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Introduction

One’s perception of globalisation is much broader today than it was two decades ago. At the dawn of the twenty-first century, the global financial crisis, Brexit from the EU, Trump’s election as the US president, the Covid-19 pandemic, the Russia–Ukraine conflict and other “black swan” or “grey rhino” events, all have relentlessly delivered heavy blows to globalisation.

Voices that were against globalisation and even proclaimed its end have prevailed and echoed in recent years. Indeed, the new round of hyper-globalisation that started in the early 1990s seems to have lost its former glory given the rise of many global challenges, which forces us to reflect on the difficulties facing globalisation. For all the unprecedented wealth it has brought to mankind, globalisation has also undeniably exacerbated the imbalances in global resource allocation and widened the gap between rich and poor, both between and within countries. At the same time, concern over climate change, geopolitical games and technological iteration have also intensified conflict. Given the accelerated evolution of the international power landscape, geopolitical competition among major powers has intensified. Meanwhile, the global flow of people, capital, goods and information has been hindered by the divide, confrontation and mistrust between countries.

At the same time, however, we believe that the growing power of China and other supporters of international multilateralism will lend new impetus to the advancement of globalisation. Biden’s inauguration as the 46th President of the United States has led to a renewed embracing of multilateralism by the US, the signing of the Regional Comprehensive Economic Partnership (RCEP), China’s application to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the end of the China–EU Comprehensive Agreement on Investment (CAI) negotiations in late 2020, as well as a consensus by over 130 countries around the world on a minimum income tax for multinational corporations—these positive signals of multilateralism have all shown the efforts and confidence of the countries involved.

During a globalisation downturn, policy initiatives that hinder globalisation and voices that question or even deny globalisation also spur more people to think about how to make globalisation more inclusive, fair and sustainable at all levels and in all sectors. Given this epochal shift, we need to think where globalisation will go from here. We should also consider what principles and paths should be followed to ensure globalisation serves human development better. Finally, as a beneficiary of globalisation, China needs to consider what role it can play in the next phase of globalisation’s development.

Globalisation at a Crossroads

A Historical Context

Since the start of globalisation, pioneers have gradually broken geographical barriers down and reshaped the global landscape. By opening up the global market, they linked production and trade systems of different countries and facilitated the flow of capital, technology, talent and information globally, thus dramatically increasing productivity and accumulating incredible amounts of wealth.

In the 1980s, faced with new rising forces such as the Federal Republic of Germany, Japan and the Four Asian Tigers, and the Third Industrial Revolution along with the growth of multinational corporations, the market-led economic system pursued by the West demonstrated its clear advantage over the planned economic system of the Soviet East. More countries began to recognise, learn from and even introduce market economy elements. The globalisation of goods was reborn under this consensus. This read especially true in the 1990s, with the epochal shift in Eastern Europe, the collapse of the Soviet Union, and the broken “Two Parallel Markets” system; all of which created a political environment conducive to the formation of a unified global market.

Simultaneously, the standardisation of containers as well as advances in transportation and communication technology continued to deepen the international division of labour, providing effective support for the expanding scale of international trade. Globalisation sped up and created thriving prosperity.

First Two Decades of the Twenty-First Century

The period from 1990 to 2008 could be called the heyday of globalisation, but globalisation never recovered fully after the 2008 global financial crisis. Two “black swan” events—Donald Trump’s election as US president and Brexit—created uncertainty for the future of globalisation. In addition, the rise of the Islamic State of Iraq and Syria (ISIS), frequent terrorist attacks in Europe, the refugee crisis, the rise of right-wing parties in European elections, Trump’s withdrawal from multiple treaties, the yellow vest movement in France, as well as the trade war launched by the US, demonstrated a trend of deglobalisation.

The Covid-19 pandemic that erupted in the early spring of 2020 ravaged the world and triggered the most serious global public health crisis since the Second World War. The global economy seemed to press the pause button automatically. Industrial chains, value chains and supply chains were disrupted, and many industries suffered heavy blows. As a result, the global economy contracted by 4.3% in 2020—sparking the worst recession since the Great Depression of 1929 (UN, 2021).

Confronting this unprecedented global crisis, the international community, which should have been united, was overwhelmed and many countries closed their borders and even seized medical supplies passing through their countries. The pandemic opened a Pandora’s box, making an already volatile world even more uncertain. The Russia–Ukraine crisis in 2022 once again reinforced the idea that the end of globalisation and the transformation of the global landscape are nigh (CCG, 2022).

