China-EU cooperation needed to safeguard globalisation’s future

SCMP | December 14 , 2023

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From SCMP， 2023-12-14

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 ■ The Bretton Woods system has failed to keep up, so the US, EU, China and other Global South states must find a new multipolar model of peaceful coexistence.

■ Amid Sino-US competition, China and Europe can keep the world on a multipolar keel by cooperating in four crucial domains.

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Illustration: Craig Stephens

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By Wang Huiyao | Founder of the Center for China and Globalization(CCG)

 

A clear message emerged from the first in-person China-EU summit in four years: building a multipolar world would require a systematic reform of global governance. China and Europe need to heal rifts and cooperate to play a pivotal and constructive role in ensuring a better future for global governance.

The current international system, comprising the World Bank, International Monetary Fund and World Trade Organization, and led largely by the United States and Europe, was established after World War II to promote globalisation and has seen great success.

But the global economy, culture and society have marched on -given the decentralisation trend in world politics, this system is no longer able to meet our needs and global governance has fallen behind in practical action. The world order is in urgent need of restructuring.

The world is undergoing seismic changes unseen in a century. Geopolitical turmoil, climate change, a pandemic and the rise of anti-globalisation have ushered in a turbulent era. Globalisation, in particular, is facing unprecedented challenges.

In May this year, German Chancellor Olaf Scholz acknowledged the multipolarity of the world at the Global Solutions Summit. But while this multipolar world has arrived, the governance system to go with it has yet to be formed.

China is part of the Global South but some of its regions have reached levels of development comparable to Global North nations. China is in a position to link with the major sectors of a multipolar world and play a leading role in globalisation.

To build a new global governance system, the US, European Union, China and other Global South countries need to agree on a multipolar model of peaceful coexistence. It would behove China, the US and EU to establish a trilateral dialogue for regular exchanges and to promote broader international cooperation.

Also, as the world’s largest economies and major emitters of greenhouse gases, these three powers should discuss sustainable development solutions.

Due to cultural and systemic differences, there is more competition between China and the US than cooperation. If both sides can coexist in a context of competition and cooperation, they may be able to reach a new balance by 2035.

Europe is essential to avoiding a bipolar world and helping the formation of a multipolar one. As Europe is an independent third party, its economic relationship with China has become increasingly important.

There are four domains in which China and Europe can cooperate to forge a more multipolar world.

The first is in new technology. From the Internet of Things and artificial intelligence to clean energy, technological advances are reshaping how we do business -even as a lack of effective international governance hinders coordination.

Cutting-edge issues include global management of the digital economy, carbon taxes and global corporate income tax. China and Europe should discuss the establishment of international institutions to foster coordination in these emerging areas.

The second is in climate action. China is a world leader in renewable energies such as wind and solar power. Its Belt and Road Initiative seeks to promote a transformation to green infrastructure, supported by financing from the Asian Infrastructure Investment Bank (AIIB).

Next year, the AIIB will host the fifth Finance in Common Summit. At this summit, China should propose cooperation in green infrastructure between its Belt and Road Initiative and the EU’s Global Gateway programme. The AIIB and European Investment Bank can also facilitate funding for climate-related work in developing countries.

The third domain in which China and EU can cooperate is in investment and trade. China has joined the Regional Comprehensive Economic Partnership and applied to be part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement.

But while China and the EU share extensive interests and a solid foundation for cooperation, they have reached an impasse on the Comprehensive Agreement on Investment (CAI). To overcome this impasse, in April last year China ratified the International Labour Organization’s 1930 Forced Labour Convention and 1957 Abolition of Forced Labour Convention.

The sooner the CAI becomes a reality, the sooner we can see an economic boom for Chinese and European companies, especially important in the current stagnant economic climate. Given that China has unilaterally lifted visa requirements for some EU countries, it could also start unilaterally applying some CAI proposals in opening up.

Last but not least, China and Europe can cooperate on smoothing the movement of their citizens. Freeing up the flow of people is part of globalisation, and has an impact on trade, investment and technological exchanges, promoting the exchange of culture and ideas.

It is in this spirit that China is trying out visa-free travel for the citizens of France, Germany, Italy, the Netherlands and Spain on ordinary passports to enter the country for business, tourism or to visit relatives and friends.

But China should also continue to work on attracting talent, especially from Europe, by further liberalising its visa policy to promote people-to-people connectivity and help build global consensus.

Global governance needs to be more inclusive and geared towards 21st century problems such as climate change and social inequality. This can be done by boosting free trade, overcoming the global infrastructure gap and closing the digital divide. China is a beneficiary of globalisation, and its economy has continued to mature, entering an age of high mass consumption, similar to Europe of the past.

It is clear that China and Europe face obstacles to greater cooperation, with pressures both internal and external. But it is in the interests of both to play a leading role together in shaping the next iteration of a more resilient, inclusive and sustainable model of globalisation.

From SCMP， 2023-12-14