promoting ‘intensive global engagement’ and bringing together governments, the private sector, civil society, the UN system, and other relevant parties.12 In terms of hierarchical relationships, the principles of the big agenda are as follows: governments of all countries are the mainstay and international cooperation is a supplement; the UN plays a key role, while international and regional cooperation make significant contributions, and the public, NGOs, and other groups actively participate in it.13 Third, integration based on universal principles highlights the mainstream feature of human rights and the people-oriented principle. The big agenda features compatibility between sovereignty and human rights, especially underlining the principle of gender equality and special attention to vulnerable groups. Judging from the content of UN agendas, the phenomenon of the big agenda in various fields has been affected by the mainstream and cross-cutting orientation of topics on human rights and women. In addition, such principles as freedom and equality, international law, international solidarity, and international cooperation are universal basic principles of the big agenda. For example, the Global Compact for the cooperation between the UN and the global business community is a principle-based agenda that targets compliance with 10 principles related to human rights, environment, labour, and anti-corruption.

12 Transforming Our World: The 2030 Agenda for Sustainable Development, https:// www.un.org/zh/documents/treaty/files/A-RES-70-1.shtml, last accessed: June 3, 2020. 13 Agenda 21, https://www.un.org/chinese/events/wssd/agenda21.htm, last accessed: June 3, 2020.

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The 2030 Agenda for Sustainable Development is a typical agenda of unprecedented scale. The mainstay of the agenda is development, one of the three pillars. Under the pillar of sustainable development, the 17 goals and 169 specific goals established cover almost all categories of UN topics, which marks an unprecedented expansion of the development agenda. In addition to the three traditional areas of economy, society, and environment, the agenda also covers different areas, such as counterterrorism, anti-corruption, transnational crime, arms trafficking, migrants and refugees, human trafficking, peacebuilding, conflict prevention, and rule of law. The agenda emphasises the cross-cutting and integrated features of the various target areas, especially the interconnection, inseparability, and coordination of the three pillars. The text of the agenda is presented as a comprehensive, broad, and cross-cutting agenda. It is ‘an Agenda of unprecedented scope and significance’, and its framework extends ‘far beyond’ the Millennium Development Goals (MDGs). The new goals and specific targets have ‘deep interconnections and many cross-cutting elements’. All countries, stakeholders, and people are called on to establish global partnerships for sustainable development.14 The big agenda orientation of the UN peace agenda is reflected in the convergence and integration of the peacekeeping operations agenda in a narrow sense with such agendas as conflict prevention, peacebuilding, and sustaining peace, thereby forming a comprehensive peace operation agenda that emphasises the interconnections and complementarity between topics, such as peace, human rights, development, democracy, and the rule of law.15 ‘Peacebuilding’ is defined as a ‘political process’ covering various programs and mechanisms on politics, development, and human rights.16 ‘Sustaining peace’ is a more inclusive and comprehensive approach to peace than peacebuilding, representing the common tasks and responsibilities of governments and all stakeholders. Relevant approaches include conflict prevention, strengthening the rule of law, poverty eradication, and sustainable development, which involves the three pillars of the UN, ‘coherent action’ between UN departments 14 Transforming Our World: The 2030 Agenda for Sustainable Development, https:// www.un.org/zh/documents/treaty/files/A-RES-70-1.shtml, last accessed: June 3, 2020. 15 Post-Conflict Peacebuilding, S /RES/2282 (2016), https://undocs.org/zh/S/RES/ 2282 (2016), last accessed: June 3, 2020. 16 Peacebuilding and Sustaining Peace, Report of the Secretary-General, A /72/707-S /2018/43, last accessed: April 21, 2020.

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related to peace operations, human rights, humanitarian assistance, and sustainable development, as well as ‘cross-pillar cooperation’ and the ‘cross-system model’.17 Another example, migration and development, which was previously an agenda in the field of migration, was later included in the 2030 Agenda for Sustainable Development. The Global Compact for Migration marks a major orientation of the migration agenda towards the big agenda. The compact integrates related agendas and formulates a series of cross-cutting and interdependent principles for guidance. These 10 guiding principles are as follows: people-oriented, international cooperation, national sovereignty, rule of law, sustainable development, human rights, gender equality, children’s concerns, whole-of-government approach, and whole-of-society approach. At the domestic level, the compact advocates extensive participation and coordination through the whole-of-government approach and the whole-of-society approach; at the international and global levels, the compact confirms the goal of strengthening global partnership; requires countries to carry out international, regional, and bilateral cooperation and dialogue; and forms a partnership which involves various stakeholders, including migrants, local communities, civil organisations, scholars, the private sector, and human rights organisations. A well-coordinated UN system is also required.18 The compact has more of the elements and characteristics of the big agenda than previous UN agendas on issues related to migration, and is regarded as a ‘milestone in the history of global dialogue and international cooperation on migration’.19 The big agenda reflects the cross-cutting and mainstream orientation of agendas on such issues as human rights, environment, development, women, and peace, and it aims to achieve mutual balance and mutual promotion of goals in related fields, as well as to promote universal principles and values. From the perspective of ideology, the big agenda reflects the dominant position of neoliberalism and has a touch of social democracy and cosmopolitanism. Major elements of the big agenda include 17 Post-Conflict Peacebuilding, S /RES/2282 (2016), https://undocs.org/zh/S/RES/ 2282 (2016), last accessed: June 3, 2020. 18 Global Compact for Safe, Orderly and Regular Migration, A/RES/73/195, https:// www.un.org/zh/ga/73/res/all1.shtml, last accessed: May 30, 2020. 19 Global Compact for Safe, Orderly and Regular Migration, A/RES/73/195, https:// www.un.org/zh/ga/73/res/all1.shtml, last accessed: May 30, 2020.

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the values and concerns of cosmopolitanism and social democracy, such as equality of humankind, collective decision-making, global partnership, global social justice and solidarity, and global ecological balance.20 However, conservatives in Western countries, especially those in the United States, have long been resistant to such big agendas. Right-wing forces in the United States equate Agenda 21 and sustainable development with fascism, socialism, and communism, and regard them as a ‘conspiracy’ of the UN, which seeks to control global resources through a ‘global government’, deprive individuals of freedom and property, and overthrow the ‘American way of life’.21

Dynamics of the ‘Big Agenda’ From the perspective of changes in the power structure within the UN, with the growing number and diversified background of member states, especially the rise in the number and status of developing countries in the UN, the diversity and competitiveness of UN agendas has become more obvious, making it necessary to seek mutual coordination, balance, and inclusiveness among agendas. More importantly, from the perspective of international organisations and global policies, due to the organisational characteristics and status of the UN and the capacity for global policies, UN agencies and various non-governmental actors have more initiative and influence in promoting the big agenda. To seize the opportunity to participate in and influence the UN agenda, many groups of countries and actors are scrambling to propose and expand their agendas, causing the UN agenda to snowball in terms of principles, target fields, and participants. I. Diversification and Integration of Agendas During the early days of the UN, there were already competitive values and relationships among colonisers, such as Britain and France, the 20 Regarding the viewpoints about cosmopolitan and global social democracy, see David Held eds, Zhou Junhua trans, Global Covenant—The Social Democratic Alternative to the Washington Consensus, Beijing: Social Sciences Academic Press, 2005, pp. 23, 215, 220. 21 Richard K. Norton, ‘Agenda 21 and Its Discontents: Is Sustainable Development a Global Imperative or Globalizing Conspiracy?’ The Urban Lawyer, Vol.46, No.2, pp. 325– 360.

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United States as an emerging power, the Soviet Union as a communist country, and independent nations. However, in the early days, the scope of UN agendas was relatively narrow, with limited categories, diversity, and competition. After many countries that had gained national independence joined the UN, the number of UN member states increased significantly and their background became more diversified. This not only resulted in an increase in the number and category of UN agendas, but also highlighted the competitiveness of the agendas’ content and fields; it was mainly reflected in the competition, balance, and integration between agendas on human rights, environment, and society promoted by developed countries and NGOs as well as the agendas on national independence, natural resource sovereignty, and economic development promoted by developing countries. The diversity and competitiveness of UN agendas is also reflected in the competition, balance, and integration among different ideologies and ideological camps, such as humanitarianism, feminism, ecologism, socialism, liberalism, cosmopolitanism, developmentalism, and nationalism. Different groups of countries and other actors inside and outside the UN are competing to propose their agendas and are seeking to expand the influence of their agendas, which become the driving force for the UN’s big agenda. Some countries and human rights organisations are very disappointed that the Charter of the United Nations has failed to include specific human rights provisions. They placed the protection of individual rights and freedom on the agenda of the UN General Assembly in 1946. The adoption of the Universal Declaration of Human Rights marks significant progress in the human rights agenda. However, progress has not been smooth since then, owing to resistance from countries supporting national sovereignty and collective rights. It was not until 20 years later that the adoption of two international conventions on human rights ushered in an unprecedented expansion of the human rights agenda. With the rise of the development agenda, especially with the foundation of the Group of 77, developing countries have gained much stronger momentum to promote their agendas, and the agenda of the UN General Assembly on economic development issues has increased significantly. With the support of developing countries, the UN General Assembly has also adopted a series of agendas devoted to sovereign equality, national independence, non-interference in internal affairs, and opposition to colonialism and racism, such as the Declaration on the Granting of Independence of Colonial Countries and Peoples (1960) and the

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Permanent Sovereignty over Natural Resources (1962). The rise of developing countries’ agendas has intensified the competition and integration among agendas, such as sovereignty, human rights, the right to development and self-determination, and environmental protection. While developing countries vigorously promoted agendas on national independence, economic development, and resource sovereignty, developed countries began to push forward agendas on population, environment, natural resource protection, and social justice. Under the influence of developed countries and NGOs on human rights and environmental protection, the agendas have been integrated with developing countries’ policies and programs, leading to a big agenda covering the principles, goals, and contents of inclusiveness. The Declaration on Social Progress and Development adopted at the UN General Assembly in 1969 is a big agenda that, at this stage, integrates the main competitive topics on human rights, sovereignty, development, and environment. The declaration includes the principles, goals, and steps for such topics as sovereignty, human rights, the right to national self-determination, the perpetual right to natural wealth and resources, the protection and improvement of the human environment, social justice and equality, opposition to racism and colonialism, and international cooperation.22 In the 1970s, developing countries continued to promote the development agenda even more strongly, putting the establishment of a new international economic order, countries’ economic rights, and their rights to development on the agenda, which both competed and aligned with the agendas on human rights and environment promoted by developed countries. It also led to the World Charter for Nature (1982) as an environmental agenda and the Declaration on the Right to Development as a development agenda. After the end of the Cold War, international cooperation ushered in an upsurge of the convergence and integration of agendas in different fields. Since then, the big agenda of the three pillars of human rights, development, and security has advanced remarkably.

22 Declaration on Social Progress and Development, A/RES/2542(XXIV), https://www. un.org/zh/ga/24/res/, last accessed: May 30, 2020.

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II. The ‘Big Agenda’ Promoted by the ‘Three United Nations’ The orientation towards the big agenda is the result of interactions between various forces inside and outside the UN. According to the concept of the ‘Three United Nations’, the governments of member states form the ‘First United Nations’, the staff of UN agencies comprise the ‘Second United Nations’, and NGOs, experts, and advisers of think tanks, consultants, and others form the ‘Third United Nations’.23 The Three United Nations have helped to promote the big agenda with different roles and functions. First, the Third United Nations has been active and influential in promoting the big agenda. In particular, NGOs, research institutes, charitable organisations, and private funds led by Western developed countries have shown much enthusiasm for promoting the big agenda, with their advantages of professional knowledge, interpersonal relations, and global operational capabilities. From its start, the UN has made formal arrangements for cooperation with NGOs, providing a solution for the Third United Nations to participate in and influence the UN agenda. The Third United Nations is related to the Second United Nations in many ways. NGOs concerned with human rights, humanitarian assistance, women, environment, and peace have the greatest influence on the big agenda. International NGOs on human rights have always played a key role in promoting human rights across fields towards a mainstream agenda; environmental organisations, such as the World Wide Fund for Nature, Friends of the Earth, and Greenpeace, are active advocates of the UN environmental agenda and sustainable development agenda. In 2000, the UN Security Council Resolution 1325 was adopted to put women’s issues on the agenda of the UN Security Council, following lobbying and promotion by a large number of transnational women’s advocacy groups both inside and outside the UN.24 The Third United Nations has shown greater initiative and persistence in promoting the cross-field and mainstreaming of topics, such as human rights, environment, women, 23 Regarding the term Three United Nations, see Richard Jolly et al., UN Ideas That Changed the World, Bloomington: Indiana University Press, 2009 (‘The Three UNs and Their Impact’ is an article in UN Ideas That Changed the World, Indiana University Press, 2009, 30(3–4), p. 336, by Richard Jolly, Louis Emmerij, and Thomas G. Weiss). 24 Jacqui True, ‘Explaining the Global Diffusion of the Women, and Security Agenda’, International Political Science Review, Vol.37, No.3, 2016, pp. 307–323.

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and equality, which also puts pressure on member governments and UN agencies. Second, the staff of UN agencies has played an irreplaceable role in promoting the big agenda. The motivation for the staff of UN agencies to promote the big agenda comes from within the organisation. They are not only driven by their responsibilities and missions, but also take advantage of their identity, status, and resources. In particular, the Secretary-General of the UN and the staff of the departments under the Secretariat have great flexibility and ability to facilitate and advance the big agenda across fields, sectors, and actors. The Second United Nations plays the role of a booster, bridge, and platform in promoting the big agenda. It also acts as an indispensable bridge and platform between the First United Nations and the Third United Nations. Any global organisation covering wide fields with numerous departments and complicated relationships has contributed to the orientation towards the big agenda, whether it be for the management needs of the agenda or the coordination and balance needs of various agencies and departments. For example, during the formation of the 2030 Agenda for Sustainable Development, different UN agencies and departments hoped to include their own topics in the agenda to demonstrate their values. During Annan’s tenure as Secretary-General, he took the initiative to form a partnership with NGOs and multinational companies and helped to develop the Global Compact between the UN and the business community. Moreover, important roles were played by the Director of Strategic Planning (Jonh Ruggie), leaders responsible for cooperation between the UN and the business community, and relevant personnel from the International Labor Organization, the UN Environment Programme, and the Office of the High Commissioner for Human Rights. The integration of the private sector, public sector, and civil society with the International Labor Organization and UN agencies for human rights and the environment reflects the ability and preferences of UN staff to cooperate across sectors, fields, and actors. Third, among the First United Nations, small and medium-sized countries, especially European countries with traditions of social democracy, cosmopolitanism, and multilateralism, have promoted the big agenda. While the Second United Nations and Third United Nations have shown initiative and persistence, most member governments of the First United Nations have shown inertia in promoting the cross-field integration and expansion of agendas, and have more often acted as followers or adopted a defensive stance. From the UN Conference on the Human

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Environment in Stockholm to Agenda 21, European countries and Canada were active promoters of the big agenda. The Swiss government put forward environmental issues at the UN General Assembly, Sweden became the host of the UN Conference on the Human Environment, and a Canadian diplomat, Maurice Frederick Strong, served as the Secretary-General of the UN Conference on the Human Environment. Such countries are active promoters of incorporating environmental issues into the development agenda. The Brundtland Commission, led by Gro Harlem Brundtland, the former Prime Minister of Norway and previously Director-General of the World Health Organization (WHO), is a promoter of the sustainable development agenda. The program is sponsored and funded by Canada, Denmark, Finland, Japan, Norway, and Switzerland. The United States has adopted a negative stance towards the big agenda. Agenda 21 has been attacked by some conservative politicians in the United States. For example, John Bolton, a former ambassador of the United States to the UN, once ‘irritated the whole world’ by proposing the removal of all references to the MDGs from the final document of the UN Development Summit 2005; the subsequent global uproar forced the United States to retract its proposal.25 Fourth, an agenda-promoting alliance composed of the Three United Nations is a necessary condition for achieving the big agenda. Representativeness, balance, and inclusiveness are not only the result but also essential elements of the big agenda. NGOs, think tanks, UN agencies, and governments that are interested in the agenda have formed an alliance that can provide intellectual support, organisational support, and financial support for the big agenda. The global agenda is an aggregation of topics in various fields. The capabilities to put these topics on the agenda are multiple, including the hard power and status of actors, the ability to persuade and influence other actors, global operations of financial resources, experience, and skills, as well as abilities to acquire expertise and connect with transnational networks.26 An alliance of the Three United Nations is most likely to gain the ability to improve and expand the agenda. This alliance has participated in all links of the big agenda, including proposal, argumentation, negotiation, lobbying, and 25 Frederick Eckhard eds, Xu Ying and Wang Jinhe trans.: Kofi Annan: A Spokesperson’s Memoir, Beijing: China Renmin University Press, 2010, p. 182. 26 Mansbach Richard and Vasquez John, In Search of Theory: A New Paradigm for Global Politics, New York: Columbia University Press, 1981, p. 94.

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report writing. In 2018, the World Bank and the UN Department of Peace Operations (DPO) jointly issued a report entitled Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict, which represents ongoing movement towards cross-cutting and mainstream topics. The purpose of promoting this big agenda is to closely link the prevention of violent conflict with the sustainable development of the economy and society, prevent conflicts and sustain peace through comprehensive approaches, and ensure the realisation of the Sustainable Development Goals (SDGs). The agenda is mainly promoted by the governments of developed countries, NGOs, and think tanks devoted to peace and humanitarianism, as well as the World Bank and the UN DPO. Representatives of some developing countries and regional organisations also participated in the consultations. In this way, the alliance of the Three United Nations promotes the big agenda. Although developed countries and their think tanks and NGOs occupy a dominant position in the alliance, the alliance is trying to be more representative and inclusive.27

Contributions and Dilemmas of the ‘Big Agenda’ The big agenda has played an active role in promoting inclusive global values and principles and mobilising global actors to participate in the construction of a global cooperation framework. As a programmatic document and priority project of the UN, the big agenda embodies the most widely recognised normative values and common goals across the globe and aims to build an inclusive global cooperation framework. However, the big agenda itself has obvious limitations and defects, including dilemmas that are difficult to overcome. I. The ‘Big Agenda’ as an Inclusive Global Cooperation Framework The big agenda is a process of competition, coordination, and integration between different fields, sectors, and actors. It is also a process of consultation and negotiation among UN member states. This process takes into consideration the interests and values of different stakeholders 27 United Nations and World Bank, Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict, Washington, D.C.: World Bank. https://doi.org/10.1596/ 978-1-4648-1162-3. License: Creative Commons Attribution CC BY 3.0 IGO. See https://www.pathwaysforpeace.org/, last accessed: June 3, 2020.

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in the world to the maximum extent, contributing to the most widely recognised values and principles in the international community. Given the status and legitimacy of the political platform by the UN, the big agenda plays a much more important role in promoting global values than small agendas. As the human rights agenda becomes more cross-cutting and mainstream, it also competes and integrates with agendas on, for example, sovereignty, security, and development. Furthermore, traditional values and principles of human rights connect and overlap with the agendas, such as the right to self-determination, development, happiness, peace, and solidarity. As a result, the values and principles of human rights are incorporated into different issues, such as development, security, and environment, forming a unique and inclusive new outlook on human rights, development, and security. These values and principles, including global partnership, global solidarity, international cooperation, respect for human rights, gender equality, and respect for nature, which have always been advocated by the big agenda, have become representative of mainstream global values and principles. Although developed countries and developing countries have different priorities in their domestic policies, developing countries still give high priority to development. After the long-term promotion of the big agenda by the UN, the concepts of inclusive and sustainable development have gained wide popularity among developing countries. The survey of countries in this study shows that nearly 70% of African governments support the 2030 Agenda for Sustainable Development (see Table 1). The big agenda of the UN has reaped fruitful results by promoting the values and principles of the UN to the business community. The Global Compact signed by the UN and the business community in 2000 integrated multinational corporations, private enterprises, UN agencies, NGOs, governments, and other actors into a coherent whole. While enhancing global partnerships, the compact also promoted the 10 principles, including human rights, labour, environment, and anti-corruption, and it was positively received with significant support from the global business community. As of April 2020, 10,435 companies from 166 countries had joined the Global Compact, including 282 Chinese companies.28

28 United Nations Global Compact, http://cn.unglobalcompact.org/index.html, last accessed: April 30, 2020.

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Table 1 The agenda-promoting alliance of the pathways for peace proposed by the World Bank and the UN UN agencies

Funding governments Consulting countries

Consulting organisations

Famous experts and advisers

Think tanks

NGOs

Department of Peacekeeping Operations, Department of Political Affairs, Peacebuilding Support Office, United Nations Development Programme, Fragility, Conflict &Violence (FCV) Group in Global Themes (World Bank), etc Norway, United Kingdom, Sweden, France, Switzerland, Netherlands, Korea, and Germany Belgium, Egypt, Ethiopia, France, Germany, Jordan, Kenya, Myanmar, Netherlands, Norway, Senegal, Spain, Sweden, Switzerland, Thailand, United Kingdom, and United States African Union, European Union, Economic Community of West African States, League of Arab States, North Atlantic Treaty Organization, Organization for Economic Cooperation and Development (OECD), etc Director of the Development Policy Research Unit at the School of Economics, University of Cape Town; Director of the Center on International Cooperation, New York University; Founder and Director of the Women in Security, Conflict Management and Peace; Director of the Peace Research Institute Oslo; Co-director of the Empirical Studies of Conflict Project, Princeton University; Director of the Center for Research on Inequality, Human Security and Ethnicity; Oxford University, etc Netherlands Institute of International Relations; Brookings Institution; Dag Hammarskjöld Foundation; European Institute of Peace; German Development Institute; Graduate Institute of International and Development Studies, Geneva; Institute of Development Studies (IDS), University of Sussex; Institute for Economic Analysis, Institute for Security, Institute for Economics and Peace, University of Barcelona; Norwegian Institute of International Affairs; Oslo Governance Center, Overseas Development Research Institute Oslo and Peace Research Institute Oslo; Stockholm International Peace Research Institute, United States Institute of Peace, etc Geneva Center for the Democratic Control of Armed Forces, Geneva Peacebuilding Platform, Quaker United Nations Office, etc

Source United Nations and World Bank, Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict, Washington, DC: World Bank. https://doi.org/10.1596/978-1-4648-1162-3. License: Creative Commons Attribution CC BY 3.0 IGO. See https://www.pathwaysforpeace.org/, last accessed: June 3, 2020

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The companies that have joined the Global Compact pledged to popularise the Ten Principles in global corporate activities and support the UN’s SDGs. ‘The UN has proved with facts that it will make profitable businesses more meaningful by committing itself to the Global Compact and promoting its principles across the globe in the fields of human rights, labor standards and environment.’29 A significant contribution of the big agenda is to encourage the participation of different actors around the world and build an inclusive global cooperation framework. The big agenda across fields, sectors, and actors is also a process of mobilising and integrating global partnerships and global resources. Global participation, global partnership, global solidarity, and international cooperation are the guiding principles of the UN’s big agenda, as well as the basic principles of the global governance framework and approach with UN characteristics. The orientation towards the big agenda aims to achieve goals through the integration of global actors and resources in a comprehensive and inclusive way. To make this happen, the big agenda not only outlines the framework and blueprint for global partnership, but also facilitates the establishment of a cooperation framework based on global partnership, such as the United Nations Environment Programme, United Nations Office for Partnership, Department of Political and Peacebuilding Affairs, Peacebuilding Commission, and high-level political forums set up specifically for the agenda. All of these partners have responsibilities for cross-sector and cross-field coordination and communication. The goal of strengthening the means of implementation and revitalising the global partnership for sustainable development set by the 2030 Agenda for Sustainable Development embodies the agenda’s vision and planning for the global sustainable development cooperation framework. It consists of North–South cooperation, South–South cooperation, regional cooperation, and international cooperation in such areas as financing, technology, trade, data, and capability building. It also emphasises ‘bringing together governments, civil society, the private sector, the United Nations system and other actors’ to strengthen coordination and collaboration among mechanisms. A technology facilitation mechanism initiated by the 2030 Agenda for Sustainable Development is a typical example of the global cooperation framework of the big agenda.