Issues Caused by Globalisation

Unequal Globalisation is Unsustainable

In the 1980s, neoliberalism dominated the world as Reaganomics dominated. As the main driving force of economic globalisation, multinational corporations were able to use production factors around the world more easily and frequently. The global development of multinational corporations strongly promoted international economic and technical cooperation, which also laid the foundation for the formulation of global trade rules.

With the deepening of globalisation, however, the disadvantages of multinational corporations became clear. The free flow of capital and free flow of interests gave rise to various problems. An International Monetary Fund (IMF) report in 2019 pointed out that non-OECD countries lose a total of some USD 200 billion in tax revenue each year as multinational corporations shift profits to low-tax areas (IMF, 2019).

Tax evasion by multinational corporations has widened the gap between the rich and poor in developing countries, increased poor populations and worsened living standards, thus blighting efforts to reach the UN 2030 Sustainable Development Goals. The failure of tax regulation also exacerbates deglobalisation, causing a contraction of global trade and a sluggish economy. Meanwhile, the interests of the middle class in some countries have been damaged, resulting in a collective backlash.

Given the global passion for profit, imbalances in development have become a visible symptom of the globalisation crisis. In the past, prosperity and inequality were two sides of the same globalisation coin, while free competition encouraged by market economies and globalisation were unable to solve the unequal distribution of national interests by itself, which resulted in the Matthew effect, an economic factor in internal social unrest and even world wars that have occurred since the birth of capitalism.

As economic globalisation expands, it inevitably requires national governments to adjust to a new status quo. The inequality of the dominant force inherent in globalisation makes it operate less equally than the rules would suggest, which means it is not always in the interest of all participants. However, many opponents of globalisation are not actually against globalisation per se and would rather simply challenge the rules.

Global Governance Lags Behind Global Practice

Sovereignty is defined by borders, but there are issues that also span borders. Global governance has become more pivotal in an era of globalisation where people increasingly interact with each other.

Current institutions of global governance, as the author of The World is Flat: A Brief History of the Twenty-first Century Thomas Friedman claims, are attempting to maintain a dynamic balance between nation-states and markets (Friedman, 2005). Such a balance played an important role in accelerating global economic and financial integration in the 1990s and the first decade of the twenty-first century. After the 2008 financial crisis, Professor Dani Rodrik from Harvard University noted in The Globalization Paradox: Democracy and the Future of the World Economy that the core contradiction of globalisation is the disconnect between government forces with national boundaries and market forces without national boundaries (Rodrik, 2011).

Globalisation is naturally contradictory to the idea of the nation-state. In the anarchy of the international community, to construct a global governance framework means that the nation-state needs to cede some of its sovereignty. Rodrik points out that there is a major trilemma in the world economy—“we cannot simultaneously pursue democracy, national determination and economic globalisation (Rodrik, 2011, p. 19)”. This contradiction also applies to the larger context of globalisation. In recent years, a surge of counter-globalisation reflects a reassertion of sovereignty by nation-states and a rising populist and nationalist sentiment. The imbalance in global distribution has eroded social solidarity within nation-states, which create new political cleavages and scepticism among the masses about the elite democracy of the past. Counter-globalisation has become a movement leveraged by nation-states to reinvigorate national autonomy.

Globalisation has reached a tipping point. It has brought new changes in infrastructure, data security, and business models, while also placing new demands on global governance.

However, existing global governance mechanisms appear to be overwhelmed in responding to global issues. For example, technological changes create challenges in coordinating interests and social management risks. The rapid growth of multinational corporations has far exceeded the scope of the existing international tax system, and reform is urgently needed. The development of financial technology has increased the potential risk of financial crimes. Advances in network communication technology have also raised concerns about privacy breaches. The global public health crisis in 2020 proved that the current global governance system lacks adequate governance and sufficient capacity to address emergencies.

The global governance system created in the twentieth century is no longer able to tackle the conflicts of the twenty-first century effectively, and urgent reform and innovation are needed. Simultaneously, the rise of China and other emerging countries has reshaped the global landscape (Wang, 2021). Old rules of globalisation are increasingly unsuited to the current relations between nations. (Institut Montaigne, 2022).

A Chinese Solution to Globalisation

Three Pillars and Seven Pathways

Policymakers worldwide need to rethink how to keep imbalances in the global landscape from triggering conflicts between countries or regions as the balance of world power changes. China is a critical player in globalisation and one of its most important beneficiaries. Since implementing its policy of reform and opening up, the Chinese economy has grown at an average annual rate of 9.5%, while its share of the world economy increased from 1.8% in 1978 to around 17% in 2020 (Xinhua, 2021). In the past few decades, China has become the world’s largest trader in goods, the largest industrial country and the second-largest economy. The country surpassed the US to become the world’s largest foreign capital inflow country in 2020. While achieving its own development, China has also been feeding back to the world, becoming an engine for world economic growth (Wang & Miao, 2022a).

