What lies ahead for the world of tomorrow? The World Economic Forum Annual Meeting 2023 was held in person in Davos for the first time three years. This year’s meeting focused on the theme “Cooperation in a Fragmented World.” While we aspire for a better world, we have to confront the harsh reality. Faced with all kinds of challenges, it is a critical that the international community play a leading role in getting countries to rebuild mutual trust and strengthen cooperation. China will prioritize managing its own affairs and push coordination on international policies, global communication and cooperation as well as the building of a community with a shared future for mankind.
Today, the world is in urgent need of more concerted international efforts to address common challenges, including Covid-19, recession, the Russia-Ukraine conflict, climate change and food and energy security. However, global conditions have changed. Prior to the outbreak of Covid-19 or even the Russia-Ukraine conflict, much more attention had been paid to global issues like climate change and financial risks. By contrast, such issues are less of a focus now, almost as if they no longer existed.
Yet a greater danger exists. Global cooperative mechanisms, especially coordination mechanisms between major countries, that have been developed since the 2008 global financial crisis are getting weaker. This is a cause for great concern. If countries turn their back on the global issues and disregard international coordination and cooperation, it will lead to worsening risks and crises in society. Not a single country can detach itself from this interconnected world.
Strengthening coordination and cooperation is of utmost concern, for which major powers should lead the way. It is not enough to express support for cooperation and goodwill. The international community must acknowledge and reflect on the causes of global fragmentation. All countries, notably leading powers, should stop mutual recrimination, which doesn’t help matters. They should instead take immediate action to meet global challenges.
As the world’s second largest economy and the largest developing country, what China does and says is under the spotlight. During the forum, Vice Premier Liu He gave a special address calling for strengthening of cooperation in a fragmented world. As for how to advance international cooperation, he shared the following three observations: uphold the right principles and maintain the effective international economic order; strengthen international macro policy coordination and strike a good balance between inflation and growth; and build a proactive global response to climate change. These observations clearly reiterate the Chinese government’s firm and rational stance in the international arena.
Separately, Liu also met with U.S. Treasury Secretary Janet Yellen, marking the first face-to-face meeting between the leaders of the U.S.-China Comprehensive Economic Dialogue since U.S. President Joe Biden took office. These are positive signals for the global economy at risk of recession and China-U.S. relations that have been soured by technological decoupling.
China has sent a clear signal, but how the receiver interprets the message also matters. As China adjusted its Covid policies, it expects an economic upturn. The international community, especially the business sector, has responded positively. However, the existing wait-and-see attitude and misgivings outside of China cannot be overlooked. The three-year pandemic and the Russia-Ukraine conflict have brought great changes to the world and permanently altered the environment.
The rebuilding of trust and confidence requires more concrete action and effective implementation than verbal goodwill and policies. At present, fragmentation is still widening. As some Chinese entrepreneurs highlighted, supply-chain decoupling has extended from some foreign governments to many multinationals; it is hard to turn the tide once foreign investors do not care about the Chinese market. They expect fair competition and hope that the government could give equal treatment to domestic and foreign investors.
The situation is pressing. For the first time in 40 years, China’s GDP growth in 2022 is likely to be below the global growth, IMF predicted. The year ahead is going to be a tougher year for the global economy than 2022. With such an external environment, both the government and business sectors must be prepared and develop effective countermeasures to address possible challenges, even as China anticipates a stronger 2023 economically.
“Upholding the right principles” is applicable to advancing international cooperation and also healthy domestic economic and social development. The two aspects support each other.
As Liu He said in his speech: “Equitable division of labor, encouragement of competition, anti-monopoly, protection of property rights and IPRs, promotion of entrepreneurship and free flow of production factors, fair distribution, a strong social safety net and maintenance of macroeconomic stability are economic principles proved to be relevant today. The government should play a key role in major issues. Despite temporary resistance and setbacks, we must have the courage to cling to truth and law of economics and address complex issues pragmatically with plain and simple solutions.”
His words capture the essence of China’s achievements in its reform and opening up over the past 40 years, and provides the fundamental principles for human development.
To uphold the right principles, it is imperative for China to deepen reforms, open itself wider to the outside world and advance law-based governance. It is necessary to give full play to the decisive role of the market in resource allocation and to give better play to the role of the government. China is ramping up efforts to foster a new pattern of development that is focused on the domestic economy and features a positive interplay between domestic and international economic flows. In this regard, a smooth domestic economy cannot be enabled without international division of labor and cooperation, which are underpinned by universally accepted systems, rules and values.
Liu He specifically and forcefully articulated the following: “Some people say China will go for the planned economy. That’s by no means possible.” But we should be aware that if individual officials are skeptical about the market economy and thus look toward the planned economy and show insufficient determination to carry out comprehensive and deepening reform arrangements, it will inflict huge damage on China’s economic and social development.
It is only by upholding the right principles can China perform well and strengthen coordination and cooperation with the international community. We expect all countries to abstain from vulgar, narrow pragmatic philosophy and shilly-shally opportunistic behaviors. Concerted efforts are called on to explore the greatest possible convergence of interests. Only in this way can we bridge differences and come up with new ideas and good solutions to global challenges.
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