29 Eckhard, Kofi Annan: A Spokesperson’s Memoir, p. 161.

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The mechanism is based on the collaboration of member states, civil society, the private sector, the scientific community, UN agencies, and other stakeholders. It consists of three parts: the UN inter-agency task team on science, technology, and innovation for the SDGs; the multistakeholder forum on science, technology, and innovation for the SDGs; and an online platform. The mission of the inter-agency task team is to promote coordination, coherence, and cooperation within the UN on matters related to science, technology, and innovation. It also cooperates with 10 representatives appointed by the Secretary-General from civil society, the private sector, and the scientific community to prepare for the Multi-stakeholder Forum on Science, Technology and Innovation for the Sustainable Development Goals, in addition to building and running the online platform. All UN agencies, funds, programs, and functional committees of the UN Economic and Social Council can join the task force. Similar global partnership networks have been established for other big agendas. On the one hand, the UN attaches importance to global partnership because of the pressure from different global actors that participate in and influence the agenda, especially from the Third United Nations. On the other hand, the UN needs a broad global partnership whether for value preference or resource considerations. The UN’s basic vision for the 2030 Agenda for Global Partnership is that governments, the private sector, civil society, and the UN should work together to mobilise all available resources, which may be a potential asset.30 To make up for insufficient investment by member governments, the UN also hopes that multi-stakeholder partnership will be seen as a supplement to ‘mobilize and share knowledge, expertise, technology, and financial resources, to support the achievement of the SDGs in all countries, in particular developing countries’.31

30 Repositioning the UN Development System to Deliver on the 2030 Agenda: Ensuring a Better Future for All, A /72/124- E /2018/3, https://undocs.org/zh/A/72/684, last accessed: May 20, 2020. 31 Transforming Our World: The 2030 Agenda for Sustainable Development, https:// www.un.org/zh/documents/treaty/files/A-RES-70-1.shtml, last accessed: June 3, 2020.

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II. Imbalance of Power and Responsibility in the Big Agenda’ The big agenda itself has obvious limitations and defects, and it faces many dilemmas that are difficult to overcome. This is also the reason that the international community does not have an optimistic outlook on the role played by the big agenda. The main reason that the big agenda faces difficulties is the asymmetry and imbalance between the promoter and owner. Although the big agenda contributes to a more comprehensive, balanced, and inclusive agenda, there is a high degree of asymmetry between the promoter and owner. The asymmetry is because the big agenda is to a large extent promoted by an alliance of various actors. In the context of global policies, UN agencies and various non-governmental actors have played an active role in advocating and advancing the big agenda. However, the state is always viewed as the owner and leader of the big agenda, such as the 2030 Agenda for Sustainable Development. The agenda emphasises that ‘countries have the primary responsibility for their own economic and social development’, ‘national ownership is key to realizing sustainable development’, and national ownership and leadership must be strengthened at the country level.32 As a result, while integrating the agenda across different fields, actors, and sectors into an inclusive agenda based on global partnership and international cooperation, the promoter cannot resolve the disconnection and imbalance between the alliance and owner, leading to defects and dilemmas that are difficult to overcome. At the same time, it should be noted that the orientation towards the big agenda has widened the gap in coordination capabilities at national and international levels, which means there is a growing gap between the global partnership integrated with the agenda and the difficulty in integrating and coordinating global actors in reality. With the growing scale and increasing target fields, the agenda will face even more challenges in the future. The big agenda, such as Agenda 21 and the 2030 Agenda for Sustainable Development, cover wide fields on a massive scale. While seeking to be more inclusive and comprehensive, they also encounter greater difficulty in coordinating the relationship across fields, sectors, and actors. These comprehensive and interconnected agendas span the

32 Transforming Our World: The 2030 Agenda for Sustainable Development, https:// www.un.org/zh/documents/treaty/files/A-RES-70-1.shtml, last accessed: June 3, 2020.

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UN pillars of peace, development, and human rights, demanding ‘deeper accountability, more transparency and stronger oversight’ and urging ‘greater coherence at all levels’.33 However, global coordination and leadership have not improved with the cross-field expansion of the big agenda, and the delayed reform of UN agencies has become a more prominent issue. The reform measures adopted to tackle the big agenda seldomly involve the contents of the Charter of the United Nations. For example, subordinate bodies of the UN General Assembly, the UN Economic and Social Council, and the Secretariat of the UN have been set up to address this issue, including various offices, committees, and high-level forums. By contrast, the reform of major UN agencies involved in the Charter of the United Nations has lagged. Reforms aimed at further empowering and improving the Security Council and the Economic and Social Council are still urgent issues. In all respects, the cross-cutting orientation of the Security Council’s agenda is most limited. On the one hand, the big agenda calls on the UN General Assembly, the UN Economic and Social Council, and the agencies and systems for human rights and humanitarian assistance to address issues on peace and security in a cross-sectoral and inter-agency manner. On the other hand, owing to competition from major powers and the restrictions of the Charter of United Nations, the Security Council has not been able to play its role in the big agenda. Promoters of the big agenda often bypass the Security Council to pass an agenda, in the hope of strengthening the role of other agencies in the fields of peace and security. If the reform of the Security Council cannot move forward, the big agenda will only marginalise the status and role of the Security Council. The Economic and Social Council faces the challenge of having to deal with various missions, extensive cooperation relationships, and heavy burdens, but with limited power and authority. The main reason is that sovereign countries are unwilling to transfer their decision-making power for economic and social affairs to the UN. International organisations, such as the World Bank and the Group of 7 (G7), have also diluted the powers held by the UN Economic and Social Council. The delayed reforms of the UN and existing international systems represent a wide

33 Repositioning the UN Development System to Deliver on the 2030 Agenda: Ensuring a Better Future for All, A /72/124- E /2018/3, https://undocs.org/zh/A/72/684, last accessed: May 20, 2020.

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gap from the requirement of the big agenda to build a global cooperation framework. Due to lack of authority, coordination, and leadership, the UN Economic and Social Council, relevant UN agencies, and highlevel forums organised for the big agenda cannot align themselves well with the ambitious big agenda. As the Secretary-General mentioned, the UN’s ‘current model has reached its exhaustion point and is insufficient to match the ambition, effectiveness and cohesion required by the 2030 Agenda’.34 The limitations of the big agenda are reflected in the lack of investment at the national level. As the owners, leaders, and main responsible parties, many countries have not yet devoted sufficient attention and input to the big agenda. The survey in this study identifies the five UN topics that the representatives of member states paid the most attention to at the General Debate of the UN General Assembly 2018 as follows: conflict and peace (68%), sustainable development (58%), climate change (52%), human rights (45%), and refugees and migrants (38%). Although issues on conflict and peace have received the most attention, their focus and position vary from country to country. For example, the United States has focused on the settlement of the Syrian Civil War. Sustainable development and climate change are the two UN global agendas that have received the most attention from member states. On the one hand, the big agenda has attracted wide attention. On the other hand, even the most popular UN agendas have not received considerable attention from some countries (see Table 2). Due to lack of consensus and willingness to cooperate on the big agenda among major powers, there is insufficient impetus, executive capability, and leadership for the big agenda at the global and international levels. As mentioned above, small and medium-sized countries have played a more active and significant role in promoting the big agenda, and the survey results in this study support this viewpoint. Countries that pay the most attention to popular UN agendas are still small and mediumsized countries, especially European countries and developing countries with stable domestic situations. Among the 100 countries surveyed, countries that have paid the most attention to the top five topics are Nepal, Sri Lanka, Central African Republic, Nigeria, Mozambique, Morocco, 34 Repositioning the UN Development System to Deliver on the 2030 Agenda: Ensuring a Better Future for All, A /72/124- E /2018/3, https://undocs.org/zh/A/72/684, last accessed: May 20, 2020.

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Table 2

Attention paid by member states to UN topics

Topic

Attention: Country as a unit (%)

Peace and conflict Sustainable development Climate change Human rights Refugees and migrants Counter-terrorism

Attention: Region as a unit (%) Africa

America

Asia and the Pacific

Europe

68 58

86.2 68.9

45.4 59

69.2 38.5

65.2 65.2

52 45 38

41.3 37.9 37.9

59 59 45.4

53.8 44.4 38.8

56.5 56.5 43.4

29

41.3

18.1

44.4

21.7

Source Survey data compiled by the author

Romania, France, Switzerland, Portugal, Luxembourg, Belgium, Bosnia and Herzegovina, El Salvador, Chile, and Mexico. Among the permanent members of the Security Council, the G7, and the BRIC countries, only the representative of France adopted a positive attitude towards the above-mentioned five issues in his speech. The major powers focus on UN agendas for which there is a difference of opinion and lack of consensus. Japan has focused on issues concerning world trade and the Korean Peninsula, while Russia has stressed its position on its protracted conflict with Ukraine and cyber security. The United States rejected a climate change agreement under the UN framework, the UN Human Rights Council, and the Global Compact for Migration without providing any comment on the sustainable development agenda. Among the permanent members of the Security Council, only China and France have paid attention to issues of sustainable development and climate change. Under the impact of intensified confrontation between major powers and rising anti-globalisation forces, these limitations and dilemmas of the big agenda have even worsened.

The Future of the ‘Big Agenda’ With intensified competition among major powers and the rise of populism and anti-globalisation forces, the big agenda has slid into its most unfavourable international environment since the end of the Cold War. These growing difficulties, lower driving force, and the undermining

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of global solidarity, international cooperation, and global partnership make it difficult for the big agenda to progress. However, the demand for global cooperation and the power to promote the big agenda have not disappeared. In some areas, some favourable conditions remain and there is still room to develop the big agenda. I. The Impact of Changes in the International Landscape and Relations Between Major Powers The international landscape and relations between major powers constitute an important factor influencing the big agenda. The phenomenon of the big agenda began during the Cold War, characterised by confrontation between major powers. During this period, the big agenda made some progress. As mentioned above, the UN agenda made slow progress in terms of cross-cutting integration throughout the Cold War, with limited scope, depth, and scale of expansion. It took more than 20 years from the Universal Declaration of Human Rights in 1948 to develop two international conventions on human rights in 1966, and it took another 2 decades from the United Nations Declaration of the Human Environment in 1972 to develop Agenda 21 in 1992. After the end of the Cold War, the world ushered in an era of cooperation between major powers, creating a favourable international environment for the development of the big agenda. There was a growing trend towards the big agenda, with the coverage and scale of the agenda being continuously upgraded. The three pillar areas of human rights, development, and security have been interconnected and expanded in a broader and more institutionalised manner, especially the connection between the Security Council agenda and topics on human rights, women, public health, and sustainable development, which would have been impossible during the Cold War. The end of the Cold War as well as China’s reform and opening-up have contributed to the rise of neoliberalism, cosmopolitanism, and global social democracy. Together with a favourable environment for cooperation among major powers, these factors have provided a huge opportunity for the big agenda within the UN. As the strategic competition between China and the United States intensified, the previous Trump administration in the United States launched a crackdown on China targeting various aspects. In addition

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to forcing some countries to choose sides over China–US relations, the United States resorted to non-cooperation or withdrawal from multilateral cooperation and global governance. The deterioration of relations between major powers, in particular, the United States’ confrontation with China, severely undermined the principles of global solidarity, international cooperation, and global partnership on which the big agenda is based. The global response to the COVID-19 pandemic in 2020 seems to be the result of major power relations in the UN global agendas on public health and security and its global cooperation framework. The UN’s MDGs include goals related to health and sanitation, while the 2030 Agenda for Sustainable Developments sets the goal of ensuring ‘healthy lives’ and achieving ‘universal health coverage’. As a sub-goal of the popular agenda, the UN agenda on health and sanitation has been further upgraded and expanded, showing an orientation towards the big agenda. In September 2019, a political declaration was adopted at the High-level Meeting on Universal Health Coverage held by the UN. The declaration emphasised the close connection between health and the SDGs, and clarified that ‘health is a precondition for and an outcome and indicator of the social, economic and environmental dimensions of sustainable development and the implementation of the 2030 Agenda for Sustainable Development’.35 In December 2019, a resolution on Global Health and Foreign Policy: An Inclusive Approach to Strengthening Health Systems was passed at the UN General Assembly. These agendas and documents have repeatedly called for increasing international solidarity, strengthening international cooperation and coordinated action, and promoting a ‘strong global partnership’ among all stakeholders.36 The UN and the WHO have already established a set of global public health emergency response mechanisms, including global partnership networks and alliances composed of different actors, such as UN agencies, NGOs, charitable organisations, and research institutes, which played a positive role in the fight against the Ebola virus. However, after the outbreak and global spread of COVID-19 in 2020, the world urgently needed global solidarity and cooperation to fight against the virus. In areas where global 35 Political Declaration of the High-level Meeting on Universal Health Coverage, A /RES/74/2, https://www.un.org/zh/ga/74/res/all1.shtml, last accessed: June 1, 2020. 36 Global Health and Foreign Policy: An Inclusive Approach to Strengthening Health Systems, A/RES/74/20, https://www.un.org/zh/ga/74/res/all1.shtml, last accessed: June 1, 2020.

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cooperation was most needed and most likely to happen, major countries, especially permanent members of the Security Council, not only failed to reach a consensus on taking collective action but also escalated their conflicts, competition, and confrontations. The rise of populism, extreme nationalism, and anti-globalisation forces has depressed neoliberalism and cosmopolitanism that supported the big agenda. The willingness and motivation of the international community to promote the global agenda has weakened dramatically, especially for major developed countries and some countries that were once active promoters of the big agenda. The Trump administration’s policies, such as America first, American interests over global governance, decoupling, and withdrawal have influenced European and American countries to varying extents. As shown by the survey of this study, Japan and the United Kingdom have tried to avoid the big agenda. Japan used to be an active supporter of UN agendas. This survey shows that Japan has taken an evasive attitude towards such issues as climate change, sustainable development, and migrants and refugees. According to the 2030 Agenda for Sustainable Development, official development assistance to developing countries should account for 0.7% of their gross national income, and that to least developed countries should account for 0.15–0.20% of their gross national income. However, at the General Debate of 2018 UN General Assembly, only France, as a member of the G7, paid attention to the sustainable development agenda and stated that it would increase development assistance. None of the other six countries mentioned the sustainable development agenda. Moreover, developed countries offered little support to the Global Compact on Migration, which was concluded in December 2018. Major immigrant countries, such as the United States and Australia, did not even join the compact. In summary, the positive relationship between the major powers is an important guarantee for promoting the big agenda. The position adopted by the United States against China is a negative factor damaging global cooperation through the UN. Without inclusive global cooperation, especially to deal with confrontations involving major powers, it would be even more difficult to initiate new global agendas and to achieve the goals of established ones.

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II. Space for Development of the Big Agenda Although the big agenda faces an extremely unfavourable international environment, demand for the big agenda and the power to promote it have not disappeared. In some areas, there are still some favourable conditions and room for the development of the big agenda. First, multilateralism, global solidarity, and international cooperation are still widely recognised and supported by the international community. Cross-field, comprehensive solutions and an inclusive partnership framework serve as the main approach for the UN and other international or regional organisations to address global issues. Although global cooperation and global governance are currently being impacted, it remains necessary to reach international consensus, strengthen global cooperation, and coordinate the needs of multiple parties through the big agenda in addressing such issues as peace and conflict, international counterterrorism, transnational crime, refugees and immigrants, climate change, environmental protection, and global public health security. Second, the power to promote the big agenda still exists and there are still possibilities of doing so. The status quo of relations between major powers and the international power landscape is not conducive to the trend towards the big agenda and has seriously threatened its survival and development. As mentioned above, the big agenda is promoted by various forces. A promoting alliance composed of multiple actors is indispensable to the big agenda, and relations between major powers are not the only influencing factor. Countries that support the UN agenda, UN agencies, NGOs, and international think tanks still have the motivation and ability to promote the big agenda as an alliance. The broad UN agenda is not legally binding. Initiated by alliances and endorsed by the UN General Assembly, UN agendas involve the participation of UN member states. Therefore, it is still possible to promote the big agenda even without the participation of major powers. From the perspective of development space and prospects, it is difficult to expand the agenda further in some fields, but there are still prospects for the big agenda in other fields. First, a big agenda that has compact goals and actors or a high level of consensus is more likely to develop than one without such features. The MDGs and the Global Compact are two successful examples of such a big agenda. The MDGs are successful because their eight development goals are specific, concentrated, and less controversial with a high degree

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of consensus although the agenda involves multiple actors and groups of people. It is easier for governments and other actors across the globe to achieve these goals together. The Global Compact covers 10 principles in the fields of human rights, environment, labour, and anti-corruption. It also emphasises the establishment of a partnership between governments, enterprises, NGOs, and civil society, which reflects the cross-field and cross-sectoral characteristics of the big agenda. With enterprises being a major actor, the compact is successful because its model is based on a high degree of willingness, a high level of identification, and compact behaviours. Enterprises voluntarily join the compact, and the top executive officers of these companies must make a public commitment to the Secretary-General that they will assume the relevant responsibilities for fulfilling the compact. The 2030 Agenda for Sustainable Development has a larger scale than the MDGs and Global Compact, with numerous goals and complicated and controversial topics, such as treatment of migrant workers, promotion of migration in an orderly, safe, regular, and responsible manner, combatting terrorism, conflict prevention, and rule of law at the domestic level. Without doubt, the difficulties faced by the 2030 Agenda for Sustainable Development will intensify. Nevertheless, the expansion and promotion of agendas in such areas as women, youth, and children will present greater possibilities. Second, the cross-cutting integration and expansion of the agenda on the three pillars has been ongoing for a long time with limited room. Moreover, it is still possible to develop the orientation of some agendas or sub-agendas with a high level of consensus towards the big agenda. In the field of development, the 2030 Agenda for Sustainable Development has reached an unprecedented scale in terms of coverage and number of goals, but there is still tremendous pressure for countries to achieve the goals. Among the 17 main goals, 169 specific targets and a series of sub-targets have been established, many of which have been widely recognised and supported by the international community. Since the 2030 Agenda for Sustainable Development was proposed, there has been a trend towards the big agenda in the fields of these goals and targets. The big agenda model has an integrated approach to addressing issues that have emerged in many areas, such as global road traffic safety, global disaster prevention and mitigation, global public health security, marine debris pollution, and conflict and violence prevention. Third, in areas in which UN agencies and transnational NGOs have traditional influence and expertise, there are still prospects for further

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cross-cutting and mainstreaming of some big agendas. At present, NGOs devoted to human rights, humanitarian assistance, environment, women’s issues, and peace are more mature and maintain wide global networks for interaction. UN agencies also enjoy greater space to develop global policy in these areas. For example, the UN is uniquely positioned to formulate norms on human rights or carry out relevant activities. In addition to ‘having more human and financial resources’, the UN is able to expand its ‘credibility and legitimacy’ in global governance.37 In these areas, the Second United Nations and Third United Nations have maintained a long-term and close relationship in promoting the big agenda. The alliance still remains strongly committed to advancing the big agenda. China remains an active supporter of international solidarity, multilateralism, and global governance, as well as the development of major UN agendas. China has expressed its support for and commitment to the 2030 Agenda for Sustainable Development and the agendas on climate change, peacekeeping operations, global governance of public health, and international counter-terrorism, among others, which reflects China’s willingness to take responsibility for safeguarding multilateralism and international solidarity and cooperation. China’s vision of a community with a shared future for humankind reinforces and contributes to the UN’s efforts to build an inclusive global cooperation framework. In view of the need for the big agenda and existing room for development, China has the potential and space to play a more active role in promoting international solidarity and cooperation, and advancing the goals of the UN global agenda.

37 Jean-Philippe Thérien and Philippe Joly, ‘“All Human Rights for All”: The United Nations and Human Rights in the Post-Cold War’, Human Rights Quarterly, Vol.36, No.2 (May 2014), pp. 373–396.