As globalisation stands at a crossroads, China bears responsibility comparable to its economic weight. We have attempted to explore ways to promote inclusive and equitable globalisation and inject new impetus into globalisation by leveraging its advantages and characteristics (Wang & Miao, 2022b). Our vision is divided into three pillars—human-based globalisation, open regionalism, and global co-existence and co-governance, which are implemented through seven pathways.

Human-Based Globalisation

Globalisation has been accompanied by the flow of people from its very beginning. From this perspective, immigrants are both a product and a driving force of globalisation. In the process of immigration, immigrants not only influence trade, investment and technology exchange, they also create new ideas and integrate the cultures of different countries. This enhances their identification with each other and creates a foundation for reaching a consensus on global cooperation.

Path 1: Embracing global talent flows and overseas Chinese communities

China has become a fertile ground for global talent innovation and entrepreneurship. According to the Global Innovation Index, China’s ranking has risen rapidly, to 11 in 2022 from 29 in 2015 (WIPO, 2015; 2022). Given its ongoing integration into the global economy and growing role in global governance, China embraces more global talent for innovation and development. The launch of a green card programme for high-level talent has facilitated the introduction of high-level talent worldwide and the introduction of market-based recognition criteria for permanent residence applications has also proven successful.

We also welcome members of the 60 million strong overseas Chinese community to contribute to China’s development. Overseas Chinese serve as a link in Sino–foreign economic and trade cooperation, cultural, scientific and technological exchanges, as well as a bridge between China and the world. Meanwhile, Chinese students studying abroad benefit from receiving an international, high-quality education, and developing a global perspective. The experience makes them more familiar with global rules and enhances global networks and cross-cultural adaptability, making them well suited to the needs of a globalised economy.

Open Regionalism

Regional economic cooperation promotes diversity in globalisation, while regional integration is a mechanism for regulating the imbalance of gains from economic globalisation. Since interests in different regions vary, a certain region can develop its own regional interests, which buffers the negative effects of globalisation.

Path 2: Regional integration through a “Common Asian Market”

China embraces open regionalism, while promoting Asian regional integration is an important measure in supporting globalisation via multilateral principles. In the current complicated and volatile global climate, China has actively deepened its economic and trade ties with Asian countries. Apart from consolidating and developing bilateral economic and trade relations with Asian countries, it has also promoted major free trade areas in Asia (Mahbubani, 2022), including “ASEAN 10 + N”. Also, China is seeking to join the CPTPP, and advocates the integration of the CPTPP and RCEP towards a unified Free Trade Area of the Asia–Pacific (FTAAP) to give new impetus to economic globalisation.

Path 3: Multilateralising the BRI

In the course of globalisation, instability in the international community impedes effective regulation of global markets. The scarcity of international public goods has to a certain extent led to a widening of the gap between developing and developed countries. The China-launched Belt and Road Initiative (BRI) endeavours to supply public goods to the world, which is pivotal for promoting global connectivity, especially in the Eurasian continent. Given its status quo of bilateral agreements, multilateralisation will be a prerequisite for BRI to offer global public goods and promote innovation in global governance (Wang, 2022). China remains open to further standardising the Belt and Road platform in terms of rulemaking, personnel composition, organisation and management, and project implementation. This move aims to attract more countries to participate in the initiative, enabling them to learn from others’ strengths to complement their own weaknesses, achieve mutual benefit and compete fairly, to create more opportunities for the recovery and growth of the world economy.

Global Co-existence and Co-governance

After the Second World War, a UN-centred global governance system was created largely by the US (Wang & Michie, 2021). As the global landscape changes and rising developing and emerging economies drive an increasing trend towards multipolarity, the old system of global governance is increasingly unable to meet the needs of countries to solve present global issues. Global governance currently lags behind global practice. This contradiction is the fundamental reason why countries need to promote more innovative forms of global governance, which requires making global governance more representative and driving a more inclusive and equitable version of globalisation (Wang & Miao, 2022c).

