The New Dynamics of Development

Preface

China’s response to the problems raised by Globalization, is now being recognized by more and more countries. When globalization is in crisis, China is willing to help it get back on track—regression is not the right solution anymore. It is impossible to return to a development model based on the framework of nation-states because the market would be too narrow to spread and develop technology and productivity. Beyond the economy, the nation-state framework cannot solve the many global issues facing the world today, such as global climate change and terrorism. For China, globalization is about building a community of shared future by all human beings, or a community of sovereign states—countries who are willing to voluntarily unify under the principles of consensus, co-building, and sharing, so they can strengthen their cooperation and jointly address challenges and crises.

However, some leaders from developed countries hold different views. Some politicians believe that by disrupting the global value chain, the industrial production process could be brought back to their countries, thereby boosting domestic employment and economic growth. Meanwhile, some even claim that global warming is a deliberate lie invented to slow down their countries’ development. For example, in 2017, the U.S. announced it would withdraw from the Paris Agreement and lift restrictions on greenhouse gas emissions.

Although China cannot force all countries to participate in global governance, we can make all countries aware of the benefits to the world of stronger global governance. If some countries are unwilling to uphold multilateralism and improve global governance, China will have to take on the task of global governance itself. For those countries that want to disengage from global governance and return to unilateralism, they will eventually realize that they are also disengaging from the track of this era—they will lose their competitive advantage and in the end isolate themselves. Only countries that actively contribute to the world can share the benefits of its global development.

In 2013, China proposed the Belt and Road Initiative (BRI) with the core ideas as followed: “multilateral cooperation, consensus, co-building, and sharing”. The BRI has provided a new impetus for world economic growth, where the emerging economies are playing an increasingly important role. This Initiative continues to be open to all, China’s wishes desire is to involve countries that can provide additional innovative development models and solutions. Collectively these innovations could diversify the world’s development and therefore provide more models for the references of each country.

The main content of this book is my analysis of the development of globalization in recent years, some of which have already been scattered in some publications. I hope to string all the beads into an integral necklace through editing and modifications, which could provide some comprehensive reflections on contemporary globalization. I would like to acknowledge the help of all those who provided me with comments during the editing process, which made the logic and analytical framework of this book clearer and more explicit. I also want to express special thanks to CITIC Press and the Taihe Institute, for having absolute faith in my project and for their willingness to publish this book in Chinese version. I want to thank warmly my friend Einar Tangen who suggests me to add a few comments to each chapter, to explain the purpose and background, why I wrote on this topic. That way, my readers outside of China can better understand in what context the chapter was written. I’m also grateful to Peter Lang for their willingness to publish this English version.

I am responsible for any errors and mistakes in this book, and I would like to invite readers to give me their precious comments.

Ding Yifan

Haidian District, Beijing, China, May 29, 2023

Introduction

In recent years, globalization has been blamed for being the origin of all misfortunes in Western countries. Politicians with anti-globalization slogans take the opportunity to emerge as the biggest winners in various elections.

The most prominent winner was US President Trump. He was elected under the slogan of “America First”, and he wanted to put the slogan of America First into practice. The United States withdrew from the TPP and threatened to reshuffle the North American Free Trade Agreement and renegotiate the free trade agreement with the European Union. The Trump administration has also imposed unilaterally tariffs on China’s exporting goods to the United States in the name of America First.

The United States has always been a believer in free trade and the main driving force behind the promotion of free trade around the world. And globalization has grown through the ethos of global free trade and cross-border investment liberalization. Globalization has a huge impact on the world economy. In terms of GDP, the world economy got its fasted growth from the 1990s to the financial crisis in 2008, and international trade also grew the fastest. That was the golden age of globalization.

In fact, the biggest beneficiaries from globalization are large multinational companies in developed countries. They take advantage of the opportunities of trade and investment liberalization to allocate resources and production globally, increasing their investment returns exponentially. However, liberalization has made the social redistribution system of developed countries seriously inclined towards the wealthy, resulting in a rapid widening of the gap between the rich and the poor populations. The Occupy Wall Street movement claimed that 99 % of Americans did not benefit, and only 1 % of the wealthy people benefited from this globalization.

Many developing countries (including China) actively participated in globalization, and took advantage of the opening of the global market to develop rapidly and realize industrialization. They are also beneficiaries of globalization, but not at the cost of enlarging social disparity and environmental pollution. Taking China as an example, globalization has also brought about the polarization of the gap between the rich and the poor people. Coastal areas were the first to receive foreign investment, and they developed rapidly. However, the central and western regions do not have these regional advantages, and few foreign companies decided to invest there. The development gap between them and the coastal regions is widening rapidly. Foreign investment is concentrated in cities, and China’s urban-rural income gap is widening amid globalization. However, the Chinese government has not sticked to the “Washington Consensus” and has not fully followed Western experts’ advices to privatize its economy and liberalize its capital market. In this context, the government still has the ability to guide economic development, invest in infrastructure construction, improve people’s quality of life and use the government’s “visible hand” to intervene in the market. Regions and social groups that are not “favored by globalization” have been allowed by government assistance to realize a better development and allow hundreds of millions of people get out of poverty.

When globalization is in crisis, China is willing to use its own power to help globalization return to the right track, because China believes that going backwards is not the right way to solve the problem. It is impossible for us to return to the development model based on the nation-state framework, because the market is too narrow, it hinders the dissemination of technology and the growth of production capacity; that kind of nation-state framework cannot solve many global problems facing the world today, such as global climate change or the proliferation of international terrorism. China wants to promote its own version of globalization, which is to build a community with a shared future for mankind. It can also be said to be a community of sovereign states. Under the principle of “mutual consultation, joint construction, and sharing benefits”, China wants to bring the international community together to strengthen cooperation and jointly deal with the challenges and problems facing our planet.

During those years of globalization crisis, I wrote many papers commenting international events. This time, I put them together and reedited them according to my own logic. My purpose is to give ordinary people, and scholars, a sense of how people, like me, in China, were thinking about important issues and times, as they happened. For each issue there was some question, event and/or issue, that prompted me to write. Sometimes, the questions we ask and attempt to answer are more important than the answers themselves. Putting these questions and events into context may be of use to those who want to understand China’s development during the period covered. I hope you find it useful.

This book has two parts. The first part analyzes China’s unique development model, including China’s choice of development path, the characteristics of its governance system, the reform and development of the financial system, and the reflections on how its economy can cope with challenges during the medium- and high-speed development phase after the completion of high-speed development. The first part also discusses China’s position in the international arena and how China uses its national power.

The second part analyzes the crisis of globalization and some of the dilemmas China faces during this process. This part starts with China’s complex relationship with the United States, such as the long-standing issues of entangled currency exchange rate between China and the United States. Then it discusses how China can work with emerging economies to build a new type of international relations and push globalization in a healthier direction. This part culminates in the issues of China’s proposal to build a community of shared future.

The essays presented cover topics that people now, and years from now, will want to understand. While I am just one voice, I can by presenting these issues in terms of chronology, and context, give some indication of what and how some of us were thinking.