The Interaction Between the Belt and Road Initiative and the Global Governance System: A Typological Analysis Laihui Xie

Introduction The Belt and Road Initiative (BRI) has had a critical impact worldwide as a novel cross-regional economic cooperation platform since being officially proposed in 2013. By May 2018, China had signed 103 agreements with 88 countries and international organisations to jointly construct the BRI, covering interconnection, capacity, investment, economic and trade, finance, science and technology, society, the humanities, livelihoods, maritime aspects, and so on. The involved international organisations include the United Nations Development Programme (UNDP), the United Nations Economic and Social Commission for Asia and the Pacific

The Chinese text of this article was originally published in World Economics and Politics, Issue 1, 2019. L. Xie (B) National Institute of International Strategy (NIIS), Chinese Academy of Social Sciences (CASS), Beijing, China

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_7

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(UNESCAP), and the World Health Organization (WHO).1 Both the BRI and its new, related mechanisms such as the Asian Infrastructure Investment Bank (AIIB), the New Development Bank (NDB), and the Silk Road Fund have become important practices for China’s participation in global governance in the new era. In May 2017, UN Secretary-General António Guterres stated that the BRI had made a significant contribution to addressing global challenges such as climate change, food security, and water scarcity as a result of closer international cooperation.2 The Chinese government has emphasised the link between the BRI and global governance in official documents. Moreover, the BRI is embedded with the concept of building a community of shared future. According to the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, released under the authorisation of the State Council in March 2015, the BRI also shoulders the mission of being ‘a positive endeavour to seek a new global governance model’.3 In his keynote speech at the Belt and Road Forum for International Cooperation on 14 May 2017, President Xi Jinping depicted the paradox between intensifying global challenges and declining global governance capacity and willingness as a ‘governance deficit’ in a bid to reveal the contemporary significance of the BRI.4 On 27 August 2018, at the Symposium Marking the Fifth Anniversary of the Belt and Road Initiative, President Xi Jinping further emphasised that the BRI conforms to the inherent requirements of the global governance system reform, highlights the ‘community of shared future’ concept, and provides a new solution for improving the global governance system’s reform. From this context, understanding and analysing the interaction between the BRI and global governance can provide great academic and policy value and is thus an important research topic.

1 Office of the Leading Group for Promoting the Belt and Road Initiative, ‘The Belt and Road Initiative Progress, Contributions and Prospects’, http://www.xinhuanet.com/ politics/2017-05/10/c_1120951928.htm, accessed on: October 22, 2018. 2 ‘Guterres: The Belt and Road Initiative Offers New Opportunities to Address Global

Challenges’, Economic Information Daily, May 12, 2017. 3 Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, http://world.people.com.cn/n/2015/0328/c1002-26764633.html, accessed on October 24, 2018. 4 Xi Jinping, ‘Jointly Building the Belt and Road: Speech at the Symposium Marking the Fifth Anniversary of the Belt and Road Initiative’, People’s Daily, May 15, 2017.

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The BRI and its practice contain not only physical connectivity but also soft connectivity. The expansion of its practice can deepen its interaction with the existing global governance system. Global governance features its own value dimensions which are embodied more in the norms, rules, procedures, and mechanisms that have been established in both international politics and the world economy to cope with global issues. According to its most popular definition, provided by the Commission on Global Governance, ‘Governance is the sum of the many ways individuals and regimes, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accommodated, and cooperative action may be taken. It includes both formal and informal regime arrangements’.5 Similarly, Professor Yu Keping defined global governance as ‘the resolution of global conflicts, ecology, human rights, migration, drugs, smuggling, and infectious diseases by binding international regimes in a bid to maintain a normal international political and economic order’.6 Young et al. argue that governance is a broad concept that covers phenomena in wider fields and includes the relationship among multiple regimes. They explain that: ‘In most of the literature, the idea of governance endows the concept of regimes with a dynamic character, focusing on the governance process and stressing actors, especially non-governmental actors. A country’s governance usually refers to new forms of rules that are different from traditional governmental activities, such as self-regulation by social actors, solving social issues through private–public cooperation, and multilevel policies. However, internationally, global governance is commonly used to describe the process of contemporary world politics, although … a widely accepted and appropriate definition has not yet been made’.7

5 Commission on Global Governance, Our Global Neighbourhood: The Report of the Commission on Global Governance, Oxford: Oxford University Press, 1995, p. 2; Ingvar Carlsson et al., Zhao Zhongqiang et al. trans., Our Global Neighborhood: The Report of the Commission on Global Governance, Beijing: China Translation & Publishing Corporation, 1995. 6 Yu Keping, ‘Introduction to Global Governance’, Marxism & Reality, Issue 1, 2002, pp. 20–32; Yu Keping eds., Globalization: Global Governance, Beijing: Social Sciences Academic Press, 2003, p. 25. 7 Oran Young et al. eds., Liao Mei et al. trans., Regimes and Environmental Change: Principal Findings, Applications, and Research Frontiers, Beijing: Higher Education Press, 2012, p. 216.

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Despite the rise of the concept of global governance over the past three decades, institutional arrangements that mirror the long-dominant values and interests of developed countries have existed for a long time. Accordingly, this study attempts to answer the following three questions: How does the BRI, as an important practice for China’s participation in global governance, affect the existing governance system in the new era? How do the two interact theoretically and practically? Can the BRI contribute to improving the global governance system?

Contending Perspectives in the Literature In recent years, domestic scholars have gradually realised the significance of these questions and have published large quantities of related literature. However, after a careful analysis of the existing Chinese literature, three shortcomings are addressed, as follows. First, although Chinese scholars have stressed the contributions that the BRI has made to the concept of global governance,8 the discussion on the BRI’s impact on and interaction with the governance system and its system of rules is insufficient. Conceptually, the BRI supports the normative values of global governance, and the idea of building a community of shared future aligns with the values originally proposed by the Commission on Global Governance. However, the problem regarding the cooperative mechanism between global governance as a system of rules and the BRI needs to be further discussed. The BRI mainly features international cooperation in the economic and trade fields and inevitably involves established, formal, and informal rules in the world economy. Professor William A. Callahan argues that the core of the BRI concerns principles, norms, and mechanisms, and that China is attempting to establish normative power and a new Eurasian order.9 Therefore, more 8 Representative works include Qin Yaqing and Wei Ling, ‘New Concept of Global Governance and the Practice of Belt and Road Cooperation’, Foreign Affairs Review, Issue 2, 2018, pp. 1–14; Zhang Wenmu, ‘The Belt and Road and the Chinese Solution to World Governance’, World Economy and Politics, Issue 8, 2017, pp. 4–25; Zhang Chun, ‘The Belt and Road Initiative and New Practice of Global Governance’, Journal of International Relations, Issue 2, 2017, pp. 99–122; He Zhipeng, ‘Chinese Solution for International Rule of Law—A Global Governance Perspective on the Belt and Road’, Pacific Journal, Issue 5, 2017, pp. 1–12. 9 William A. Callahan, ‘China’s Belt and Road Initiative and the New Eurasian Order’, Norwegian Institute of International Affairs (NUPI), Policy Brief, No. 22, 2016;William

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attention must be paid to this issue in empirical research, since it also features important policy value. Second, while the current Chinese literature has mainly discussed international politics and formal regimes,10 the discussion of informal regimes in the economic sphere has been neglected. In addition to formal international rules, there are many informal rules and norms raised by non-governmental organisations (NGOs) that regulate and constrain micro behaviours in the world economy. This is also known as private transnational governance (PTG),11 which has not yet been paid due attention. The Extractive Industries Transparency Initiative (EITI), for example, has developed important anti-corruption governance norms for the global mineral extractive sector, especially in developing countries, which have great implications for the Chinese companies that invest abroad.12

A Callahan, ‘China’s “Asia Dream”: The Belt Road Initiative and the New Regional Order’, Asian Journal of Comparative Politics, Volume 1, Issue 3, 2016, pp. 226–243. 10 See Li Xiangyang, ‘On the Diversified Cooperation Mechanism for the Silk Road

on the Sea’, World Economics and Politics, Issue 11, 2014, pp. 5, 9; Li Xiangyang, ‘A Comparison of the Trans-Pacific Partnership Agreement and the Belt and Road’, World Economics and Politics, Issue 9, 2016, pp. 29–43; Li Xiangyang, ‘The Concept of A Community with Shared Future Guides the Direction of Global Governance Reform’, People’s Daily, March 8, 2017; Chen Weiguang and Wang Yan, ‘Jointly Constructing the Belt and Road An Analytical Framework for Relation-Based Governance and Rule-Based Governance’, World Economics and Politics, Issue 6, 2016, pp. 93–112; Men Honghua, ‘Strategic Thinking on the Rule-making Power of the Belt and Road Initiative’, World Economics and Politics, Issue 7, 2018, pp. 19–40. 11 That is, a variety of informal mechanisms and norms driven by TNCs and NGOs are exerting an important regulatory effect on investment and trade in many industries. See Susan Strange, Xiao Hongyu and Geng Xiefeng trans., The Retreat of the State: The Diffusion of Power in the World Economy, Beijing: Peking University Press 2005; Rodney Bruce Hall and Thomas J. Biersteker, The Emergence of Private Authority in Global Governance, Cambridge University Press, 2004; Klaus Dingwerth, ‘Private Transnational Governance and the Developing World: A Comparative Perspective’, International Studies Quarterly, Volume 52, Issue 3, 2008, pp. 607–634; Philipp Pattberg, ‘The Regimeization of Private Governance: How Business and Nonprofit Organizations Agree on Transnational Rules’, Governance, Volume 18, Issue 4, 2010, pp. 589–610; Graeme Auld, Constructing Private Governance: The Rise and Evolution of Forest, Coffee, and Fisheries Certification, New Haven and London: Yale University Press, 2014. 12 International financial investor George Soros even claimed China’s absence from the EITI as the evidence for its inactive engagement in global governance. In fact, the EITI and similar European and American initiatives are nothing but ‘unilateralist practices under a global banner’, without relevant international agreements. See George Soros, ‘The Way

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Finally, the existing Chinese literature has revealed the BRI’s contributions and positive implications for global governance,13 but has failed to adequately discuss the potential conflicts between them. In contrast, some scholars and media have argued that the BRI and its related mechanisms may challenge the existing governance system, and its investment and trade patterns may weaken the established governance standards in finance, anti-corruption, environmental protection, labour, and other areas. There are three arguments in this regard, as follows. First, the BRI has been interpreted by some Western media as a ‘Chinese Marshall Plan’ that is attempting to establish China’s sphere of influence. Moreover, the establishment of the Silk Road Fund and especially the AIIB provoked backlash in the USA14 because the AIIB features similar functions to the International Monetary Fund (IMF) and the World Bank, but does not have any political prerequisites attached to it. Therefore, the BRI and its related organisations have been considered by many Western scholars and media as a Chinese initiative to challenge or even replace existing international organisations and establish a system of parallel regimes.15 The Chinese government has promptly responded to and denied this argument.16 Meanwhile, several Western scholars have Forward: The Financial Crisis Reshapes China’s Relationship with the World—Speech at Central European University in Budapest, Hungary’, Economy and Management Digest, Issue 23, 2009, pp. 50–53. Gonzalo Escribano, ‘Pathways Toward a Global Standard for Transparency in the Governance of Energy Resources’, Global Governance, Volume 23, Issue 2, 2017, pp. 265–283. 13 Representative works such as Zhang Youwen, ‘The Belt and Road Initiative: International Development Synergy and Global Governance Innovation’, Studies on Mao Zedong and Deng Xiaoping Theories, Issue 5, 2017, pp. 88–94; Ouyang Kang, ‘The Belt and Road Initiative and the New Trend of Globalization’, Social Sciences in China, Issue 8, 2018, pp. 5–16; Wu Zhicheng and Chi Yong: ‘The Belt and Road Initiative and Changes of Global Governance’, Tianjin Social Sciences, Issue 6, 2017, pp. 80–85; Wang Qianlin and Cheng Dawei: ‘The Contribution of the Belt and Road Initiative to Global Trade Governance’, Review of Political Economy, Issue 3, 2017, pp. 219–224. 14 See Paola Subacchi, ‘The AIIB Is a Threat to Global Economic Governance’, Foreign Policy, March 31, 2015, http://www.foreignpolicy.com/2015/03/31/the-aiibis-a-threat-to-global-economic-governance-china/, accessed on October 28, 2015. 15 James F. Paradise, ‘The Role of “Parallel Regimes” in China’s Growing Participation in Global Economic Governance’, Journal of Chinese Political Science, Volume 21, Issue 2, 2016, pp. 149–175. 16 President Xi Jinping clearly pointed out at the 2016 G20 Summit in Hangzhou that: ‘The new mechanisms and initiatives launched by China are not intended to reinvent the wheels or target any other country. Rather, they aim to complement and improve the

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explicitly pointed out the inherent contradictions in this viewpoint.17 In fact, most of the world’s major multilateral development banks and international organisations have not rejected the BRI but have supported it.18 Nonetheless, similar scepticisms have appeared.19 The second argument is the ‘debt-trap diplomacy’ argument. This term originated from the suspension of the Colombo Port City project, which was invested in by Chinese companies after the 2015 Sri Lankan parliamentary election. Eventually, the Sri Lankan government resumed the project, but it was still linked to Sri Lanka’s debt problem by some commentators. The term ‘China’s trap’ was first introduced in the

current international mechanisms to achieve win–win cooperation and common development’. ‘It is an invitation open to all. It is a pursuit not to establish China’s own sphere of influence, but to support common development of all countries. It is meant to build not China’s own backyard garden, but a garden shared by all countries’. See Xi Jinping, Speech at the Opening Ceremony of the G20 Business Summit, http://politics.people.com. cn/n1/2016/0903/c1001-28689034.html, accessed on November 2, 2018. 17 Nathan Gaddles, senior advisor to the Berggruen Institute, for example, noted that as the United States abandons the postwar multilateral system it once led, China is stepping into the breach, laying the groundwork for a post-American world order. But lining up with hostility against China’s initiatives the way Joseph Stalin and his minions did toward the Marshall Plan after World War II is a mistaken course for the West. He said that the BRI may produce a connected continent as the foundation for prosperity like the American expansion of railroads nationwide. He emphasized that neither the United States nor the EU has energy to propose similar investment initiatives, and ‘Western nations are not going to finance and construct infrastructure all over the world’. See Nathan Gaddles, ‘China Is Laying the Groundwork for A Post-American World Order’, Website of Washington Post, July 27, 2018, cited from Reference News, July 29, 2018. 18 In particular, President Jim Yong Kim of the World Bank made it clear: ‘The World Bank Group very proudly supports the Government of China’s ambitious, unprecedented effort to light up that night sky. The Belt and Road will improve trade, infrastructure, investment, and people-to-people connectivity - not just across borders, but on a trans-continental scale’. See Daniel Kliman and Abigail Grace, ‘Power play: Addressing China’s Belt and Road Strategy’, https://www.cnas.org/publications/reports/ power-play, accessed on November 2, 2018. 19 A report released in September 2018 by the Study Center of the Center for A New American Security made a similar point. According to the report, China’s recent ‘intention to set up a new “Belt and Road” dispute resolution mechanism suggests that its strategy will increasingly challenge existing international legal standards and for local courts in the receiving country or the existing international arbitration framework, this mechanism may be placed under China’s Supreme People’s Court and provide Beijing with a more expansive tool to resolve “Belt and Road” legal disputes’. See Daniel Kliman and Abigail Grace, ‘Power Play: Addressing China’s Belt and Road Strategy’, https://www.cnas.org/ publications/reports/ power-play, accessed on November 6, 2018.

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article entitled ‘China ‘s Investments in Sri Lanka: Why Beijing’s Bonds Come at a Price’ published in U.S. Foreign Affairs.20 On 23 January 2017, Indian commentator Brahma Chellaney published an article on the Project Syndicate website that further clarified the term as ‘debttrap diplomacy’, argued that the BRI is a hidden trap, and stated that China wants the projects that it invests in to fail because doing so will put the countries involved in a debt trap, thus increasing China’s influence.21 Chellaney’s remarks spread quickly to many countries. On 18 March 2018, two Southeast Asian scholars echoed this sentiment on the East Asian Forum and stated that Sri Lanka, Cambodia, and other small Southeast Asian countries were likely to fall into such a ‘trap’. In their view, Cambodia, Laos, Myanmar, and Thailand could return to Chinese policies as a result of China’s economic support.22 The ‘debt-trap diplomacy’ argument has spread to more influential governments, including India, Japan, and the United States. On 13 May 2017, an official spokesperson of the Indian Ministry of External Affairs (MEA) issued a statement that set out reasons for its non-participation in the Belt and Road Forum for International Co-operation and provided several criticisms of the BRI, which included that ‘interconnected projects must follow principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities’.23 On 5 June 2017, the US Secretary of State Rex Tillerson said that ‘China is a significant economic and trading power. We desire productive relationships, but we cannot allow China to use its economic power to buy its way out

20 Jeff M. Smith, ‘China’s Investments in Sri Lanka: Why Beijing’s Bonds Come at

a Price’, Foreign Affairs, https://www.foreignaffairs.com/articles/china/2016-05-23/chi nas-investments-sri-lanka, accessed on November 2, 2018. 21 Brahma Chellaney, ‘China’s Debt-Trap Diplomacy’, https://www.project-syndic ate.org/commentary/china-one-belt-one-road-loans-debt-by-brahma-chellaney-2017-01, accessed on November 2, 2018. 22 Veasna Var and Sovinda Po, ‘Cambodia, Sri Lanka and the China debt trap’, East Asian Forum, March 18, 2017. 23 Official Spokesperson’s Response to a Query on Participation of India in OBOR/BRI Forum, Ministry of External Affairs, Government of India, May 13, 2017, http://mea.gov.in/media-briefings.htm?dtl/28463/Official+Spokesper sons+response+to+a+query+on+participation+of+India+in+OBORBRI+Forum, accessed on November 10, 2018.

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of other problems’.24 Japanese Prime Minister Shinzo Abe stated that some ‘indispensable conditions’ must be included in the BRI, such as ‘allowing the borrowing countries to be able to repay their debts without destroying their fiscal health’.25 The ‘debt-trap diplomacy’ argument then escalated and almost replaced the ‘parallel institution’ argument as the primary reason for Western countries to criticise the BRI. In January 2018, Concetta Fierravanti-Wells, Australia’s Minister for International Development and the Pacific, accused China’s investment and aid to the South Pacific of building ‘roads to nowhere’ that could result in a ‘debt trap’. On 4 October 2018, US Vice President Mike Pence also accused China of non-transparent lending in his speech on China’s policy at the Hudson Institute, once again supporting ‘debt-trap diplomacy’.26 Undoubtedly, the attack on ‘debt-trap diplomacy’ is unfounded. Western countries are more likely to incite fears of foreign investment and foreign debt among the countries along the Belt and Road based on their historical practices to advocate the ‘China threat theory’ in a new form. However, some problems have been exposed in the practice of the BRI, including project transparency, the coordination mechanism of rights and obligations between China and the countries along the Belt and Road in relevant investment projects, and the relationship with established debt treatment mechanisms in developed countries (e.g. the Paris Club). The reputation of the BRI will be greatly affected if these problems cannot be resolved properly. The third argument is the ‘Shanghai effect’. The Western media has focused on the environmental and social impacts and responsibilities of Chinese companies in overseas investments and trade activities.27 After 24 Rex Tillerson, China Can’t Buy Its Way Out Of Global Problems, http://www.zao bao.com/realtime/china/story20170606-768910, accessed on June 6, 2017. 25 ‘Abe Shifts His Attitude Towards Supporting the Belt and Road’, Reference News, June 7, 2017. 26 ‘Remarks by Vice President Pence on the Administration’s Policy Toward China’, October 4, 2018, https://www.whitehouse.gov/briefings-statements/remarks-vice-presid ent-pence-administrations-policy-toward- china/, accessed on November 10, 2018. 27 American right-wing scholar Stefan Halper critiqued China’s investment and trade in other developing countries as undermining Western values and norms such as democracy and human rights, calling it the ‘China Effect’. See Stefan Halper, The Beijing Consensus: How China’s Authoritarian Model Will Dominance the Twenty-first Century, New York: Basic Books, 2010.

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the 2008 financial crisis, China’s replacement of developed countries as major importers caused concern for some Western scholars over its low environmental and social governance standards, as it could lead to worsening environmental and labour outcomes in other developing countries. For example, some studies have argued that due to the rapid increase in productive capacity in large emerging economies such as China and India, especially after the 2008 financial crisis, the profound market shift in end demand for manufactured and intermediate goods from the north to the south may have negative implications concerning environmental and social governance for other developing exporters.28 Many scholars have also argued that the BRI will accelerate the formation of a new Chinese-centred regional economic order, thus emphasising the above-mentioned issues. Another hot topic in Western countries concerns how the newly-established AIIB can comply with environmental and social responsibility standards. In addition, some have said that China is promoting the construction of ecological civilisation, significantly improving environmental governance standards, and transferring production capacity outside its country through the BRI, which may aggravate ecological and environmental crises in countries that have lower standards29 along the Belt and Road. In the literature on trade and environment, there is a so-called ‘race to the bottom’ hypothesis, wherein countries improve their competitiveness

28 See: Raphael Kaplinsky, and Masuma Farooki, ‘Global Value Chains, the Crisis, and the Shift of Markets from North to South’, in Olivier Cattaneo, Gary Gereffi and Cornelia Staritz, eds., Global Value Chains in a Postcrisis World: A Development Perspective, Washington, D.C.: The World Bank, 2010, pp. 125–153; Kaplinsky, Raphael, Anne Terheggen and Julia Tijaja, ‘China as a Final Market: The Gabon Timber and Thai Cassava Value Chains’, World Development, Volume 39, Issue 7, 2011, pp. 1177–1190. In addition, with their status as a palm oil consumer market rising fast, emerging economies such as China do not join the Roundtable on Sustainable Palm Oil (RSPO) dominated by European enterprises and social organizations, putting a lot of pressure on the RSPO. See: Philip Schleifer and Yixia Sun, ‘Emerging Markets and Private Governance: The Political Economy of Sustainable Palm Oil in China and India’, Review of International Political Economy, Volume 25, Issue 2, 2018, pp. 190–214. 29 Dokku Nagamalleswara Rao and Atmaja Gohain Baruah, ‘Is China Going Green by Dumping Brown on Its BRI Partners?’. http://www.eastasiaforum.org/2018/09/25/is-china-going-green-by-dumpingbrown-on-its-bri-partners, accessed on September 28, 2018.