Path 4: Strengthening South–South Cooperation

As members of a transregional, global and truly international organisation, BRICS (Brazil, Russia, India, China and South Africa) countries have their own unique cultural history and economic development processes. The future of BRICS countries could potentially provide an example for the future of globalisation. The BRICS cooperation mechanism is an emerging force in the global financial sector and political security. To a certain extent, this balances the discourse power of developing and developed countries in the context of global governance. Sub-Saharan African countries have long been economically low in the global industrial chain, supply chain and value chain, and have less of a voice in political matters. However, they also have great economic potential, rich natural and human resources and could benefit in the process of economic globalisation. After modernising, Latin American countries such as Brazil, Argentina and Chile have built solid economic foundations and achieved a high degree of integration with the world. Despite once being caught in the middle-income trap, Latin American countries are having a relatively positive impact on global affairs and have become another global force in addition to East Asia, Europe and the US.

Path 5: Enhancing cooperation with European countries

Europe, as the second-largest economic region only to the US, is moving towards closer economic integration. However, the continent is also facing geopolitical crises like Brexit and the Russia–Ukraine conflict. Europe and China currently have no geopolitical disputes, and bilateral economic and trade exchanges are close. They have been each other’s most important investors for a long time, and concluded CAI negotiations in 2020. China and the EU take similar stances on many global issues, and both advocate an international order based on multilateralism.

China–EU relations will determine the degree of internal economic integration in Eurasia in the future and will help to lay a new foundation for global governance. The completion of the CAI negotiations as scheduled has created a historic opportunity for China and the EU to enhance mutual trust and cooperation. China and the EU also have promising prospects for cooperation in fields such as climate change, the digital economy and clean energy. With these advantages, China should cooperate more with the EU in global affairs, especially within the framework of the UN, to ensure a stable and more multilateral world order.

Path 6: Creating a “new model of great power relations” with the US

Sino–US relations are a priority in China’s foreign affairs policy as they affect the development of the two countries as well as the future of globalisation. China has worked to seize all opportunities to avoid falling into the “Thucydides Trap” (Allison, 2017) and achieve a form of “cooperative rivalry” (Nye, 2023) as coined by Joseph Nye, former Dean of Harvard’s Kennedy School of Government. In the long run, the best outcome is for the two countries to maintain strategic mutual trust, economic and trade cooperation, and people-to-people and cultural exchanges. China and the US need to ensure cooperation between their business communities, carry out state-level diplomacy and foster people-to-people and cultural ties. Bilateral cooperation in areas such as climate change, infrastructure, digital economy and public health can help to quiet calls for decoupling. The two countries should also cooperate on reforms to global governance to avoid decoupling and any increased risk to the world order.

Path 7: Advocating the concept of “co-governance”

As a representative of emerging and developing economies and given its rising global clout, China recognises its responsibilities and seeks to replace confrontation with cooperation, which has always been a fundamental part of its vision for global governance. As a keen driver of innovation in the global governance system and a reformer of existing global governance institutions, China also advocates for a multilateral cooperation mechanism based on the concept of “co-governance” that balances “East and West”.

Policy Recommendations for Inclusive Globalisation

China has clarified its thinking and developed a set of policy tools to upgrade global governance. China’s priority is to respect and maintain existing international multilateral mechanisms despite strong headwinds in changes to globalisation. China is not looking to build a new world order from scratch and emphasises reforms to dispute settlement mechanisms under existing rules, especially within the framework of the UN and the WTO.

Reforms to the UN and WTO

With rising unilateralism and protectionism in addition to existing hegemony and intervention, the current system of global governance is often ineffective due to a lack of leadership. The Russia–Ukraine crisis has exacerbated global geopolitical issues and a series of new issues, such as a shifting global landscape, climate change, digital economy and the BRI, have created new challenges for the UN. Pragmatism, balance and regulation are at the core of the UN, but they are also the foundations for its reform. The UN should be able to coordinate, guide and regulate areas such as the digital economy, climate change, the management of polar zones, and safeguard peace and global security. It should also give full play to its advantages and participate in regional and global development projects such as the BRI.

The WTO, a permanent international organisation independent of the UN, plays a unique role in global economic governance. For years, it has played a leading role in balancing international trade relations and reducing trade frictions, despite endless doubts of a marginalised WTO. Moving from the global periphery to the centre, emerging countries have become an integral part of international trade and the world economy. However, the different demands of emerging economies and advanced economies have kept the WTO from functioning properly.

Reforms to the WTO could potentially begin with plurilateral agreements in place of multilateral agreements to improve efficiency and implementation. Second, a reformed WTO should fully consider the demands and capabilities of developing countries and endeavour to find common interests among parties in disagreement, who must also exercise patience and maintain a win–win mindset to avoid a zero-sum outcome. Finally, as we enter an era of digital trade, the WTO should take advantage of the potential to promote e-commerce negotiations, enhance digital transitions in cross-border goods and service trade, narrow the digital gap, strengthen privacy protection, and ensure fair competition.