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by undercutting environmental and social standards to attract investment and export opportunities under economic globalisation. This hypothesis has been widespread without insufficient empirical evidence. In contrast, some scholars have disagreed with this hypothesis and have instead stated that exporters will enhance export competitiveness by actively raising environmental and social standards to squeeze into the markets of developed countries, which is known as the ‘California effect’.30 In 2017, based on the social impact of trade between China and African countries, Adolph et al. proposed the ‘Shanghai effect’ to correspond to the ‘California effect’.31 While their study rehashed the ‘race to the bottom’ hypothesis, the ‘Shanghai Effect’ further criticizes China as an archetype, which has a negative impact on the BRI. The BRI has proposed both policy communication and Green Silk Road targeting to solve environmental and social problems that will arise from both investment and trade liberalisation and facilitation in an attempt to avoid the ‘race to the bottom’. However, in reality, as Westernbacked NGOs dominate the standards and discourse in the environment and human rights fields, the BRI will face challenges in establishing its own mechanisms, standards, and discourse.

Analytical Framework for the Relationship Between the BRI and the Global Governance System To analyse this relationship more comprehensively and systematically, this study proposes a theoretical typological framework after reviewing and summarising the evolution of both the global governance system and the characteristics of China’s participation in the global governance system.

30 Davd Vogel, Trading Up: Consumer and Environmental Regulation in a Global Economy, Cambridge: Harvard University Press, 1997, p. 5, pp. 248–260; David Vogel, ‘Trading Up and Governing Across: Transnational Governance and Environmental Protection’, Journal of European Public Policy, Volume 4, Issue 4, 1997, pp. 556–571. 31 Christopher Adolph, Vanessa Quince and Aseem Prakash, ‘The Shanghai Effect: Do Exports to China Affect Labor Practices in Africa?’ World Development, Volume 89, 2017, pp. 1–18.

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I. Relationship Between the Development of the Global Governance System and the BRI Global governance originated from a normative proposition of rebuilding world politics at the beginning of the Cold War. The 1995 Commission on Global Governance’s report, entitled Our Global Neighbourhood, suggested that world politics should return from being dominated by the great powers to being UN-centred in order to form a power structure that would expand the rights of representation and decisionmaking for emerging developing countries and strengthen the status of the rule of law and equity principles to better reflect the demand for the development and positively respond to global issues.32 This proposition can be traced back to the New International Economic Order (NIEO) advocated by developing countries in the 1970s. With its concept featuring an obvious reform overtone, global governance generally reflects the rights claims and justice demands of developing countries and has received widespread attention. The concept was closely associated with optimism after the end of the Cold War in the early 1990s, as countries wished to refocus on global development and solve common global problems through international cooperation. The Commission on Global Governance’s report largely expressed such optimism, yet it also contained rich idealism because it did not consider the concrete means from which to achieve its goals but instead pinned its hopes on a smooth power shift. Such optimistic expectations were also reflected in some multilateral processes such as the Agenda 21, the United Nations Framework Convention on Climate Change, and the Convention on Biological Diversity adopted in Rio de Janeiro. However, developed countries soon lost interest and instead embarked on a neoliberal transformation of global governance. The initial US commitment to the ‘unipolar moment’ evolved into maintaining a ‘unipolar era’, and the initial ambition of global governance to drive international political reform was gradually dissolved through neoliberal discourse. Thus, dominant discourses of hegemonic powers, including neoliberal institutionalism, liberal internationalism, and hegemonic stabilisation, obscured the role of the great powers and continued to provide 32 Ingvar Carlsson, Shridath Ramphal et al., Zhao Zhongqiang trans., Our Global Neighborhood: The Report of the Commission on Global Governance, Beijing: China Translation & Publishing Corporation, 1995.

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a source of legitimacy for US and Western hegemony.33 Since the 1980s and 1990s, Western countries have taken ‘good governance’ as a prerequisite for lending support through the World Bank and IMF, and have provided aid in large quantities through cross-border NGOs in the name of enhancing efficiency and legitimacy to influence the domestic politics of recipient countries.34 In addition, the active participation of Western multinational corporations and NGOs in multilateral organisations such as the UN is considered a major manifestation of global governance. For example, in 2000, UN Secretary-General Kofi Annan launched the Global Compact to encourage multinational corporations and NGOs to actively assume social responsibility and participate in global governance. American scholar John Ruggie, Annan’s advisor in the Global Compact, clearly embedded liberalism in the Global Compact and promoted it globally.35 Therefore, Western countries, multinational corporations, and NGOs joined forces to create mechanisms and initiatives in various fields, forming a complex global governance network that combines formal and informal regimes.36 Furthermore, the field of global governance expanded rapidly to involve many elements at the end of the Cold War. For example, the UN’s 2030 Agenda for Sustainable Development contains 17 basic goals, including poverty reduction, energy, health, environmental protection, resource development, and human security, and most of these areas have embraced cross-border governance arrangements (see Table 1). 33 See Andrew Hurrell, Lin Xi trans., On Global Order: Power, Values, and the Constitution of International Society, Beijing: China Renmin University Press, 2017. 34 Heikki Patomäki, ‘Good Governance of the World Economy?’, in Yu Keping eds., Globalization and Global Governance, Beijing: Social Sciences Academic Press, 2003, pp. 237–267. 35 John G. Ruggie, ‘Taking Embedded Liberalism Global: The Corporate Connection’,

in David Held and M. Koenig-Archibugi, eds., Tong Xingeng trans., Taming Globalization: Frontiers of Governance, Shanghai: Shanghai Translation Publishing House, 2015; John G. Ruggie, ‘Taking Embedded Liberalism Global: The Corporate Connection’, in David Held and M. Koenig-Archibugi, eds., Taming Globalization: Frontiers of Governance, London: Polity Press, 2003; Jean-Philippe Thérien and Vincent Pouliot, ‘The Global Compact: Shifting the Politics of International Development?’, Global Governance, Volume 12, Issue 1, 2006, pp. 55–75. 36 There is, of course, a significant stake in controlling global value chains, in addition to the values. See Laihui Xie, ‘Market Shift and Environmental Upgrading of Emerging Economies in the Perspective of Global Value Chains’, in Foreign Theoretical Trends, Issue 12, 2014, pp. 22–33.

IMF, World Bank Asian Development Bank (ADB) World Trade Organization (WTO) Comprehensive and Advanced Trans-Pacific Partnership (CPTPP) South Asian Association for Regional Co-operation (SAARC) International Centre for Settlement of Investment Disputes (ICSID), Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (Washington Convention) Paris Club, International Accounting Standards Board (IASB)

Finance

Investment

Trade

Name

Decentralised Relatively Centralised

Relatively Centralised

Decentralised

Centralised

Formal

Formal

Formal

Informal

Relatively Centralised Relatively Decentralised

Power structure

Formal

Formal Formal

Regime form

Major global governance mechanisms involved in the BRI

Field

Table 1

Observer

Full member

Non-member

Non-member

Full member

Full member Full member

China’s participation status

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Non-traditional Security Governance

Ecological and Environmental Protection

Development Assistance

Field Informal

International credit rating agencies (Standard & Poor’s, Moody’s Investors Service, Fitch Ratings Inc., etc.) Development Assistance Committee (DAC) Convention on Biological Diversity (CBD), United Nations Framework Convention on Climate Change (UNFCCC) Forest Stewardship Council (FSC), Roundtable on Sustainable Palm Oil (RSPO), Equator Principles United Nations Convention on the Law of the Sea (UNCLOS) United Nations Comprehensive Convention on International Terrorism Decentralised

Decentralised

Formal

Centralised

Informal

Formal

Decentralised

Centralised

Centralised

Power structure

Formal

Informal

Regime form

Name

(continued)

Full member

Full member

Non-member (or partial companies as members)

Member

Non-member

Non-member

China’s participation status

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International Labour Organization (ILO) SA8000 Certification United Nations Convention Against Corruption (UNCAC) Extractive Industries Transparency Initiative (EITI)

Social Responsibility

Source Compiled by the Author

Anti-Corruption

Name

(continued)

Field

Table 1

Decentralised Relatively Centralised Decentralised Centralised

Informal Formal Informal

Power structure

Formal

Regime form

Non-member

Non-member Full member

Full member

China’s participation status

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Following the 2008 financial crisis, global governance entered a new phase, marked by the 2009 G20 Summit. The UN regained its dominant position in the 2030 Sustainable Development Agenda, and the representation and voting powers of developing countries in international organisations such as the IMF increased. For example, the emerging powers established the BRICS (Brazil, Russia, India, China, and South Africa). Meanwhile, the proposal of the BRI and the establishment of regimes such as the AIIB marked a new stage in China’s participation in global governance. The BRI carries a new political and economic philosophy that is fundamentally different from neoliberal globalisation, and its ‘new model of major power relations’ and community of shared future concepts have developed China’s participation in global governance. China has proposed a comprehensive vision for world order for the first time to answer the question: What kind of world should we build, and how should we build it? Accordingly, the BRI establishes the interests, responsibilities, and destiny of mankind as objects of value instead of limiting them to narrow nationalism and demands from developing countries. Therefore, the BRI truly fits the values of global governance and provides order to justice and reform. Instead of reforming or even ‘fixing’ the existing global governance system, it supports, utilises, and maintains the system by promoting both the address of global challenges and the renewal and improvement of the system itself. Therefore, following the global financial crisis and the insufficient momentum for globalisation and global governance, both the community of shared future and the BRI are of great significance and should be understood from the perspective of global governance rather than geopolitics. II. Typological Analysis of the Relationship Between the BRI and Global Governance There is a direct, logical relationship between the BRI and global governance, which is mainly reflected in three ways. First, the BRI is committed to addressing various global issues such as poverty through common development; undertakes the mission of exploring a new model of global governance; and carries the concept of building a community of shared future, which is compatible with and complementary to

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the concept of global governance. In particular, its principle of ‘extensive consultation, joint contribution, and shared benefits’ is consistent with both the fundamental principles of international law and the basic norms of international relations with the UN Charter as the core, and it conforms to the spirit and requirements of the international rule of law. Second, there is a close relationship between the new systems and mechanisms associated with the BRI and the existing rules and norms of the global governance system. The BRI contains hardware infrastructures as well as software infrastructures, such as principles, norms, and international mechanisms, to interact with the existing global governance system. The BRI emphasises the need to ‘abide by and improve relevant international rules-based systems’ and to ‘comply with relevant international conventions, bilateral treaties, and other international rules’37 ; however, in practice, such interactions can be complex, and both coordination and potential conflicts can arise. Finally, the trade and investment flows between China and the countries along the Belt and Road advocated by the BRI may shape a model that is different from economic globalisation, which could put pressure on the existing governance system. It ultimately depends on the relationship between China’s rules and governance models for trade and investment and the existing global governance system. The BRI contains extensive elements in international cooperation as its main content includes infrastructure connectivity and economic and trade cooperation with the target of achieving five cooperation priorities (policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds). As Julio Rios, a Spanish expert on China, suggested, ‘its impact goes beyond trade and economics to the environmental, cultural, and social dimensions, thus forming a complete and comprehensive plan’.38 As a result, the BRI will constantly involve formal regimes and informal norms and mechanisms in various areas of 37 Statement of the Co-Chairs of the Forum on the Belt and Road Legal Cooperation, Xinhuanet, July 3, 2018, http://www.xinhuanet.com/politics/2018-07/03/c_1123073 746.htm, accessed on November 3, 2018. 38 Julio Rios, ‘The Belt and Road Initiative Becomes Part of Global Agenda’, Reference

News, July 28, 2018. For related views, see Julio Rios, ‘China Promotes Substantial Changes in Global Governance’, Reference News, July 23, 2018; ‘Round-Up: The Belt and Road Initiative is a New Platform for Exploring Global Governance Models—Overseas People Talk About the 5th Anniversary of the Belt and Road Initiative’, http://www.xin huanet.com/world/2018-10/03/c_1123517242.htm, accessed on October 28, 2018.

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Types of relationships between the BRI and global governance

Regime Form

Binding Formal Regime

Non-Binding Informal Regime

Power Structure Centralised

Decentralised

Potential competition, limited cooperation, provision of complementarity (e.g. financial sector, development assistance) Competition-dominated or innovative standards (e.g. investment, anti-corruption, environmental and labour standards issues)

Cooperation (e.g. the UN and the WTO)

Innovation and leadership (e.g. disaster prevention and mitigation, low-carbon economy, renewable energy, green finance)

Source Compiled by the Author

global governance, thus contributing to the complex interactions. Just as there are different paths for China’s participation in global governance,39 the relationship between the BRI and the global governance system is bound to vary depending on the issue. Theoretically, we can build a two-dimensional framework using the two variables of power structure and regime form to analyse these complex relationships (see Table 2). In this context, power structure refers to the distribution of power in an existing governance system, where governance mechanisms with centralised power have a higher hierarchy and are often exclusive, such as the regimes or systems that are controlled by industrialised countries. The IMF and the Organization for Economic Co-operation and Development (OECD), for example, are subject to a hierarchy of decision-making powers and have club-like membership. In contrast, organisations with decentralised power are more inclusive and 39 There are several important views on the classification of China’s participation in global governance. See He Fan, Feng Weijiang and Xu Jin, ‘On the Challenges of Global Governance Mechanism and China’s Countermeasures’, World Economics and Politics, Issue 4, 2013, pp. 19–39; Wu Fengsi, ‘China and Global Governance: Four Pathways to Cross a Threshold’, Strategy and Management, Issue 2, 2016, p. 193; Zhang Youwen, ‘The Construction of the Belt and Road: International Development Synergy and Global Governance Innovation’, Studies on Mao Zedong and Deng Xiaoping Theories, Issue 5, 2017, p. 94.

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implement the principle of multilateralism more thoroughly, such as the WTO, where the decision-making influence of each individual member state is essentially the same. The hierarchical and inclusive role of power structure is evident in the interactions between emerging countries, such as China, and international organisations. Sohn found that China’s differential absorption of and compliance with different rules for its participation in international financial governance stemmed, in part, from the looseness of the governance structure and the differentiated regulations over different rules.40 Moreover, a foreign comparative study of 13 international organisations that had accommodated the participation of emerging countries revealed that one of the most important factors that determined the effectiveness of participation was the international organisations’ inclusiveness of large, emerging developing countries.41 Regime form refers to the development stage of the existing governance system and involves coverage, form of rules, legitimacy, and so on. A binding formal regime is generally considered to be more important because it is more crucial for members to conduct a cost–benefit analysis; however, informality is often neglected. An informal regime features more ambiguous rules with more hidden power elements, which leaves greater room for dominant powers to play a role instead.42 This includes the exclusion of members and convention-based decisionmaking processes, which may have adverse consequences for new or non-members. However, even within a formal regime framework, such as the IMF, hegemonic states clearly use informal arrangements to control their governance outcomes during emergencies.43 Under different scenarios, the BRI will face different regime environments and power patterns as well as different responses (Table 2). In

40 Injoo Sohn, ‘Between Confrontation and Assimilation: China and the Fragmentation of Global Financial Governance’, Journal of Contemporary China, Volume 22, Issue 82, 2013, pp. 630–648. 41 Dries Lesage and Thijs Van de Graaf, Rising Powers and Multilateral Regimes,

Basingstoke: Palgrave Macmillan, 2015. 42 Caroline, ‘Unequal Power and the Regime Design of Global Governance: The Case of Arms Control’, Review of International Studies, Volume 40, Issue 3, 2014, pp. 505– 531. 43 Randall W. Stone, Controlling Regimes: International Organizations and the Global Economy, New York: Cambridge University Press, 2011.

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areas where power is more centralised and existing rules and mechanisms are better developed, the BRI will face greater backlash. For example, the IMF and the OECD tend to consider the BRI as a challenge to their rules and regulations, and thus limit their cooperation. Conversely, in areas where power is more decentralised and multilateralism is more supported, the benign competition embodied by the BRI may be more tolerated. For example, UN bodies and the WTO are generally supportive of the BRI. In Western-led non-binding mechanisms, many BRI practices will affect the operation effect of their norms and mechanisms and will therefore be prone to greater backlash. In terms of investment and development assistance, there are only a few informal rules or rules that apply to a few countries, such as the OECD’s Development Assistance Committee (DAC), and China’s entry into the world market as a new credit provider may be considered as weakening the effect of the original rules and norms of those mechanisms, which will naturally lead to a large reaction. Although China is not bound by the relevant mechanisms because it is not a member, such tensions will continue. As the practice of the BRI continues to advance, China’s participation in global governance will be greatly deepened, as will related interactive issues. For example, through a comparative study of some cases of China’s participation in several areas of governance, scholars have found that both the cost of China’s absence from the governance process and China’s indispensability could properly explain the extent of China’s participation in global governance.44 On this basis, the construction of the BRI will enable China to increase its participation in global governance in many areas. This will lead to a deeper integration into the world economy, by which time China will embrace less room for absence and stronger indispensability, and therefore be more willing to invest in and influence the global governance process. By holistically understanding the comprehensive and complex interaction between the BRI and the global governance system from multiple dimensions, this analytical framework reveals objective problems and obstacles, better summarises potential contributions or conflicts and provides in-depth analysis and problem-solving. It truly answers the fundamental questions of the study of global governance: Who is 44 Scott L. Kastner, Margaret M. Pearson and Chad Rector, ‘Invest, Hold Up, or Accept? China in Multilateral Governance’, Security Studies, Volume 25, Issue 1, 2016, pp. 142–179.

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governing, how to govern, and for whom to govern? Through this typological analysis, we may be able to better understand why the BRI encounters different responses in different areas of governance, the level that it may contribute to improving the global governance system, and which aspects it can avoid conflict in to play a more complementary role.

The BRI’s Contribution to Global Governance Global governance should extend far beyond Western governance. The goal of global governance is to achieve a new international political and economic order that is fairer and more reasonable, and should be realised through ‘extensive consultation, joint constitution, and shared benefits’. In the early 1990s, a Commission on Global Governance report put forward a series of new ideas and policy suggestions based on this concept. Unfortunately, almost none were adopted. However, the BRI has carried forward its ideas and adopted the community of shared future as its guiding concept. With the aim of supporting more countries in achieving economic and social development, the BRI will become an indispensable improvement of and supplement to the existing neoliberal global governance. I. Both China and the Countries Along the Belt and Road have Become Active Players in Global Governance Since the end of World War II, developed industrialised countries have dominated major international organisations and exerted decisive influences over the world economy. Under this context, the call for developing countries to establish a new international political and economic order would not have encountered an active response as the resources and discourse of global governance have always been controlled by Western countries. Since the 1980s, Western countries have actively propagated the development paradigm represented by the Washington Consensus. In particular, developed Western countries urged the World Bank, IMF, and OECD, among others, to use so-called ‘good governance’ as a prerequisite for providing assistance. As a result, many developing countries were forced to undergo neoliberal reforms. Rather than achieving economic development, as expected, they slid into chaos and stagnation in the

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wake of the crisis.45 Although the report issued by the Commission on Global Governance attached great importance to the rise of industrialised developing countries and the necessity for the international institutions’ reform, the core agenda of the global governance system’s reform did not receive attention from Western developed countries for a long time. After the 2008 international financial crisis, the neoliberal development model ended, the world economy entered an important stage of transformation, and global governance emerged as an important issue for the international community. In this context, China, as the world’s second-largest economy and the largest trading nation, formally proposed the BRI in 2013. This was of great significance in facilitating the transformation of global governance.46 American economist Michael Spence believes that the AIIB and BRI represent China’s international development strategy. He also asserts that while China has focused on developing its domestic economy for the past 35 years, it has since formed a ‘new positioning of international growth and development agenda’ and has introduced a ‘strategy that convinces its neighbours that they will benefit from China’s economic transformation’.47 In this sense, China has the ability and willingness to become an active participant in global governance and can play an active role in correcting the distortions of the original global governance system. China has clearly presented itself as a contributor to global development. The BRI is an important medium through which China can display both its responsibility as a major country and its determination to address issues related to global development. Moreover, China has pledged to provide export markets and fill gaps in funding, which will inject new impetus into global development. Developed Western countries have been the main source of international capital and development assistance for a long time, which has given them a dominant position 45 Walden Bello, Dark Victory: The United States and Global Poverty, London: Pluto Press, 1999; Alice H. Amsden, Escape from Empire: The Developing World’s Journey Through Heaven and Hell, Cambridge: The MIT Press, 2007. 46 Xie Laihui, ‘From “Distorted Governance” to “Real Governance”: Transformation of Global Development Governance’, Foreign Theoretical Trends, Issue 12, 2015, pp. 2–13. 47 Michael Spence, ‘China’s International Growth Agenda’, Project Syndicate, June 17, 2015, https://www.project-syndicate.org/commentary/china-international-growthagenda-by-michael-spence-2015-06, accessed on October 28, 2018; Michael Spence, ‘China’s International Development Strategy Benefits the World’, Reference News, July 9, 2015.

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in the external development environment of developing countries. After China joined the WTO in 2001, imports and exports surged rapidly and made China an important trading partner of more than 180 countries. After 2010, China’s loans for development assistance exceeded the World Bank’s total amount. In June 2017, the World Investment Report, released by the United Nations Conference on Trade and Development, showed that China’s foreign investment had surged by 44% to USD 183 billion in 2016, making it the world’s second-largest foreign investor for the first time.48 Thus, the rise of China’s economy can help to reduce the overreliance on the world economy and on global governance from a few developed Western countries. In the context of the international financial crisis in developed industrialised countries, the BRI is of great significance for reversing the imbalance of global development and improving global economic governance. George Papandreou, the former prime minister of Greece, publicly expressed his gratitude for the BRI in an interview by recalling that ‘when we were facing a financial crisis and the EU was up against broader challenges, China helped us. China is one of the few countries that have bought our national debt. This was an important vote for trust. After that, China began to invest in the Port of Piraeus, which has become a major part of the new Maritime Silk Road. These investments have shown great confidence in the ability to overcome the crisis. Only a few countries would do this’.49 Meanwhile, Deborah Brautigam, the head of the China-Africa Studies Programme at Johns Hopkins University in the United States, has revealed that China has granted loans of approximately USD 100 billion to Africa through its State-owned banks since 2000, ‘which [is] almost equal to the loans issued by the World Bank’.50 Moreover, Aden Ahmed Doualeh, an adviser to the president of Djibouti, stated that ‘without infrastructure, there will be no trade … no European countries are willing to help African countries develop infrastructure and

48 UNCTAD, World Investment Report 2017: Investment and the Digital Economy, New York and Geneva: United Nations, 2017. 49 Nathan Gardels, ‘China Laying the Groundwork for Post-American World Order’, Washington Post website, July 27, 2018, quoted from Reference News, July 29, 2018. 50 ‘China’s Construction Craze in Africa’, Frankfurter Allgemeine Zeitung, January 31, 2018, quoted from Reference News, February 2, 2018.

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economy, only the Chinese do that. Now, this is not good for Europe, but it is good for China and good for Africa’.51 II. Development Issues Have Become the Main Content of International Cooperation to Reverse the Distortion of Neoliberal Global Governance The Cold War saw competition for hegemony between the United States and the former Soviet Union, and the advancement of developing countries did not receive enough attention. After the end of the Cold War, many developing countries were eager to develop this as a core issue on the global agenda. The Commission on Global Governance also suggested that the UN should establish a more authoritative economic council to coordinate and promote development on the global agenda. However, the existing global governance system is affected by the values and preferences of Western countries. For instance, many of its mechanisms or initiatives put human rights, the environment, and climate change, among others, in a more prominent position, and address local issues by exporting many Western governance models. Instead of formulating governance agendas based on the actual needs of developing countries, the dominant countries popularise their values and expand their capitalist economic systems based on their strategic preferences and interests. For example, the United States has always resisted the concept of global governance, therefore, US presidents rarely use this concept. Meanwhile, due to the lack of adequate support, the UN’s Millennium Development Goals have been severely underachieved. Accordingly, Anthony McGrew, a British scholar, criticised the existing global governance system as featuring ‘distorted governance’ rather than ‘real governance’,52 while Henk Overbeek, a Dutch scholar, stated that ‘in the past two decades, the so-called global governance is a form of neoliberal global governance, which serves the accumulation of capital on a global scale’.53 51 ‘Chin’s Trains Heading for the Hinterland of Africa’, South China Morning Post, January 11, 2018, quoted from Reference News, January 15, 2018. 52 Anthony McGrew eds., Chen Jiagang trans., ‘Towards Real Global Governance’, Marxism & Reality, Issue 1, 2002, pp. 33–42. 53 Henk Overbeek eds., Xie Laihui trans., ‘Global Governance as an Academic Concept: Mature or Decline?’ Foreign Theoretical Trends, Issue 1, 2013, pp. 22–26.

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Since the original global governance system has not put the economic development of developing countries on the core agenda of global governance, the serious inadequacy of the infrastructure in the vast regions of Asia, Europe, and Africa has not received attention for a long time, even though it has become a serious bottleneck that restricts economic integration and social development. In contrast, the BRI, which is built on China’s own experiences, places the construction and interconnection of infrastructure in a prominent position, advocates for equal dialogue with the countries along the Belt and Road, and jointly promotes economic integration and cooperation via linked development strategies to better address the issues amid development. Therefore, as UN Secretary-General Guterres pointed out, the BRI is aligned with the UN’s 2030 Agenda for Sustainable Development; will help to advance economic globalisation in a more balanced, inclusive, and harmonious manner; and will bear great significance in overcoming many challenges faced by the world today through international cooperation.54 III. A New Model of Cooperation that Respects the Sovereignty and Equality of all Countries Should be Built to Improve the Global Governance System The BRI is based on the five basic principles of peaceful coexistence; pursues the new concept of international relations that features ‘mutual respect, equality, and win–win co-operation’; and follows the new concept of global governance that features ‘extensive consultation, joint contribution, and shared benefits’. These basic norms advocated by China are conducive to safeguarding the principle of sovereignty and forming more stable and peaceful international relations, and have been supported and embraced by the UN and most countries along the Belt and Road. It has been widely noted that there is an obvious conflict between a state’s right to maintain its territorial integrity and a minority’s right to selfdetermination. Western powers such as the United States often propagate that some normative values overpower others (such as human rights over

54 Guterres, ‘Belt and Road Initiative Promotes Balanced, Inclusive and Harmonious Development of Globalization’, http://www.xinhuanet.com//2017-05/13/c_1120967409.htm, accessed on November 1, 2018.

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sovereignty), yet such practices often fail to reach a consensus at the international level. This leads to an ambiguous international order and even to frequent conflicts. Therefore, some foreign scholars have suggested that the international order advocated by China will more actively safeguard territorial integrity and sovereignty and thus form a better international order.55 The BRI can help eliminate the soil that breeds terrorism and can compensate for the shortcomings of the existing global governance system by promoting joint development. Many countries along the Belt and Road, especially those landlocked countries in Asia that have both a low level of participation in globalisation and poor infrastructure, have been unable to benefit from globalisation and have thus suffered from backwards development for a long time. This imbalanced development caused by globalisation has become a weak link in global governance. Many countries have repeatedly fallen into internal conflicts and been subsequently labelled as ‘failed’ or ‘dangerous’ countries. As pointed out by American scholar Thomas Barnett, those in the US military who are involved in the war against terror have increasingly realised that the countries that are decoupled from globalisation are the most vulnerable to conflict, and many of these countries are concentrated in Asia. Compared with the Western approach of launching wars to promote regime change or democracy, Barnett believes that integrating these countries into the concept of globalisation provides a fundamental solution to global security issues.56 If supported by regional integration forces, the ‘backwards’ countries, especially the so-called ‘failed’ countries, can gain the opportunity to participate in the global division of labour, unleash their growth potential, and share the fruits of globalisation. In this sense, the BRI 55 Ryan D. Griffiths, ‘States, Nations, and Territorial Stability: Why Chinese Hegemony Would Be Better for International Order’, Security Studies, Volume 25, Issue 3, 2016, pp. 519–545. In addition, scholars from the University of Helsinki in Finland also pointed out that China shows a completely different leadership style, the international order it advocates recognizes the value of free trade, and it seems to be more just for emphasizing the fairness between countries, recognizing national sovereignty, and respecting the diversity of culture and civilization. See: Guilherme Vasconcelos Vilaça, ‘China and Global Governance: “‘One Belt One Road”, the New Development Bank and the Concept of Market State’, Culture-History-Globalization, Volume 22, 2017, pp. 241–258. 56 Thomas Barnett eds., Wang Changbin, Tang Xuewu, and Xie Jingzhen trans., The Pentagon’s New Map: War and Peace in the Twenty-first Century, Beijing: Oriental Publishing House, 2007; Thomas Barnett eds., Sun Xuefeng and Xu Jin trans., Blueprint for Action, Beijing: World Affairs Press, 2009.

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aims to promote common prosperity, and its development may be a more fundamental solution to terrorism and other global issues.57 China has clearly proposed building the BRI as a ‘peaceful’ and ‘civilised’ road, which will help to fundamentally resolve many challenges faced by the world. Furthermore, China has established innovative mechanisms under the framework of the BRI such as the ‘safety mechanism for maritime voluntary cooperation under the coordination of major powers outside the region’ in some regions to ensure the smoothness and safety of the Maritime Silk Road through informal voluntary arrangements.58 IV. The BRI Explores New Models of Global Environmental Governance Environmental protection is an important issue in the construction of the BRI. Related difficulties have mostly originated from the conflict between the challenging task of economic development and the inherent fragility of the ecological environment in the countries along the Belt and Road. Merely relying on a certain initiative and action of a single country or region will be far from sufficient to handle the transnational environmental risks faced by the construction of the BRI.59 Therefore, China and the countries along the Belt and Road will be required to jointly improve their communication on issues related to environmental governance to help the host countries improve their governance capabilities and cooperate in building a new environmental governance system. The Chinese government has attached great importance to the construction of a ‘green’ Belt and Road in the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road issued in March 2015, as well as in the Guiding Opinions on Promoting the Construction of Green Belt and Road. In May 2017, the Ministry of Environmental Protection issued the Belt and Road Ecological 57 See: Qin Yaqing and Wei Ling, ‘“New Concept of Global Governance and the Practice of Belt and Road Cooperation’, Foreign Affairs Review, Issue 2, 2018, p. 12. 58 Shao Xueting and Rong Zhengtong, ‘A Study on the Security Mechanism Construction of the 21st Century Maritime Silk Road in the Middle East Sea Area’, Journal of Ocean University of China (Social Sciences), Issue 4, 2015, pp. 54–59. 59 Wang Luozhong and Zhang Yijun, ‘Strategic Positioning and Governance System of Environmental Problems from the Perspective of the Belt and Road Initiative’, Chinese Journal of Environmental Management, Issue 4, 2016, pp. 60–64.

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and Environmental Co-operation Plan, which clarified China’s current and future cooperation plan of action to promote the BRI’s approach to ecological and environmental protection.60 At the Belt and Road Forum for International Co-operation held in May 2017, President Xi Jinping also proposed the establishment of a big data service platform for ecological and environmental protection and to build the International Coalition for Green Development on the Belt and Road. Therefore, the BRI aims to address the issues caused by neoliberal economic globalisation such as trade liberalisation, which affects environmental pollution. Although the BRI highlights the basic principles of market operation, it also emphasises that the role of the market is subject to many constraints, which also reflects the significance of the BRI in promoting policy exchange and people-to-people bonds. President Xi Jinping particularly emphasised that ‘Chinese enterprises must not only pay attention to investment interests when going global, but also win a good reputation, abide by the laws of the host country, and shoulder more social responsibilities’, and that ‘further efforts should be made to ensure that the enterprises’ investment and operation behaviours comply with relevant laws, pay attention to environmental protection, fulfil social responsibilities, and act as an image ambassador for the joint construction of the BRI’.61 Western scholars and media have often criticised China for exporting pollution through production capacity cooperation under the framework of the BRI, which is a baseless claim.62 In practice, Chinese companies have invested in the construction of many coal-fired power plants in developing countries along the Belt and Road, which is of great help to the countries that are emerging from energy shortage crises. Moreover, meeting the reasonable energy needs of developing countries is also an integral part of the UN’s 2030 Sustainable Development Goals. According to the Paris Agreement, most developing countries along the

60 Belt and Road Ecological and Environmental Cooperation Plan, https://www.yidaiy ilu.gov.cn/xwzx/roll/13384.htm, accessed on November 8, 2018. 61 ‘Promoting the Construction of the “Belt and Road Initiative” and Expanding New Room for Reform and Development’, Xi Jinping: The Governance of China (Vol. 2), Beijing: Foreign Languages Press, 2017, p. 501. 62 Karen McVeigh, ‘Rich Countries Pushing “Dirty Energy” in Africa, Report Claims’, The Guardian, 23 July, 2018, https://www.theguardian.com/global-development/2018/ jul/23/rich-countries-pushing-dirty-energy-africa-report-claims, accessed on December 2, 2018.

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Belt and Road have not committed to enforcing restrictions on carbon emissions. Meanwhile, the relevant practices of the BRI have often been criticised for both increasing the carbon emissions of countries along its route and weakening the effect of prohibiting OECD member states from exporting coal-fired power plants. To respond to climate change and promote emissions reductions, the OECD established standards on energy efficiency and emissions for the construction and operation of coal-fired power plants using foreign aid in 2015. Since China does not qualify for membership in the OECD, it is not subject to its relevant restrictions. However, contrary to some Western media reports that China keeps its clean energy projects at home, China has never transferred fossil energy projects with high emissions overseas. Meanwhile, according to the statistics from Johns Hopkins University in the United States, from 2000– 2015, most of China’s investment in Africa was devoted to renewable energy industries: USD 10 billion was invested in hydropower; around USD 1.5 billion was invested in solar energy, wind power, and geothermal power generation; around USD 2.2 billion was invested in coal power; and USD 1.9 billion was invested in gas-fired power generation. In other words, China has provided far more in loans to African governments for non-fossil energy projects than to fossil energy projects in the power industry.63 At present, developed Western countries mainly rely on four governance models to deal with environmental issues caused by cross-border investment and trade, and all of these models have obvious limitations. The four models are as follows: (1) establish requirements on imported products according to domestic standards, and impose tariff or non-tariff barriers; (2) establish special environmental clauses in bilateral or regional trade agreements, and force other member states to accept a certain environmental standard or implement environmental agreements; (3) conduct ‘private governance’ through multinational companies and NGOs, and establish governance systems or certification procedures at the industrial level (such as the FSC, RSPO, and Equator Principle); and (4) establish a special committee within the EU to coordinate environmental policies and standards among member states. These models reflect developed countries’ governance concepts without considering the policies of host countries. Due to the frequent abuse of power, most of these concepts 63 Deborah Brautigam, ‘More Bad Data on Chinese Finance in Africa’, July 26, 2018, http://www.chinaafricarealstory.com/, accessed on December 2, 2018.

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are ineffective in practice and are generally unsuitable for the practice of the BRI. The BRI seems to lean towards policy communication by addressing issues via intergovernmental policy dialogue and capability building, while involving the participation of enterprises and social organisations. This model also emphasises the core role of the host country’s government and respects its initiatives. In fact, the governance capabilities of developing countries along the Belt and Road are vital for the construction of the BRI. Many best practices and innovative models of environmental governance have emerged during the construction of the BRI that are worthy of in-depth research. For example, the Kenyan government, the Chinese government, the Export–Import Bank of China, the China Road & Bridge Group, and third-party assessment agencies have cooperated to conduct the Environmental and Social Impact Assessment (ESIA) for the Kenyan Standard Gauge Railway (SGR), which can be promoted as a model.64 However, developed Western countries have advantages in terms of environmental management and technology. Therefore, if they were to abandon the mindset of strategic competition and participate in the construction of the BRI, they would be conducive to the formation of a new environmental governance model, which would be of great significance to global environmental transformation. American scholar Nathan Gardels stated that ‘the wise attitude adopted by the West towards the BRI is to join in China’s efforts to advance global development … the experience of the AIIB involving many Western countries in achieving the goals for lean, clean, and green shows that high standards can be implemented if the West is a participant rather than a bystander during the formation of the new order’.65 In February 2017, a Forbes article pointed out that the BRI could benefit Western companies in many ways. For example, Western professional service companies, including professional companies in areas such as accounting, consulting, banking, and

64 Bingyu Liu, ‘Regulation of Chinese Infrastructure Companies’ Environmental and Social Impacts in Host Countries Overseas: A Study of the Chinese-Built Standard Gauge Railway Project in Kenya’, South African Journal of Environmental Law and Policy, Volume 23, Issue 1, 2017, pp. 101–141. 65 Nathan Gardels, ‘China Laying the Groundwork for the Post-American World Order’, the Washington Post website, July 27, 2018, quoted from Reference News, July 29, 2018.

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insurance, could leverage their own advantages to solve problems related to good management and transparency. Moreover, Western NGOs could also benefit from participation in the BRI’s clean energy and sustainable development projects.66 V. Global Anti-Corruption Governance Advances with New, NonWestern Concepts and Norms At present, the differences in the understanding and definition of global governance between China and Western countries remain. By adhering to a development model and governance model that has Chinese characteristics, China has its understanding of concepts such as global governance, the rule of law, and civil society. This difference may be reflected in the growing debate over discourse.67 Thomas J. Christensen, an American expert on Chinese issues, states that China has its own understanding of international politics and has always been reluctant to act in accordance with Western standards of human rights. Rather than following Western standards when assisting with and investing in other developing countries, China tends to act according to its own traditions.68 The BRI’s financing plan aims to support the development projects of the countries along its route, especially large-scale infrastructure development projects that will bring substantial and inclusive economic growth to relevant countries. This is in stark contrast to the aid from Western countries in the twentieth century, which ended up in the pockets of a few elites. While some scholars and the media in Western countries have claimed that China’s financing plans may lead to a similar situation in the countries along the Belt and Road, they have obviously ignored the fundamental difference between the two approaches. During the Cold War, Western countries and international financing institutions offered massive financial support to the authoritarian regimes 66 ‘The West Can Benefit from the Belt and Road Initiative’, the Forbes biweekly

website, February 25, 2017, quoted from Reference News, February 27, 2017. 67 Alice Ekman, ‘China and the “Definition Gap”: Shaping Global Governance in Words’, http://www.theasanforum.org/author?user_id=9192334, accessed on October 28, 2018. 68 Thomas J. Christensen, The China Challenge: Shaping the Choices of a Rising Power, New York: W. W. Norton & Company, 2015, pp. 163–164.

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of developing countries, which resulted in severe debt crises. The key issue was that the relevant loans were not used to facilitate the economic development of the host country, but instead flowed into the pockets of a few rulers. In the 1990s, American philosopher Noam Chomsky criticised Western countries and international creditors as being responsible for these debt crises. Using the example of Brazil, he stated that ‘like almost all Third World countries, the generals, their henchmen, and the super-rich in Brazil have borrowed massively and saved money abroad. The need to pay off the debt has become a noose tied to its neck, making the countries unable to solve their own problems. The need to pay off debts also restricts social spending, social equity, and sustainable development’. He stated that ‘If I borrow a lot and deposit it in a Swiss bank, I will definitely not be able to repay my creditors. Is this your problem or my problem? People living in slums did not borrow money, and workers who lost land did not borrow money. In my opinion, even if people on the Moon are heavily in debt, 90% of Brazilians owe no money’.69 Western countries have established mechanisms such as the DAC and the Paris Club based on their historical experiences in dealing with issues related to sharing information on foreign aid, investment, and debt over the past decades. China has more actively interacted with the Paris Club as an observer, and cooperation between the two is expected to improve China’s technical capabilities in investment and debt management related to the BRI. However, this does not mean that Western countries can criticise the investment and assistance of the BRI based on their own values and policy preferences. Western countries have often viewed the political regimes of developing countries as a black-or-white issue, and have imposed sanctions on these countries at will. In reality, the hegemonic behaviour of the West has triggered anti-Western sentiment in many developing countries, yet these countries must often swallow their anger because of their dependence on the external economic environment. In future, Western countries may face growing criticism from developing countries upon losing their superior position as the result of the establishment of a better global governance system. In recent years, China has actively placed international anti-corruption cooperation to feature higher on its agenda, and has proposed to build the BRI into a ‘clean’ road. In April 2014, the Beijing Declaration on 69 Noam Chomsky eds., Ji Guangmao trans., How the World Works, Beijing: Yilin Press, 2015.

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Fighting Corruption was passed at the 26th Ministerial Conference of the Asia–Pacific Economic Co-operation (APEC), and the APEC Network of Anti-corruption Authorities and Law Enforcement Agencies (ACTNET) was established. In September 2016, China promoted both the adoption of the G20 High-Level Principles on anti-corruption and the return of stolen assets at the G20 Hangzhou Summit. In his speech at the opening ceremony of the 2017 Belt and Road Forum for International Co-operation, President Xi Jinping asserted, for the first time, that it was necessary to strengthen international anti-corruption cooperation and build the BRI as a ‘clean’ road. In September 2017, the BRICS Xiamen Summit reached an important consensus on strengthening anticorruption cooperation, which was included in the BRICS Leaders Xiamen Declaration. On 20 November 2017, the China-ASEAN Joint Statement on Comprehensively Strengthening Effective Anti-Corruption Co-operation was released at the China-ASEAN Summit. On 3 July 2018, a co-chairman’s statement covering the ‘clean’ road was issued at the Forum on the Belt and Road Legal Co-operation in Beijing. The statement read: ‘Call on the participants of the BRI to strengthen co-operation on the clean Belt and Road based on the international conventions and related bilateral agreements, such as the United Nations Convention Against Corruption, and build the BRI into a clean road; support the participants of the BRI to deepen co-operation in judicial enforcement’.70 Anti-corruption governance based on international conventions and related bilateral agreements, such as the United Nations Convention Against Corruption, prioritises improving the governance capabilities of China and the countries along the Belt and Road, and aims to strengthen enterprises’ self-discipline awareness and resistance to corruption. It also provides new solutions and paths for global anti-corruption governance. At a seminar on strengthening international cooperation and building an integrity path that was jointly organised by the World Bank and the Central Commission for Discipline Inspection of the CPC in September 2017, Pascale Hélène Dubois, Vice President of the World Bank, said that the World Bank supported the BRI and shared experience with China and other participants in combating commercial fraud and bribery,

70 ‘The Co-Chairman’s Statement at the Forum on Belt and Road Legal Cooperation’, Xinhuanet, July 3, 2018, http://www.xinhuanet.com/politics/2018-07/03/c_1123073 746.htm, accessed on November 6, 2018.

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promoting corporate compliance operations, and building a clean business environment.71 Since the BRI was proposed in 2013, China and the countries along the route have actively established many cooperation mechanisms in wide areas under the framework of the BRI (see Table 3). These mechanisms are mainly based on cooperation between governments and include formal multilateral international systems as well as informal norms and rules. One of the distinctive features is that China does not pursue dominance in the BRI but instead follows the Silk Road spirit of ‘peaceful co-operation, openness and tolerance, mutual learning, mutual benefit, and win–win co-operation’ to gradually push forward the BRI.