China can also contribute to innovation in upgrades to the global governance system based on the principles of shared responsibility for global governance and “co-governance” with other countries in the world by establishing global institutions that focus on the current obstacles and challenges globally such as infrastructure deficits, climate change, data security, economic inequality and global talent.

Creating a Global Infrastructure Investment Bank (GIIB)

There is global demand for investment in infrastructure, but a lack of funding and structural issues like the failure to match supply and demand have existed for years in international development financing. Since its launch in 2015, the Asian Infrastructure Investment Bank (AIIB) has operated in accordance with the model and principles of multilateral development banks, adhering to high international normative standards, and it has been recognised by the UN and other multilateral organisations. Under the proper conditions, it is possible for the AIIB to be upgraded to a Global Infrastructure Investment Bank (GIIB) to focus more on expanding the scope and regional distribution of infrastructure investment, providing funding for eligible infrastructure investment projects around the world. However, this requires inviting new members to play a major role, specifically the US and Japan, and bringing in countries from Africa and Latin America. In future, the GIIB could play a greater role in building sustainable infrastructure, digital infrastructure financing and stimulating private financing.

Establishing a Global Organisation to Find a Solution to Climate Change

The global climate crisis is one of the most serious challenges in the twenty-first century. Many countries have set detailed emission reduction targets and launched initiatives. To accelerate the pace of efforts to reduce global emissions and incorporate the needs of less developed countries, we suggest adding China, India and Russia to the G7, and discussing more effective multilateral climate cooperation mechanisms under a G10 framework. The integration of these three countries would increase the representation of the organisation from 10 to 47% of the world’s population. The G10 would also incorporate the world’s six largest carbon producers and bring together representatives from both developed and developing countries, which could serve to build bridges between countries with different levels of development and take various green development cooperation models into account.

Establishing a Global Taxation Organisation

Global tax system reform is essential to address the core issue of uneven distribution in globalisation. In 2021, 132 countries reached a consensus to reform the “global minimum corporate tax” and agreed to fix the global minimum corporate tax rate at 15%. With a view to closing loopholes in the global tax system, the global minimum corporate tax rate will encourage multinational companies from developed countries to repatriate their income from tax havens to their home countries, which will also raise the income of their own people. However, the reform of the global tax system will not be achieved overnight, as it focuses on how to reasonably allocate the tax base on the basis of the lowest tax rate and effectively respond to tax challenges brought about by the global digital economy.

Establishing a Global Data Security Organisation

Data flows epitomise globalisation in the twenty-first century, while the globalisation of data both drives the world economy and brings many challenges. In this process, cross-border data flows are critical, but complexities such as national security, geopolitics and privacy protection have kept countries from reaching a consensus in promoting free data flows and enhancing data localisation. Establishing a D20 (the Data of Twenty) would lead to a discussion about reaching a consensus on cross-border data flows in countries with relatively advanced digital economies. In addition to this, establishing a “global data organisation” would lead the way in creating standards for global data security and data use as the world has not yet reached a comprehensive multilateral solution to either of these issues.

Promoting the Alliance of Global Talent Organisations (AGTO)

Global talent has become an important part of world population flows. However, differences in visa policies, talent policies and public benefits in different countries make it difficult for them to flow freely (Wang & Michie, 2021). The AGTO, established in 2020, aims to unite major immigration organisations and institutions worldwide and provide a platform for governments to coordinate talent flows. It creates a fair and competitive international platform for talent exchange and lowers the barriers to global talent cooperation. At the same time, the AGTO protects the rights and interests of individuals and narrows gaps in knowledge and innovation capabilities between different countries. The AGTO should work to enhance communication between international organisations and relevant actors, filling the gaps in global governance and talent management.

Working Towards an Inclusive, Fair, Multilateral and Sustainable Model of Globalisation

Globalisation is a fluid concept, and its evolution affects not only China, but other countries as well, which means that we must explore solutions together. The course of China’s development will profoundly influence the future of globalisation and as the world’s expectations of China become greater, the wisdom we share and the solutions we provide will enable China to play a greater and hopefully more positive role in globalisation and global governance. Facing twists and turns in the course of globalisation, we need to work with other countries to identify as many common interests as possible, pursue broader and deeper cooperation in a spirit of mutual benefit, resolve urgent global issues, and promote a model of globalisation that embraces inclusiveness, fairness, multilateralism and sustainability.