Conclusion The existing global governance system is a complex network that consists of formal and informal systems or regimes. Defects and distortions exist in its insufficient capability and legitimacy; therefore, new mechanisms need to be urgently developed in emerging fields. The BRI focuses on the fundamental issue of imbalanced global development and is committed to overcoming various global challenges through international cooperation. It plays an important role in addressing the governance deficit. This study recognises the rich diversity in the relationship between the BRI and the global governance system as well as the different regime forms and power structures that affect this interaction. Based on this research, the following conclusions can be drawn regarding the interaction between the BRI and the global governance system. First, the construction of the BRI is embedded in the formal regimes of the existing global governance system instead of forming a ‘parallel’ regime; however, there is obvious tense competition with the informal regimes established using concentrated Western power. Therefore, it can be suggested that the UN’s system highly appreciates the BRI while the World Bank and IMF have different attitudes towards it, and the informal norms and initiatives led by Western countries have rebounded. As the BRI is consistent with the initial concept of global governance, the concept of a community of shared future for mankind, based on China’s 71 Yang Hailong, ‘Guard the Belt and Road Initiative with Clean Governance—Sidelights of the Seminar on Strengthening International Cooperation and Building an Integrity Path’, China Discipline Inspection Daily, September 24, 2017.

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Table 3

The BRI’s main newly-established governance mechanisms

Field

Name

Date

Finance

Asian Infrastructure Investment Bank (AIIB) Silk Road Fund Belt and Road Free Trade Network Lancang-Mekong River Dialogue and Co-operation Mechanism China International Import Expo Belt and Road Mechanism for Settlement of Investment Disputes (Belt and Road Mechanism and Agency for Settlement of International Commercial Disputes) Financing Guidance and Principles for Belt and Road Initiative Green Silk Road Initiative International Coalition for Green Development on the Belt and Road Conception of Environmental Protection Co-operation of SCO Belt and Road Ecological and Environmental Co-operation Plan Silk Road NGO Co-operation Network Silk Road News Network and Music Education Alliance Across the Silk Road Silk Road Think Tank Network

December 2015

Trade

Investment

Ecological and Environmental Protection

Social and Cultural Dimension

December 2014 May 2017 March 2016 November 2018 June 2018

May 2017

March 2015 May 2017

June 2018 May 2017 May 2017 May 2017

October 2015

Source Compiled by the Author

understanding of global governance, is also in line with the original spirit of ‘our global neighbourhood’ proposed by the Commission on Global Governance. As an important practice for China’s active participation in global governance, the BRI is conducive to overthrowing the historical monopoly of a few Western countries in the global governance system, correcting distortions in the neoliberal global governance system, and promoting the formation of a more balanced and inclusive global governance system. Real global governance can be achieved only by opposing

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hegemonic rule, yet competition and cooperation at different levels must also be handled properly to leave greater room for innovation. Second, the BRI is committed to facilitating the interconnection of infrastructure, improving the weak links of global development, and resolving issues related to global development as a driving force. It can draw the attention of the global governance agenda back to global development issues and the realisation of the UN’s 2030 Agenda for Sustainable Development, which will be of great significance for achieving international cooperation and addressing various non-traditional security issues. Third, the BRI does not fully follow Western standards in dealing with issues such as corruption and human rights. However, this does not mean it follows an anti-Western approach, so it should not be seen as a threat or challenge; on the contrary, it should win due respect. Respect for diversity is also an element of global governance. Fourth, the BRI actively explores a new model of global governance and follows the principles of ‘extensive consultation, joint contribution, and shared benefits’. It requires the joint support of China, countries along the Belt and Road, and countries outside the region, especially the United States and other Western countries, to address various global issues and achieve the goal of global governance. Real global governance and good governance can only be realised in this way. China should actively explore the possibility of joint governance with developing countries along the Belt and Road and with Western powers outside of the region when dealing with issues such as disaster prevention and mitigation, energy utilisation, environment, and climate change in the future. Finally, to promote and coordinate the relationship between the BRI and the global governance system, China needs to properly respond to the various criticisms and doubts that already exist. If the BRI is to be compatible with the existing global governance system and ease potential conflict, then the key lies in establishing how to avoid malicious attacks, smears, and vicious competition from the West, especially the United States, and how to reduce the risk of conflict and strengthen the dialogue between the two sides. At present, the policy and attitude of the United States towards the BRI are uncertain remain to be observed. In May 2017, the United States sent an official delegation to attend the Belt and Road Forum for International Co-operation. Then, in September 2018, the United States proposed the establishment of a new institution

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called the US International Development Finance Corporation (IDFC) as a clear alternative to the BRI. The attitudes of Japan and the EU may also change, although they send many positive signals to strengthen their cooperation with China. Major global multilateral development banks, including the World Bank, the Asian Development Bank (ADB), and the European Bank for Reconstruction and Development (EBRD), have expressed their support for the BRI. However, the extent to which they intend to cooperate with China remains worthy of attention.

The Global Governance Dilemma in the Pandemic Shock and Its Root Causes Kejin Zhao

The coronavirus disease 2019 (COVID-19) pandemic has emerged as the first truly global crisis that human society has faced in the twenty-first century. It will certainly have a significant and far-reaching impact on the entire world. Since its outbreak in late 2019, the pandemic has spread worldwide. According to the World Health Organization (WHO), at 14:00 on 4 May 2020, there were more than 3.5 million confirmed cases of COVID-19 and 247,000 deaths worldwide, with the United States being the most seriously hit, having exceeded 1.15 million confirmed cases. In addition to Europe and the United States, both of which have been severely affected by the pandemic, Brazil in South America become the ninth country in the world with more than 100,000 confirmed cases following the US, Spain, Italy, the UK, France, Germany, Russia, and Turkey [1]. Overall, the spread of COVID-19 has caused great fear throughout the world and catastrophic consequences in many regions.

The Chinese text of this article was originally published in Northeast Asia Forum, No. 4, 2020 Total No.150. K. Zhao (B) School of Social Sciences, Tsinghua University, Beijing, China

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_8

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However, when viewed from another perspective, the serious problems revealed during the response to COVID-19 have highlighted the vulnerability of global public health governance. Even more worrying are the secondary disasters caused by the pandemic, such as economic recession, social shutdowns, power expansion, and international frictions, which have triggered considerable anxiety about the future of global governance. Instead of forming a ‘world united front against the pandemic’, the entire international community has gradually fallen into a mutual blame and responsibility shifting scenario. Some have even declared it as a reversal of globalisation and the collapse of the entire world order [2].1 There is no doubt that the COVID-19 pandemic, as a public health crisis, will eventually pass with the joint efforts of people worldwide. However, the problems revealed by the impact of the pandemic are thought-provoking. Why has pandemic management not shown the energy it should have? Why is cooperation among major countries to combat the pandemic stumbling? Where will the damage caused by the pandemic take the whole world? Placing the pandemic in the framework of the global health governance system and governance capacity, this study attempts to analyse the diverse roots of the difficulties in international cooperation, and thus, analyse the future direction of the global health governance system and governance capacity.

Pandemic Shock Understanding the nature of the pandemic shock and the harm caused by it is a prerequisite for diagnosing the lack of international cooperation. On the surface, the pandemic shock appears to be a public health event and a medical problem; however, this is not the case. In addition to being a public health emergency, the pandemic is a serious social problem,

1 Ian Bremmer, president of the Eurasia Group, published a paper in the Japan Economist, suggesting that the COVID-19 pandemic foreshadows the de-globalisation and populist trend of the world order. Robin Niblett, director of the Royal Institute of International Affairs, published a paper entitled ‘The End of Globalization as We Know It’, suggesting that the pandemic makes it almost impossible for the world to return to the mutually beneficial and win–win globalisation of the early twenty-first century. Stephen Walt, professor at the Belfer Center for Science and International Affairs at Harvard Kennedy School, published a paper entitled ‘A World Less Open, Prosperous, and Free’, arguing that the pandemic will usher in a world that retreats from openness, prosperity, and freedom.

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especially with regard to inadequate governance systems and governance capacity. The coronavirus, an unknown deadly virus, is a public hazard facing human society and essentially presents the same challenge as that presented by earthquakes, volcanoes, hurricanes, transnational crimes, climate change, etc. The only difference between COVID-19 and other public hazards is that this virus is transmitted through the activities of its carriers—people. A region with more frequent large-scale social mobility is more vulnerable to the rapid spread of the virus and more likely to witness a greater impact and shock from it. Thus, the impact of COVID19 poses a significant danger to the entire world due to deep globalisation and modernisation as well as the factors of production such as goods, people, and information. Overall, COVID-19 is the first global public health crisis to date. Regions more vulnerable to the great impact of the pandemic are those that are further integrated into globalisation, more economically developed, and accommodative of larger and faster-moving populations. From Wuhan, the ‘transportation hub’ in China, to Milan in Europe, New York in theUnited States, and other large or small regions, we can see that the areas most affected by COVID-19 are precisely the most economically developed and open regions. The problem revealed by the pandemic can be defined as ‘the dilemma of an open society’. Philosopher Henri Bergson argued that in an open society, the government is transparent and subject to public constraints and that the criterion for judging an open society considers the implementation of the principles of individual freedom and human rights [3]. In the book ‘The Open Society and Its Enemies’, Karl Popper defined an open society as a good society, one that is pluralistic and multicultural, individualistic-oriented, democratic, egalitarian, spontaneous, and not artificially designed, while a collectivist society, in his view, is a ‘bad society’ and the enemy of an open society [4]. Later, George Soros combined the uncertainty principle and theory of reflexivity with the concept of an open society, establishing the Open Society Foundations to improve the so-called capitalist system. However, the definition of an open society continued to largely derive from Popper’s view with a strong ideological colour [5]. In contrast, Ulrich Beck, the famous German thinker, precisely defined the nature of an ‘open society’. Beck put forward the notion of a ‘risk society’, which has received a lot of attention from academicians. Beck was the first to cite the possible

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consequences of the suffering caused by nuclear explosions and the deterioration of environmental quality due to the use of chemical substances, asserting the emergence of a risk community at the global level, making national borders meaningless and the international community a necessary utopia [6]. Baker’s risk society is crucial for understanding and defining the COVID-19 pandemic in 2020. The global impact of the pandemic is not mainly in the health field but in the social sector. The pandemic itself is not terrible, but the ‘secondary disasters’ caused by the pandemic are, such as major economic recessions, a major expansion of power, major social upheavals, a crisis of confidence in the society, the spread of racial discrimination, and right-wing xenophobia, and in the worst case, the return of extreme right-wing fascism. Overall, the impact of the pandemic is largely a human-made disaster rather than a natural disaster; this impact has manifested in three major ways, which are elaborated upon below. The first major impact has been the public health shock. Medical resources related to COVID-19 and material security have become urgent with the rapid increase in infected patients, even in the developed capitalist countries of Europe and America. According to the Society of Critical Care Medicine (SCCM) based in the United States, a total of 960,000 patients in the United States will require ventilators due to the COVID-19 infection, but the number of ventilators in theUnited States’ acute care hospitals and other sources is not likely to increase to more than 200,000, including those that are already old [7]. In Italy, where the pandemic has caused the most deaths, a severe shortage of ventilators has forced doctors to abandon treatment for some patients. According to data provided by the Secretary of the US Department of Health and Human Services (HHS), Azar, the US national emergency stockpile of medical supplies has only about 12 million medical-grade N95 masks and 30 million surgical masks, while at least 10 times more of these amounts are needed to ensure that the US medical personnel have enough masks [8]. The HHS estimates that the United States will need 3.5 billion masks if the COVID-19 pandemic continues for a year [9]. Chaun Powell, Vice President of Premier Inc., said that hospitals received less than half of the N95 masks they ordered [10]. Besides the US, Italy, France, Germany, the UK, Japan, and other countries are also facing a shortage of medical supplies. There are even frequent cases of some countries retaining medical supplies meant for other countries. The spokesperson of the Ministry of Commerce of the People’s Republic of China, Gao Feng, said at a routine online press conference that as of 8

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April 2020, 58 countries (regions) and four international organisations have signed commercial procurement contracts with Chinese companies for medical supplies, and 71 countries and 10 international organisations are in the process of conducting commercial procurement negotiations with Chinese companies [11]. In addition, COVID-19 has placed a heavy strain on the health care system. According to the WHO’s official website on 7 April 2020, even though there were nearly 28 million nurses worldwide, with a global increase of 4.7 million nursing staff between 2013 and 2018, there was still a shortfall of 5.9 million nurses [12]. These data leave no doubt that no country can guarantee enough medical staff and supplies under a severe attack of COVID-19. The second major impact has been the economic development shock. Along with the severe public health situation, the pandemic has hit the world economy heavily and led to sluggish economic growth and a significant negative impact. The United Nations (UN) released its monthly briefing on the World Economic Situation and Prospects for April on 1 April 2020. In this report, it predicted the impact of the pandemic on the global economy in 2020 using two scenarios: a global economic growth of 1.2% in 2020, or a global economic recession with a growth rate of -0.9% in the worst case [13]. The International Monetary Fund (IMF) released its latest World Economic Outlook report in April 2020 and estimated that the global economy would contract by 3% in 2020 [14]. The Bloomberg database summarised the forecasts of global economic growth of major countries (regions) by financial institutions as of 26 March 2020. Among them, the medians (averages) of economic growth forecasts for the US, Germany, China, and Japan were −1.25% (−2.13%), −3.25% (−4.02%), 3.5% (3.29%), and −2% (−2.69%), respectively [15]. In general, financial institutions forecast a very high probability of recession in 2020 in all major economies, especially in developed countries such as the United States and Japan (Table 1; Fig. 1). Compared to the expected growth of the world economy, international financial markets and commodity prices have been encountering great uncertainty. The three major US stock indices plunged across the board. The S&P 500 Index even triggered four ‘circuit breakers’ in 10 trading days, ending the ‘ten-year-long bull’ run in the US stock market after the 2008 financial crisis. The pandemic has triggered a global financial panic, with stock markets in many countries experiencing the biggest drop in history. On 12 March 2020, in addition to the United States, the stock markets of at least 10 countries, including Brazil, Canada, Thailand,

−2.6 −7.8

−2.88

−6.5

Chinese Mainland 6.1

3.5 −3

3.29

1.2

−1.25 −9

−2.13

−5.9

India

4.9 0.5

3.53

1.9

Source Bloomberg database; IMF reports

5.2

1.3

0.7

Maximum value Median Minimum value Average value IMF forecast Predicted value Maximum value Median Minimum value Average value IMF forecast

UK

US

0.7 −6.7 −0.56 −1.2

−1.45 −2.5 −1.18 −5.8

1

Republic of Korea 1.7

−7.0

−4.02

South Africa

−7.2

−3.82

−3.75 −7.4

−1

−1.5 −4 −7.7

Germany

France

0.5

2.60

3.15 −0.6

4.8

Indonesia

−9.1

−5.98

−5 −10.2

−2.2

Italy

−1.7

0.17

1.2 −5.8

4.3

Malaysia

−6.2

−0.64

0.35 −4

1.7

Canada

0.6

2.90

2 0.6

The Philippines 6.2

−5.2

−2.69

−2 −5

−0.8

Japan

−4.0

−0.07

0.6 −5.7

Taiwan (China) 1.9

−5.3

0.29

0 −2.5

3

Brazil

Summary of financial institutions’ forecasts of economic growth in 2020 for 18 major economies

Predicted value

Table 1

−3.5

−2.99

−2.8 −7.3

1.4

Singapore

−5.5

0.04

0.3 −2.7

1.8

Russia

202 K. ZHAO

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Fig. 1 Global major market stock index gains and losses since 2020 (as of 27 March 2020) (Source Wind database)

the Philippines, and Pakistan, were hit by circuit breakers. The European STOXX 600 Index plunged 11%, a new historical decline record. Germany’s DAX Index fell more than 12%, the largest one-day decline since 1989; while France’s CAC 40 Index fell more than 12%, a new historical maximum decline. Furthermore, Italy’s FTSE Index closed at nearly 17% down, and Spain’s IBEX 35 fell by almost 15%. Crude oil prices fell sharply, with the price of WTI crude oil (spot) dropping 50% from $59.8 per barrel at the end of 2019 to $29.9 per barrel in March 2020 [16]. Other commodity prices, such as natural gas, coal, and iron ore, also declined in varying degrees due to the pandemic (Table 2). Developed countries in Europe and America have taken large-scale economic stimulus measures. For example, the US Senate and House of Representatives voted on 25 and 27 March 2020 to pass the $2 trillion economic stimulus bill. President Trump launched the largest fiscal stimulus bill in US history [17]. However, negative economic growth in 2020 should be a foregone conclusion. Even China, the best-performing economy, saw its Gross Domestic Product declined by 6.8% year-on-year in the first quarter of 2020, the first negative growth since quarterly statistics became available in 1992 [18]. For the United States and China, which account for more than 50% of the global economy, the ‘secondary

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Table 2

Nov. 2019 Dec. 2019 Jan. 2020 Feb. 2020 Mar. 2020

World bulk commodity prices (all spot prices) World crude oil average price (USD/barrel)

WTI crude oil price (USD/barrel)

World natural gas index (2010 = 100)

Australia coal price (USD/Metric Ton)

World iron ore price (USD/DMTU)

60.4

57.1

63.5

67.0

85.0

63.4

59.8

56.0

66.2

92.7

61.6

57.5

48.6

69.7

95.8

53.3

50.5

43.8

67.6

87.7

32.2

29.9

41.4

66.1

89.0

Source CEIC database

disasters’ of the economic crisis are more alarming than the pandemic shock. The third major impact is the social and political shock. On 21 April 2020, the UN World Food Programme pointed out that the global population with a severe food crisis would exceed 265 million. The pandemic is affecting the food security of several countries such as Iraq, the Philippines, Indonesia, Central Asian countries, and African countries, especially with the increasing inflationary pressure on food prices [19]. On 24 March 2020, Vietnam took the lead in announcing a ban on any form of export of all kinds of rice. Grain and oil-exporting countries such as Kazakhstan, Serbia, Russia, Malaysia, and India have also announced restrictions on export [20]. Due to the impact of the pandemic and the economic recession, the number of unemployed individuals in various countries has risen significantly. As of 11 April 2020, the number of unemployed individuals in the United States climbed sharply, reaching and staying at 22 million for four consecutive weeks [21]. With the extended stay-at-home order, the general public’s psychological endurance has reached its limit. Protests demanding immediate lifting of the order were undertaken in some states in the United States. On 16 April 2020, large demonstrations against the lockdown broke out in the cities of Ohio, Virginia, New York, Utah, Kentucky, and Michigan, among other states, in the United States [22]. Meanwhile, social distancing and

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the increasingly lowered level of trust have led to the rise of populism, nationalism, and xenophobia in the developed countries of Europe and America. The polarisation of political parties has further ignited, coupled with increasingly aggravated socio-psychological problems. Populist sentiments within European countries have been rising rather than falling, resulting in the hollowing out of European solidarity and the risk of repeated European integration processes. In addition, the Islamic world has become more divided between the rich and poor under the impact of the pandemic, thereby affecting the religious lives of Islamic believers. This social virus, i.e. the anxiety and radical xenophobia spreading in a large number of developing countries in the Middle East, Africa, and Latin America, is more detrimental than COVID-19. It is not difficult to observe that the pandemic has triggered a significant shock to the world pattern and international order. Thus, the unexpected secondary disasters arising from the pandemic are manifesting as ‘pandemic shock’ and’panic shock’: the economic recession, social shutdowns, and governance deficit have rendered a significant impact on the world economy, society, and even global security and strategy. The pandemic leaves no one a winner and constitutes an intricate global crisis for the entire humanity. Secondary disasters resulting from the pandemic are highly likely to cut off global production and supply chains. The current pandemic can very effectively collapse countries economically, socially, and politically. Moreover, it has been creating difficulties in cooperation relating to international relations and global governance. The world has been faced with the challenge of grasping the intrinsic causes of the difficult cooperation for pandemic management and resolving the friction and conflicts that have crept into international relations.

Difficulties in Cooperation As a common challenge for humanity, the pandemic should have created opportunities for cooperation in international relations and facilitated the shaping of major country cooperation, similar to the formation of an anti-fascist united front. In contrast, relations between major countries have become tenser. Some major countries have started to politicise the pandemic, stigmatise other countries, intercept medical supplies from other countries, stir up conflicts between different ethnic groups, and distract the public and release domestic audience cost. Such moves

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have resulted in more tense international relations and a more difficult cooperation scenario. The pandemic shock has led to further competition in major countries, especially between the United States and China. Some US politicians have referred to COVID-19 as the ‘China virus’ or ‘Wuhan virus’, publicly calling for a unified media campaign to smear other countries, and even pressurising allies and partners to join in stigmatising other countries. On 15 April 2020, FOX News stated, ‘COVID-19 is not a Chinese biological weapons program, but a part of a Chinese scientific research effort to prove that China is no worse than the US at identifying and fighting viruses’ [23]. In addition, some politicians, represented by Representatives Smith and Wright and Senators Cruz and Hawley, have introduced bills related to the pandemic, escalated economic sanctions against Iran, launched so-called ‘reparations lawsuits’ against China, and called for sanctions on Chinese officials who arguably suppress medical experts, journalists, and dissidents. They have been stirring up controversies around the world by shifting the blame for the pandemic to China [24]. A typical example is when, on 25 March 2020, the US Secretary of State, Pompeo, used COVID-19 as an excuse to attack China at the G7 Foreign Ministers’ Meeting and claimed that China is responsible for the COVID-19 pandemic. However, six European foreign ministers lashed out at Pompeo’s ‘smear campaign’ and refused to sign a joint statement proposed by the United States that included blaming China for the spread of the pandemic [25]. On 18 February 2020, the US Department of State announced the tightening of restrictions on the US operations of five mainstream Chinese media outlets, treating their US affiliates as foreign missions [26]. On 19 February 2020, the Ministry of Foreign Affairs of the People’s Republic of China officially announced the revoking of the press credentials of three Beijing-based journalists from the Wall Street Journal with immediate effect, in response to the paper’s egregious behaviour of publishing defamatory and discriminatory reports and its arrogant refusal to apologise for it [27]. Against the growing challenges of the pandemic, the strategic rivalry between the United States and China, instead of subsiding, has been spreading to other areas, causing many commentators to worry about a ‘new US-China Cold War’ [28]. Global governance systems and cooperation frameworks have also been lacklustre in their response to the pandemic. The UN, World Trade Organization (WTO), IMF, World Bank, G20, and other global cooperation agencies have generally delivered more promises than they have acted on,

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and have been ineffective at building a worldwide united front to fight against the pandemic, at least in the short term. On 26 March 2020, the G20 Extraordinary Leaders’ Summit on COVID-19 pledged to build a united front to fight this common threat. However, beyond this statement, no sufficiently strong coordinated action has been carried out by the G20 in the short term [29]. Instead, some countries have used the pandemic to exacerbate international tensions and challenge the authority of the UN and global governance. The United States imposed severe sanctions on Iran, Venezuela, and other countries during the pandemic, and announced that it will impose sanctions on five Iranian entities and 15 relevant individuals [30]. On 17 March 2020, the US Department of State announced sanctions on the Syrian Defence Minister for ‘creating violence and a humanitarian crisis’ [31]. On 26 March 2020, the US Department of Justice suddenly announced narco-terrorism and other criminal charges against the current Venezuelan President Nicolas Maduro and 14 other current and former officials, offering a $15 million reward for Maduro’s arrest and conviction [32]. Furthermore, US President Donald Trump publicly announced at a White House briefing on April 14 2020 that the United States was halting funding to the WHO and launching a review of the organisation for ‘severely mismanaging and covering up the spread of COVID-19’. This decision sparked widespread criticism worldwide [33]. The regional cooperation framework has experienced a cooperation crisis. European regional cooperation is under the double pressure of Brexit and anti-establishment in European countries. The pandemic has been hollowing out European cooperation. The EU was slow to respond in the early days of the pandemic, and countries are now largely on their own in fighting the pandemic, with the EU framework playing only a coordinating role. Meanwhile, the pandemic has exacerbated the conflict between the North and South regions within the EU, such as the Nordic and Southern European countries; it has also widened discrepancies between the Western European and Central and Eastern European countries. For example, at the meeting of the EU finance ministers held on 9 April 2020, Germany, Netherlands, Austria, and Finland advocated using the existing European Stability Mechanism (ESM) to provide assistance, while Italy, France, Spain, and other countries wanted a guarantee that the Eurogroup would issue special ‘corona bonds’ to fight against the pandemic [34]. While the differences between Eastern and Western Europe countries have principally been in the democratic rule of law, the

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Central and Eastern European countries have been caught in an awkward situation where neither self-help nor assistance by others has been effective. From the perspective of the EU’s operation mechanism, issues of health and pandemic prevention belong to the sovereignty of country members. The EU can play only a supplementary role as an intermediate coordinator and policy communicator. Although the EU accelerated anti-pandemic cooperation and launched a large-scale economic stimulus plan after April, the effort was virtually ineffective. On 16 April 2020, the European Commission’s President, Ursula von der Leyen, once again expressed her ‘heartfelt apology’ on behalf of Europe to Italy for not being by its side since the beginning of the pandemic [35]. Compared to the EU, cooperation among member countries of the Association of Southeast Asian Nations (ASEAN) on the outbreak of the pandemic has been better. At the special summit of ASEAN-China, Japan, and South Korea (ASEAN Plus Three or 10 + 3) held on 14 April 2020 to tackle the issue of COVID-19, the parties agreed to explore the possibility of allocating a portion of the China-ASEAN (10 + 1) Co-operation Fund and 10 + 3 Co-operation Fund as a special fund to support ASEAN countries in responding to the outbreak of the pandemic. All parties have been active in vaccine R&D, medicine collaborations, strengthened intraregional infectious disease surveillance and early warning systems, and co-efforts to establish a medical supply reserve system [36]. However, regional cooperation frameworks such as the North American Free Trade Area (NAFTA), the African Union (AU), the Gulf Co-operation Council (GCC), and the Community of Latin American and Caribbean States (LAC) have not demonstrated the capacity to take effective actions in response to the COVID-19 pandemic. Looking around the world, why has international and regional cooperation been so difficult under the pandemic shock? How can we ascertain the possible impact of the pandemic on the international system, international order, international relations, and China’s diplomacy? All these questions are consequential theoretical questions that require elucidation and solutions using relevant theoretical studies.

Theoretical Elucidations In the face of new problems posed by the pandemic on international relations theory, several elucidations have emerged in the academic circle. In a series of lectures and interviews, Professor Yan Xuetong, the Director

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of the Institute of International Studies, Tsinghua University, China, has offered an elucidation regarding the difficulties in cooperation during the pandemic using moral realism. In Professor Yan’s view, the pandemic shows that the international community is still an anarchic international system. Regardless of how it is hit by the pandemic, the anarchy in the international community combined with a lack of moral leadership in the absence of an absolute authoritative government determines the different responses and strategic policies of countries and causes the impossibility of international cooperation [37]. This elucidation argues that global governance is difficult without the cooperation of major countries, especially bilateral cooperation between China and the United States. Obviously, Professor Yan’s elucidation is slightly simplistic and cannot explain the cooperative behaviour during the current pandemic, when anarchy is present but moral leadership is absent. Although Professor Yan’s theory elucidates the phenomenon of international cooperation being difficult, it does not sufficiently explain the causes for it. Hence, a more holistic explanation is needed, especially when considering the anti-fascist united front formed during World War II; the numerous mechanisms of international cooperation for the economy, energy, and arms control after World War II; and China’s strong willingness to actively promote international cooperation. Professor Jin Canrong, Associate Director with the School of International Studies in the Renmin University of China also elucidates the difficulties in international cooperation in fighting the pandemic. He believes that the primary reason for the early failure of pandemic prevention and control in the developed countries of Europe and America is arrogance, including racial arrogance, cultural arrogance, and institutional arrogance. This is despite the fact that the Western self-perceived system has been proven to be a ‘fairy tale’. China’s success in pandemic prevention and control is primarily due to its comprehensive national strength and institutional advantages, and the determinants of China’s willingness to contribute to the global fight against the pandemic after the pandemic is brought under control [38]. In Professor Jin’s view, overcoming the difficulties in international cooperation in the fight against the pandemic depends on Western countries changing their inappropriate mentality as soon as possible. The ‘institutional advantage’ theory provided by Professor Jin points out the institutional root cause of Western countries’ reluctance to cooperate; however, this theory is caught in the rut

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of ‘institutional determinism’ and cannot explain the help and cooperation provided by developed countries to China in the early stage of the pandemic. Thus, arrogance and institutional advantages cannot clarify all causes of cooperation or non-cooperation. Neither the ‘moral power determinism’ of Professor Yan, nor the ‘institutional determinism’ of Professor Jin can help us understand the current phenomenon of difficulties in cooperation during the pandemic. Other theoretical approaches are needed to determine the true root causes of this problem. Robert O. Keohane argues that cooperation is a process of ‘policy adjustment’ and negotiation between previously discordant countries or groups to achieve cooperation and concerted action [39]. Helen V. Milner, after summarising the discussion on international relations, argues that a consensus on the definition of cooperation defines it as ‘a process by which actors adjust their behavior to the current and future needs of others through a process of policy adjustment’ [40]. To date, research on state cooperative behaviour has focused on two issues. The first is the conditions required for cooperation. For example, Keohane has explored the conditions for cooperation in a post-hegemonic international environment. Kenneth A. Oye has focused on the conditions for ‘co-operation in anarchy’, and Robert Axelord has raised the question of ‘how cooperation can be established and carried out between actors pursuing private interests without central authority’ [41]. The focus on international cooperation is not a rejection of international conflict, but rather an emphasis on conflict resolution and cooperation through policy adjustment. Whether cooperation is based on international affairs in a state of international anarchy or domestic affairs in a state of domestic hierarchy is a pivotal variable that shapes international cooperation. The second issue is that of cooperation strategies. Keohane has proposed that international cooperation follows two paths: the insideout path, which occurs at the unit level, and the outside-in path, which occurs at the system level. The former is embodied in Robert Axelord and others’ research on cooperation based on game theory, and the latter is embodied in Keohane’s research on cooperation based on institutional theory. The distinction between game theory and institutional theory is a crucial variable in cooperation strategies. The two issues mentioned above are conducive to constructing a framework for the analysis of international cooperation against the pandemic (Table 3).

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Framework on international cooperation against the pandemic

Environmental conditions

International anarchy

Domestic hierarchy status

Cooperation strategy Institutional theory

Game theory

International system model

Great power coordination model Great model, China–US, China–Russia, US–Russia relations Self-help cooperation model

UN, IMF, World Bank, WHO, EU, ASEAN, AU, LAS, etc Mutual assistance cooperation model Melinda Gate Foundation, Global Alliance for Vaccines and Immunization (GAVI)

Anti-pandamic practice of U.S., France, U.K., Germany, Italy, China, Japan etc

Source Self-made by the author

It can be seen from the above table that international cooperation is diverse and international cooperation under different conditions often exhibits different patterns due to the different strategies adopted by countries. To analyse international cooperation under the pandemic shock, we need to consider its performance within four frameworks—the international system model, major country coordination model, mutual cooperation model, and self-help cooperation model—in an empirical study. These four models can cover the root causes of the difficulties in international cooperation under the pandemic shock.

Case Examinations Case 1: International System Model The international system model proposes that international cooperation will occur when all parties adhere to the institutionalist strategy under anarchy. The existing international system, which was gradually established after World War II, was promoted by the developed countries of Europe and theUnited States. This international system is primarily a political and security cooperation framework featuring the UN system and an economic and financial cooperation framework characterised by the Bretton Woods system. In the context of pandemic governance, the global health governance system features the WHO. By examining the

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performance of international cooperation under the WHO framework, this study attempts to analyse the true root causes of the difficulties in international cooperation. After World War II, the UN established the WHO in 1946 on the basis of three major international health organisations, and formulated the International Health Regulations (IHR) in 1951. The role of the WHO has gradually expanded from regulating the control of infectious diseases to managing public health. Following the Cold War, the WHO’s mandate has been expanding with the challenge of the globalisation of diseases, as evidenced by the increasingly frequent outbreaks of new infectious diseases caused by the human immunodeficiency virus (HIV), influenza A virus (HINI), Ebola virus, novel coronaviruses, and ‘superbugs’. In 2005, the 58th World Health Assembly adopted the revised International Health Regulations (2005) and established the WHO’s leadership in the global public health crisis response, especially in light of the lessons learned from the Severe Acute Respiratory Syndrome (SARS) in 2003. Under the revised regulations, to enable countries to effectively prevent and respond to similar events in the future, the WHO Director-General is expected to consult the Emergency Committee to ultimately decide whether an event constitutes a Public Health Emergency of International Concern (PHEIC), and each country member has the legal responsibility to respond promptly to a PHEIC [42]. If an outbreak in an area is declared a PHEIC, the WHO is expected to issue an interim recommendation on health measures that countries should adopt for people, goods, and transport, and coordinate global human and material resources to provide guidance and assistance to the area where the PHEIC is occurring. The WHO has succeeded in responding to small-scale regional outbreaks or single diseases since its inception. In response to the six PHEICs declared since 2009, the WHO has generally functioned well with a high level of national compliance and cooperation. However, it has been marked by slow response, inefficiency, and ineffectiveness when managing pandemics. For example, the WHO’s performance in responding to the Ebola virus epidemic has been severely criticised by various parties, mainly because the WHO lacks medical resources. Hospitals, doctors, nurses, medical equipment, and anti-epidemic supplies are all in the hands of individual countries. The WHO can provide only professional guidance, and has to rely on individual countries to carry on with the actual implementation of that guidance. For countries with

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a strong national governance capacity, governance under the WHO’s guidance is more effective; however, countries with a poor governance capacity or little willingness to cooperate are less effective in adhering to the guidance. Starting from 31 January 2020, after COVID-19 was declared a PHEIC, cooperation between China and the rest of the world has performed as expected, and has been fully recognised by the WHO. The WHO-China Joint Mission on COVID-19 held a press conference in Beijing on 24 February 2020, concluding that the decline of the COVID-19 outbreak in China has significantly protected international security and built a strong first line of defence against the disease’s international spread. The crisis of cooperation within the WHO framework under the pandemic shock did not occur until the pandemic had spread and expanded in the developed countries of Europe and America, which is when some countries began to criticise the WHO for providing incorrect statistics, slow and inefficient action, and bureaucracy [43]. The US government even announced the cessation of funding to the WHO. However, the much-criticised problems of the WHO during the pandemic are not new. The WHO faced similar criticism during its response to the two Ebola outbreaks in Africa. However, as an international public health system, the WHO is being questioned on similar concerns because of its lack of capacity to promote cooperation rather than its institutionalised cooperation itself. The key to effective governance is integrating domestic governance resources with those of the international system in the governance system to eliminate the government deficit. To date, the WHO remains the generally accepted framework for international institutional cooperation. After Trump criticised the WHO and cut off funding by the United States, a UN spokesperson continued to argue that the ‘WHO has demonstrated the strength of the international health system’ [44]. Similar to the WHO, issues in cooperation faced by most of the universal international organisations established so far, such as the UN, IMF, and World Bank, as well as the international organisations for fostering regional cooperation, such as the EU, ASEAN, and EU, are not because of their abandonment of cooperation, but rather their lack of capacity. When responding to the COVID-19 pandemic, it is the individual countries and not international organisations that possess public health resources and materials, and hence, international organisations have to cede the vast majority of governance authority over social affairs. There is essentially no way to talk about international joint or mass prevention and control mechanisms. These organisations can do nothing

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but let individual countries do whatever the countries find appropriate over such things as controlling the source of infection, cutting off the transmission routes, and protecting susceptible populations; all of this makes cooperation difficult. Case 2: Major Country Coordination Model When all parties under anarchy adhere to game theory, international cooperation tends to present a model of major country coordination. The existing major country coordination model is primarily reflected in the G20 platform and the complex interactions among major countries such as the US, China, Russia, France, Germany, the UK, Italy, and Japan. The coordination among major powers includes: coordination among the traditional major countries such as the ones that are a part of the G7; cooperation platforms for emerging countries, such as the BRICS leaders’ summit mechanism; and interactions between traditional and emerging major countries such as between the United States and China. The observation of major country coordination relationships and their problems is a feasible path to understanding the difficulties in international cooperation. The G20 was established in 1999 at the initiative of the G7 Finance Ministers’ Meeting. Originally created as a means for finance ministers and central bank governors to meet, the G20 was upgraded to a leaders’ summit after the 2008 international financial crisis. Its broad and representative membership allows the G20 to balance the interests of developed and developing countries and different geographic regions. The G20 essentially relies on the coordination of major countries because it operates on consulted consensus and currently has no permanent structure. As a crisis response mechanism, the G20 performed prominently in responding to the global financial crisis in 2008, and contributed significantly to the recovery of the world economy and reform of the international financial system. The G20 also discussed the Ebola epidemic when it ravaged West African countries in 2014. Instead of committing to funding at that time, the G20 stated only its resolve to fight the epidemic. During the Hangzhou Summit in September 2016, the G20 issued the G20 Leaders’ Communique Hangzhou Summit, which indicated a new direction for the G20 to transform from crisis response to a long-term governance mechanism [45]. Facilitated by the presidency of Saudi Arabia, the G20 Extraordinary Leaders’ Summit on COVID-19 held by videoconference on 26 March 2020 issued a statement expressing

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the need for concerted action to inject $5 trillion into the global economy in response to the pandemic, strengthen global cooperation, and emphasise enhanced assistance to the least developed countries. The G20 health ministers held a videoconference on 19 April 2020, once again calling for global action against the pandemic and working together to overcome the pandemic as soon as possible. In terms of national performance, countries have largely exercised a nation-first policy, focusing primarily on their national outbreaks, and achieving slow progress on international cooperation. Although countries are connected on the G20 international governance platform, governance resources are still not institutionalised. Hence, international cooperation still depends on the consciousness and voluntariness of individual countries. ‘Governance deficit’ is a tremendous root source constraining the G20’s capacity. Similar to the major country coordination within the G20 framework, other platforms for major country coordination have demonstrated a modest level of cooperation. In traditional major-country relations within the G7 framework, the cooperation of the United States with other major countries is very limited. The United States once hoped to advance a united front against China, which was not supported by other major countries. Cooperation among emerging countries is also very limited, except for the extraordinary performance on anti-pandemic cooperation between China and Russia as well as among other emerging countries. Instead of closer coordination in response to the pandemic, the relationship between China and the United States, which is representative of the relationship between the emerging and traditional major countries, has experienced more friction and disagreement on pandemic management, and the tendency of intertwining old and new problems. Compared with cooperation frameworks such as the G20, the governance deficit in major-country relations is greater and cooperation more difficult. Apart from some information or experience sharing and material donations, a comprehensive examination of the model of coordination among major countries reveals limited cooperation in response to the pandemic shock. The fundamental reasons for limited cooperation include power contrasts among the major countries as well as complex domestic politics. When the pandemic becomes increasingly serious within major countries, the audience cost caused by the complex domestic political struggle is quickly transferred to international relations. A country with fiercer domestic political struggles tends to shift the crisis onto something else, and thereby, sacrifice major-country relations. In contrast, countries with

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a more stable domestic situation, such as China, are more inclined to actively participate in international cooperation against the pandemic. Case 3: Mutual Cooperation Model International cooperation under hierarchy tends to be characterised by assistance and cooperation when all parties respect system theory. This model implies that when a country is hit hard by a pandemic and when other countries adhere to the national sovereignty, territorial integrity, and political system of that country, mutual assistance and cooperation for pandemic prevention and control result. The major manifestations of this cooperation are in the form of mutual assistance among countries, assistance by multinational companies and non-governmental organisations (NGOs), and global public–private partnerships built on this basis. The most typical example is the relationship between China and the rest of the world under the COVID-19 pandemic shock. China insists on deepening cooperation with all parties based on the five principles of peaceful coexistence. Since the beginning of the outbreak, China has firmly supported and cooperated with the WHO in the fight against the pandemic. China’s active role in the involvement of the G20 Extraordinary Leaders’ Summit on COVID-19 and its bilateral/multilateral cooperation efforts are highlights that run contrary to the international chaos caused by the pandemic. At the beginning of the pandemic’s outbreak in China, the international community provided great assistance to China. At the regular press conference of the Ministry of Foreign Affairs of the People’s Republic of China, spokesperson Hua Chunying said that as of noon on 5 February 2020, 21 governments had donated pandemic prevention and control materials to China. These countries included the Republic of Korea, Japan, Thailand, Malaysia, Indonesia, Kazakhstan, Pakistan, Germany, the UK, France, Italy, Hungary, Belarus, Turkey, Iran, the UAE, Algeria, Egypt, Australia, New Zealand, and Trinidad and Tobago. The UN International Children’s Emergency Fund (UNICEF) was one of the more than 10 international organisations that donated to China [46]. People in Japan wrote touching words sourced from ancient Chinese poems on the boxes of their donated goods to Wuhan; a few examples of these include: ‘Although hills’s rills set us apart, the moon and wind share our kind heart’, ‘Together we stand, my armours thine!’ Japanese schools reminded children not to malign Wuhan [47]. When the pandemic started to spread globally, China assisted other countries in

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their efforts to fight the pandemic. China carried out technical coordination, assistance, information sharing, and other related work through the ASEAN-China or ASEAN Plus Three health cooperation platforms. As of mid-April 2020, in addition to supporting ASEAN solidarity against the pandemic, China has provided material assistance, including medical masks, protective gear, and testing reagents to 127 countries and four international organisations. Other contributions include: donating $20 million to the WHO; sending 13 medical expert teams to 11 countries; and holding about 70 expert video conferences with more than 150 countries in Northeast Asia, South Asia, Central and Eastern Europe, Africa, Latin America, the Caribbean, and the South Pacific, and international organisations such as the ASEAN, EU, AU, Shanghai Co-operation Organisation (SCO), and Caribbean Community (CARICOM). Chinese local governments, enterprises, and civil society have donated medical supplies to more than 100 countries, regions, and international organisations [48]. The anti-pandemic cooperation promoted by China has been a mainstay in sustaining the fragile global cooperation and has been widely commended by the international community. In addition, several NGOs and enterprises have become a new force in international cooperation. They have played an active role in advancing international cooperation, especially against major country tensions. As the world’s largest private philanthropic foundation, the Bill and Melinda Gates Foundation (Foundation) has provided China with great support during the pandemic. The Foundation, founded by Bill Gates and his wife Melinda Gates, has had a long history of cooperation with China in a variety of areas, including disease prevention and control, and poverty alleviation. On 27 January 2020, the Foundation committed emergency funding of $5 million to support China’s fight against COVID-19. On 5 February 2020, the Foundation pledged a donation of up to $100 million, a part of which will help China accelerate the development of drugs, vaccines, and diagnostics, among other medical resources. On 20 February 2020, the Chinese President Xi Jinping wrote back to the Foundation’s Co-chair Bill Gates, thanking him and the Foundation for supporting China’s efforts to prevent and control the COVID-19 pandemic and calling on the international community to strengthen coordination and work together to combat the pandemic. From the above information, one can conclude that it would not be objective to completely deny the existence of cooperation during the fight against the pandemic. The success of international cooperation depends on

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the conditions of cooperation and policy positions of each country. All parties should display a willingness to cooperate. Medical resources and relief supplies should be deployed in a unified manner to provide support to the infected areas and eliminate the ‘governance deficit’ in international cooperative governance. Therefore, the effectiveness of the performance against the pandemic lies in China’s domestic cooperation, the international cooperation of NGOs, and multinational corporations. Case 4: Self-Help Cooperation Model The self-help cooperation model will present itself when all parties adhere to market game theory under hierarchy. This model is primarily reflected in the development of each country’s strategy to combat the pandemic. In addition to a lack of cooperation among countries, this model displays a ‘security dilemma’, a ‘prisoner dilemma’, and frequent mutual ‘blame’ and ‘stigmatisation’. So far, scholars have prioritised the self-help cooperation model as the most difficult model of anti-pandemic cooperation. For example, Professor Yan Xuetong focused more on international cooperation under the coordination model of major countries. The difficulties in cooperation emphasised by him are primarily those based on a game of major countries under international anarchy. In his view, only ‘self-help’ among domestic governments can be used to cope with the pandemic shock. Professor Jin Canrong, in contrast, focuses on the institutional advantage and institutional arrogance of the ‘self-help’ system of domestic inter-governmental cooperation. He argues that the reason for China’s better results in fighting the pandemic is primarily its institutional advantage, while the reason for the ineffectiveness of European and American countries in fighting the pandemic is their institutional arrogance of not recognising China’s institutional advantage. Both scholars insist on national centrism and have paid little attention to the significance of cooperation in the international institutional framework and transnational mutual aid cooperation at the non-national level. Certain self-help cooperation efforts on anti-pandemic cooperation have, in fact, emerged as manifestations rather than a cause of the difficulties faced in international cooperation. The true cause is the game theory strategy adopted by countries for anti-pandemic cooperation in each country, which also applies to all other issues. In other words, the true cause of the difficulties in cooperation is the logic of power politics adopted by countries. The belief that ‘the tragedy of

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major country politics’ leads to international conflicts is a ‘self-fulfilling prophecy’. International cooperation will always be difficult if countries cannot walk away from the cold logic of power politics. Even so, the diversity of domestic systems in different countries has a profound impact on international cooperation. In comparison, countries with a unitary system perform better than those with a federal system. Countries with a single-party system perform better than those with a two-party or multi-party system. Countries that are politically stable perform better than those that are politically unstable. The primary reason for this is that in the face of a global crisis such as the COVID19 pandemic, the way to effectively control the source of infection, cut off transmission routes, and protect susceptible populations is to centralise power, coordinate resources, unify command, and coordinate actions. The effects of undertaking these actions are bound to be observed after a while. The core reason behind the successful implementation of these initiatives depends, once again, on whether the ‘governance deficit’ caused by the fragmentation of governance resources can be eliminated. More importantly, the results achieved in practice could help the countries implementing these actions obtain a better understanding of science and the regularity of pandemic prevention and control, resulting in their awareness of the significance of international cooperation. Therefore, these countries will be much more engaged in international cooperation than other countries. The performance of East Asian developmental countries such as China, Japan, and the Republic of Korea has effectively proven this point since the outbreak of the pandemic.

Conclusions and Recommendations The COVID-19 pandemic shock is a common challenge faced by the entire humanity, similar to other global public health problems faced by the international community. In general, it is easy for countries to achieve international cooperation when facing a common challenge. This act of cooperation is perceived as a natural logic and rational choice. However, since the outbreak of COVID-19, there has been a general lack of cooperation among countries. International organisations have been observed as being inefficient and slow to act. Two prominent explanations, among others, have been put forth by the academic community to elucidate the phenomenon of difficultly in cooperation against the pandemic. One attributes the difficulty in cooperation to the competition for power in

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international anarchy, while the other attributes it to the institutional arrogance of certain countries. Unfortunately, neither explanation seems convincing enough to answer the root cause behind the difficultly in cooperation. By examining the performance of different cooperation frameworks in the fight against the pandemic, we find that the reason for the weak performance of the various global health governance cooperation frameworks is not their being restrained by the power politics of the competing major countries. Instead, we argue that the reason for it is complex domestic politics. In the face of the COVID-19 pandemic, medical resources in the world are currently concentrated in individual countries. International governance frameworks, such as the WHO, can provide only professional guidance, but do not have the legitimate authority to mobilise and deploy medical resources and materials in a unified manner. Even the sharing of information related to the pandemic is influenced by the attitudes of different countries, resulting in slow action. Therefore, international cooperation and domestic politics in international health governance frameworks are disconnected. So far, globalisation has primarily been reflected in economic globalisation. Commodities, capital, personnel, information, etc., have achieved rapid cross-border mobility, but governance resources such as medicines, education, employment, and supervision have not yet established globalised governance. International health governance mechanisms, such as the WHO, suffer from a serious ‘governance deficit’: economic globalisation is strong, but governance globalisation is weak. This ‘governance deficit’, on being faced with the ongoing pandemic, has placed a heavy reliance on national governance capacity and countries’ willingness to cooperate. When a country has a strong governance capacity and a willingness to cooperate with international organisations, pandemic management can be achieved, as evidenced by China’s achievements in fighting the pandemic. On the contrary, when a country’s governance capacity is weak or the country has a low willingness to cooperate with international organisations, its pandemic management tends to be ineffective. This ‘governance deficit’ has been revealed in the WHO’s response to some local outbreaks. Cooperation in the fight against the pandemic depends on the coordination of medical, information, and policy resources, which are in the hands of individual countries, thereby creating a governance deficit in the international cooperation frameworks. What makes it worse is the lack of an international joint prevention and control

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mechanism and lack of usual drills. However, in the face of a pandemic such as COVID-19 in 2020, even developed countries in Europe and the United States with high levels of economic development and strong governance capacity have been unable to effectively combat the pandemic on their own due to the lack of deep reforms in the globalisation of governance and their low willingness to cooperate. As opined by President Xi Jinping in his meeting with the UN Secretary-General Guterres, ‘The problems at the international level are many and varied, and boil down to solving the issues related to the governance system and governance capacity’ [49]. There is always a solution to any problem. What the pandemic shock has triggered is the self-adjustment of globalisation, rather than de-globalisation. Looking ahead, the governance system and governance capacity must develop accordingly if the world economy is to achieve better development. Global governance requires promoting ‘deep globalisation’ involving not just economic globalisation, but also governance globalisation. Deep globalisation calls for addressing the ‘governance deficit’ and a fair and reasonable global governance system and capacity. This governance challenge requires the adjustment of both interests and values. In the face of global challenges, it is necessary to build a new pattern of international relations and highlight the values of mutual respect, reciprocity, justice, and win–win cooperation. This will enable the achievement of our common pursuit and goal of a human community with a shared future as well as lasting peace, universal security, common prosperity, openness, and inclusiveness. All of the above are conclusions drawn from the practice of prevention and control of the COVID-19 pandemic.

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Political Logics and Challenges of Global Governance: An IPE Perspective Zhengyi Wang

The prominence of global governance as a research topic in international politics has been increasing since the twenty-first century. In particular, after the 2008 global financial crisis, the popularity of the global governance concept soared in both academic and policy circles. In an effort to elucidate this concept, this chapter aims to answer the following three questions: First, who are the participants of global governance? Second, how can global governance be conducted? Third, what challenges could global governance face in the future?

The Chinese text of this article was originally published in Exploration and Free Views, No. 3, 2020. Z. Wang (B) Department of International Political Economy, School of International Studies, Peking University, Beijing, China

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 B. Zhang (ed.), China’s Role in Global Governance, https://doi.org/10.1007/978-981-16-6687-2_9

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Economic Globalization and the Dilemma of Power Diffusion The most significant results of the continuous expansion and deepening of economic globalisation since the 1990s are power diffusion and the resultant power structure transformation in the international system. Power diffusion is not only manifested in the diversification of actors, but also in the fragmentation of governance systems across different levels, and in the transformation of governance structures. 1. Features of Power Diffusion I: Increasing Governmental and Nongovernmental Actors Economic globalisation is mainly embodied in the flow of goods, services, and capital in the global market. During the Cold War era, the Soviet Union, Eastern European countries, China, Vietnam, and other countries adopted centrally planned models; thus, international trade, transnational production, and international capital flow were mainly confined to the Western capitalist world system. After the Cold War, dramatic changes in the Soviet Union and Eastern European countries, along with the reform and opening-up policies implemented by China, Vietnam, and other countries, international trade, transnational production, and international capital flow began reaching every corner of the international system. However, not all consequences of economic globalisation are good. In fact, economic globalisation caused an unprecedented debate from the very beginning, which focused on identifying the real beneficiaries and victims of economic globalisation. It was found that the four main beneficiaries of economic globalisation are as follows: The first is well-organized domestic companies and interest groups, who have benefited from their countries’ opening-up policies through political lobbying. The second is emerging market economies, such as Brazil, India, China, and Russia, which have become the biggest beneficiaries through their opening-up economic policies. The third is global, regional, or transnational international organisations, such as the World Trade Organization (WTO), the European Union (EU), and the Association of Southeast Asian Nations (ASEAN), which have become active participants in economic

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globalisation through policymaking. The fourth is multinational organisations and experts with professional knowledge, who benefit from economic globalisation by making and enforcing professional rules and norms in the global market. These beneficiaries have also been active global governance participants, and the key questions that they are concerned with are whether economic globalisation will continue, and if so, whether it will need global governance. Moreover, they question the kind of global governance that should be promoted if it is indeed needed. 2. Features of Power Diffusion II: Institutional Fragmentation Across Levels Bilateral and multilateral systems designed at the regional level based on geopolitics have diluted the power of the international system, which is the second feature of power diffusion. Regionalism and regionalisation have not only changed the world’s geopolitical and economic structures but have also affected the political and economic strategic choices of relevant countries. Post-Cold War regionalism can be roughly classified into four types, according to forms of regional cooperation (formal or informal institutions) and degree of integration (single or multiple issue areas). The first type involved promoting deep regional integration through building formal institutions, the most representative case of which is European integration. The second type involved promoting regional integration in single-issue areas through building formal institutions. The North American Free Trade Area (NAFTA), various regional free trade agreements (FTAs), and preferential trade agreements (PTAs) are representative examples. The third type concerned promoting regional cooperation in multiple areas through building informal institutions, such as the ASEAN. The fourth type concerned promoting regional cooperation in single-issue areas through building informal institutions, such as Asia–Pacific regionalisation. Responding to increasingly fragmented institutional designs and various forms of regionalism, debates have emerged around (a) which, between open and exclusive regionalism, is more effective; (b) which, between formal institution construction and informal regional cooperation, has more lasting power; and (c) whether regionalism is a steppingstone or obstacle to economic globalisation.

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3. Features of Power Diffusion III: The Crisis of the US-Led Liberal World Order The most prominent feature of power diffusion is the decline of United States (US) hegemony and the interrogation of the liberal world order established by the United States. Immediately after the Cold War, the US became the only global power. Later, The End of History and the Last Man, a book published in 1992 and authored by Francis Fukuyama, a Japanese-descendant American political scientist who was well known in Western academia for this work, cheered for the victory of liberalism and democracy. However, two subsequent incidents made the international community question US hegemony and the liberal world order. The first incident was Al Qaeda’s terrorist attack on the United States on 11 September 2001. Since then, terrorist attacks have spread all over the world, and the traditional international security structure established during the Cold War has been challenged. The second incident was the US subprime mortgage crisis in 2008 and the concurrent global financial crisis and economic downturn. The liberal international economic order led by the United States during the Cold War has since faced unprecedented challenges. Compared with the financial crises since the 1980s (the 1980s debt crisis, 1992 European Exchange Rate Mechanism crisis, 1994 Mexican peso crisis, and 1997 Asian financial crisis), the 2008 financial crisis— originating from the subprime mortgage crisis that occurred in the US domestic real estate financial market—quickly spread to the world and became a truly global financial crisis. The 2008 global financial crisis had two main direct impacts on the US-led liberal world order. First, it shook the confidence of the IMF community established after the Second World War (WWII) and resulted in an increasing demand for reforms of its power structure and functions. In December 2010, the four largest emerging economies, Brazil, China, India, and Russia, successfully increased their shares in the IMF, thereby enabling the organisation to change its decision-making procedure from US hegemony to multilateralism, which is more democratic. Second, the G20 replaced the G7 as an important forum for reshaping global economic cooperation. Although disputes regarding the legitimacy and efficiency of the G20, including doubts about the qualification of member states and the G20’s scope of issues, have never ceased, it is certain that the world economic

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order dominated by Western countries and the international organisations manipulated by them seem to be ending. Doubts about the American liberal world order have prompted the international community to reflect on the power structure of global governance. These doubts pose questions regarding (a) whether it is best to amend this structure based on the US liberal world order or to build a new global governance structure based on power transfer, and if the latter, then (b) what basic elements it should consist of.

Two Competing Solutions of Global Governance How can effective global governance on the transnational flow of economic factors be conducted? Scholars and policymakers have proposed various governance solutions based on different governance concepts, rules, and structures. Among them, the following two competing global governance solutions are the most influential. 1. The US-led Liberal World Order This solution has three basic assumptions. First, the international society is anarchic; thus, conflicts among countries are inevitable. Second, hegemonic countries provide public goods for the stability of the global economy and stabilize the world economy. Third, other countries participating in the world economy are beneficiaries of these public goods. The US-led liberal world order was initially known as the Bretton Woods system, established shortly after the end of WWII, and has three fundamental characteristics. (1) The United States is the core advocate and defender. For instance, the United States provided aid to Europe through the Marshall Plan. (2) It pursues a self-regulating market economy and a liberal world economy. This is prominently revealed in rounds of negotiations regarding tariff reduction and non-tariff barrier elimination under the General Agreement on Tariffs and Trade (GATT), and in the macroeconomic policy coordination within the G7 (such issues as exchange rate policy, balance of payment, international trade, and policies toward developing countries). (3) It establishes an alliance between Western democracies. For example, when confronted with the socialist camp led by the Soviet Union, the United States mainly invited Western democracies to join the liberal world order. Therefore, this order is also

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known as an alliance between democratic nations. The order began in 1945, and although many disputes have occurred since then—including the US–Japan trade conflict over the past two decades, the US–Europe contention over agricultural products, and the collapse of the Bretton Woods system—the US-led liberal world order lasted until the end of the Cold War in 1989. After the end of the Cold War, the United States amended this order in response to economic globalisation. The adjusted order has these new features: (1) maintaining order through ‘concert of powers’, such as absorbing Russia as a member state and thus, upgrading the G7 to the G8; (2) continuing to promote free trade—this led to the establishment of the WTO; and (3) expanding participating countries from Western developed democracies to including developing and emerging economies. After the 2008 global financial crisis, it is plausible that American hegemony declined. The mainstream view of both American academic circles and political decision-makers, however, contends that the relative decline of the United States is not like the decline of ancient Rome. The challenges that the liberal world order faces do not mean in any way that the United States will give up its leadership. In fact, to reinvigorate the American leadership and the US-led liberal world order, under the rhetoric of ‘America First’, the Trump administration attempted to reshape not only the national interest of the United States, but also the world economic order. This was prominently manifested in the administration dramatically changing the US foreign and international economic policies implemented since the 2008 global financial crisis, including renegotiating the NAFTA with Canada and Mexico, FTA negotiations with Japan and South Korea, trade negotiations with China, withdrawal from the Trans-Pacific Partnership Agreement, and publicly condemning the stalled Doha Round of negotiations. 2. A Pluralistic Multilateral System The aforementioned global governance system is based on the hegemonic country’s support, and thus emphasises national power. In comparison, the pluralistic multilateral system has three basic assumptions. First, the international society is anarchic, but countries can cooperate through international institutions. Second, international institutions

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have enforcement and supervisory functions; therefore, free-riding and beggar-thy-neighbour problems will be solved. Third, international institutions can eliminate the problem of insufficient confidence in cooperation through resource sharing. In addition, the pluralistic multilateral system is distinctly different from the US-led liberal world order in terms of governance ideas, rules, and structures in the following ways: 1. It upholds a plural and inclusive governance idea. The US-led liberal world order emphasises privatisation, self-regulating markets, and open capital accounts, while the pluralistic multilateral model calls for pluralism and inclusiveness as fundamental governance ideas. Pluralism widely includes the idea of a self-regulating market economy rooted in the United Statesand the United Kingdom, the idea of a state-oriented market economy in China, Russia, and Brazil, as well as the idea of a social welfare-oriented market economy developed in the Nordic countries. Inclusiveness refers to respecting the characteristics of different countries, ethnic groups, and races, adopting an inclusive attitude towards different cultures, histories, religions, and ideologies, and thus realising multilateral cooperation at the global and regional levels. 2. It calls for the improvement and innovation of multilateral institutions. The US-led liberal world order overemphasises the role of hegemonic countries. In contrast, the pluralistic multilateral model seeks to reform existing international institutions and cope with the new problems resulting from economic globalisation through institution building. Institutional reform is mainly manifested in the reformation of existing multilateral institutions, such as the WTO, IMF, and World Bank, in the hope that these institutions could better serve the stability and sustained growth of the global economy. Institutional innovation mainly occurs in multilateral relations aimed at solving global issues. Examples include the G20’s discussion of global economic cooperation, the United Nations Framework Convention on Climate Change regarding coping with climate change, the New Development Bank regarding promoting cooperation among BRICS countries, the ‘ASEAN+3’ established by relevant countries (10 ASEAN countries, China, Japan, and South Korea), and the Asian Infrastructure Investment

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Bank initiated by China. The primary goal of both multilateral institutional reform and multilateral institutional innovation should be the stability and sustained growth of the global economy, rather than maintaining the centre position of hegemonic countries or Western countries. 3. It emphasises a benefit-sharing governance structure. Unlike the US-led liberal world order, which overemphasises the balance of power and concert of great powers, global governance based on pluralistic multilateral institutions places more emphasis on a governance structure consisting of both state and non-state actors. In this plural and multilateral global governance structure, cooperation between major countries exists, while major and minor powers share power and responsibilities. This structure includes not only international organisations built upon formal treaties, but also non-state organisations and private groups. Given the diversity and differences of issues, this structure follows both top-down and bottom-up governance logic. It considers both the traditional coercive power and regulatory power of the rules. In short, this governance structure based on pluralistic multilateral institutions not only considers national interests, but also personal safety and sustainable human development.

Challenges of Global Governance Regardless of which persists, the US-led liberal world order or the emerging pluralistic multilateral system, global governance will face the following three challenges. 1. Principle of Sovereignty or Diversity of Actors? The first challenge of global governance is the issue of actors; that is, whether to adhere to the principle of sovereignty or advocate diversification of actors. The most direct result of the global flow of economic factors is that actors participating in the global economy have diversified. These actors include sovereign states, international organisations, non-governmental organisations (NGOs), multinational companies,

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independent professionals, private security companies, and even transnational criminal groups and drug networks. These diverse actors are involved in different economic issues (such as international trade, transnational investment, and international finance) and are active at different levels (such as transnational, trans-regional, and global). This poses a huge challenge to global governance: shall it adhere to the principle of sovereignty in global governance? If yes, how can the free-riding or beggar-thy-neighbour predicament be avoided? 2. Old or New Rules? The second challenge is related to the rules. The existing governance rules are mainly derived from the legacy of the Bretton Woods system established after the end of WWII. In fields such as trade, finance, currency, and direct investment, this legacy reflects the idea of capitalism propagated by Western countries, such as privatisation, a selfdisciplined market economy, and a free and open country and society. These ideas were crystallised as the so-called ‘Washington Consensus’ and were widely accepted by relevant international organisations, such as the IMF, WTO, World Bank, and others, as fundamental norms of building global economic governance rules. Because developing countries, especially emerging economies such as China, India, Russia, Brazil, and others, have joined the global market, the global power structure is being challenged, and power diffusion has become prominent. Emerging economies are calling for power structure adjustments to reflect their economic strengths better. This desire can be seen in various fields of the world economy, such as disputes on agricultural products, services, and intellectual property in the Doha Round of negotiations, and the redistribution of IMF voting rights. In these disputes, developing countries have brought many new ideas derived from their development into global governance, such as fair trade, sustainable development, and sovereign wealth funds. Therefore, one major challenge facing global economic governance is whether to follow the existing governance rules built upon the ideas of Western developed countries or to make new rules in consideration of power transfer and if the latter, then what are the fundamental ideas that these new rules should be built on?

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3. Issue-specific Fragmented Governance or Cross-level Networked Governance? The third challenge of global governance concerns governance structure. Specifically, the challenge is whether global governance should take a level- and issue-specific fragmented form or a cross-level networked form with multiple functions. In the previous global governance structure, since actors were mainly countries and treaty-based international organisations, the agenda setting of global governance mainly depended on the strength of countries. Powerful countries set standards by virtue of their material forces (such as economic and financial resources), and therefore decide on the accessibility of other countries to these resources. For example, in the Uruguay Round negotiations of the GATT, regarding the agricultural protection policies of the European Union, Japan, and other agricultural exporting countries, the United States insisted on including ‘market access’ into the negotiation. With the diversification of actors and the power diffusion caused by power transfer, the issue areas of global governance have become diversified and hierarchical. Diversification and hierarchy are more clearly shown in the different issue priorities of various actors. Countries prioritise issues that can improve social and economic welfare, such as trade, currency, investment, finance, and energy. NGOs prioritise issues of human rights, the environment, and health, which are based on the perception of civil society and individual citizens. Multinational companies prioritise labour, technology, intellectual property, and market access issues, which are highly related to the effective operation of these companies. Diversification and hierarchy trends challenge the agenda-setting efforts for global governance. Some scholars and countries advocate fragmented governance over hierarchical issues. The advantage of this reductionist governance path is that actors can easily find their own positions in a certain issue area, and cooperation among them will form an international regime. However, the disadvantage is that it is difficult to achieve the effect of global governance because issues are interrelated and actors are interdependent. Other scholars and countries advocate cross-level-networked governance. The advantage of this path is that it connects actors and the issues with which they are concerned. Once an international regime is formed, agenda setting may likely develop in a way

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that major actors expect. However, the disadvantage of this path is that networked governance is easily deadlocked owing to free-riding problems. From the perspective of international political economy, the above analysis dissects economic globalisation, the dilemma of global governance brought by power diffusion, two competing ways of global governance, and the future challenges of global governance. Effective global governance is one of the biggest challenges faced in the twenty-first century. It requires theoretical analysis from the relevant academia and feasible action plans provided by policymakers and practitioners. Effective global governance can only be realised by combining the two.

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