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Cooperation Beats Fragmentation

Jul 12, 2022
  • He Weiwen

    Senior Fellow, Center for China and Globalization, CCG

Chinese Vice Premier Liu He and U.S. Treasury Secretary Janet Yellen had a phone conversation on July 5 about joint efforts in macroeconomic policy coordination, global supply chain stability, tariffs and trade policies. Chinese Foreign Minister Wang Yi and U.S. Secretary of State Tony Blinken are set to meet later this week during the G20 meeting of foreign ministers in Bali, Indonesia. It has been reported that U.S. President Joe Biden is seeking a phone call with Chinese President Xi Jinping.

The intensive high-level dialogues between the world’s two largest economies have brought some light of optimism to the world, despite the backdrop of turbulence and risk of fragmentation. Simultaneous summits in the East and West in late June had presented the prospect of a world splitting into two camps: the West and the rest.

The June 23-24 EU Summit in Brussels, the June 26-28 G7 summit at Schloss Elmau, Germany, and the June 29-30 NATO Summit in Madrid gathered the West and delivered tone of fragmentation and confrontation. The G7 leaders’ communique made 14 accusations against China regarding its own internal matters. The G7 summit announced a plan to find $600 billion to finance infrastructure projects in low-income developing countries, a strategic plan only to counter the Belt and Road Initiative led by China.

NATO’s Strategic Paper 2022, while asserting that Russia was a “direct and dangerous rival,” designated China as “systemic challenge” 11 times, although China is thousands of miles from Europe and shares no border with NATO. Obviously, the Western agenda points to global political fragmentation.

On the other hand, the June 24 BRICS summit and Global Development Initiative High-Level Dialogue, both held in Beijing, showed no camp gathering. Although the participants were 18 developing countries, they also include the presidency of the leading global or regional organizations: ASEAN (Cambodia), G20 (Indonesia), CIS (Kharzakstan), APEC (Thailand), African Union (Senegal) and Comunidad de Estados Latino Americanos y Caribeños, or CELAC (Argentina). Members of these organizations include all G7 countries, the EU, Japan, South Korea, Canada, Australia and New Zealand. Hence, the attendees covered various parts of the world, not “the rest” only.

The agendas of the two events in China showed no camp confrontation. It included global development partnerships for attaining UN 2030 Sustainable Development Goals. The BRICS summit and GDI upheld multilateralism and the UN Charter, putting development as the core agenda for the common prosperity of all humanity.

It is doubtful whether the three events in the West would really lead to world fragmentation.

First, the EU does not want camp confrontation with China. Charles Michel, chairman of the European Council, said after the EU Summit that the key for China-Europe relations remains cooperation and win-win outcomes. German Chancellor Olaf Scholz has expressed explicitly that it is imperative to prevent the positioning the West on one side and China and Russia on the other. The leaders of Belgium and the Netherlands have taken the same position.

Second, the G7 mechanism is mostly outdated in global governance, having been replaced by the G20 after the global financial crisis of 2008-09. With the mentality of world camp confrontation, the G7 Summit 2022 actually failed to provide the world any positive public goods except the commitment of $4.5 billion in food aid. The $600 billion infrastructure financing plan for low-income economies, mostly from the private sector, can hardly be regarded as a result before they actually find the money. An article posted on a U.S. political website said the G7 Summit was a failure in all respects.

Four months from now, the G20 Summit 2022 will be convened in Indonesia. Its objective, announced by Indonesia on May 4, is to provide opportunities for jointly promoting a global and regional agenda by all G20 members, and let peace, prosperity and sustainable development benefit people of all countries of the world. It is undoubtedly a global effort, not an example of political fragmentation. G20 membership includes all G7 and BRICS members. Hence, when the G20 Summit takes place, the G7 leaders will also sign the leaders’ statement for global collaboration, thus overrunning the G7 Summit agenda for fragmentation.

Third, it is doubtful that an Asia-Pacific version of NATO would really divide the region. All four invitees (Japan, South Korea, Australia and New Zealand) are both RCEP and APEC members. Within RCEP, China is the largest trading partner for them all. The APEC Summit 2022 will be held in Thailand on Nov. 18 and 19. The objective of the summit announced by Thailand on May 4 exactly mirrors the G20 as to global solidarity and common prosperity.

The United States, the driving force behind the NATO expansion, is a member of APEC as well. The leaders’ declaration for the APEC Summit 2022 will be signed and implemented by the U.S. and five other countries, including China. In this context, APEC will become a strong institutional constraint on the fragmentation of the region.  

In light of all this, more efforts should be devoted to supporting global cooperation and mediating differences to avoid world fragmentation. China and the U.S., the two key players, should contribute more.

The successful cooperation of China and the U.S. at the recent 12th WTO Ministerial Conference (MC12) is the most recent and convincing example, making a key contribution to the historical success of multilateralism. Ngozi Okonjo-Iweala, the WTO’s director-general, expressed her sincere thanks to Chinese Minister of Commerce Wang Wentao and U.S. Trade Representative Katherine Tai for the fact that “U.S.-China cooperation helped get us through at the toughest moments” and “was instrumental in getting to positive outcome.”

China and U.S. should also work together, both bilaterally and at the G20 Summit in November, to help coordinate macroeconomic policies of G20 countries to check the most serious inflation in decades and prop up the weakening world economy. It should especially seek common solutions to the world’s energy, food and debt crises in low-income developing economies.

The “systemic challenge” to the U.S. is not China, but the worst inflation in 40 years. For that purpose, the U.S. should drop tariffs on Chinese goods, and the sooner, the better. China should follow by dropping the counter-tariffs on U.S. goods, thus reinvigorating bilateral trade in a more positive atmosphere.

China and the U.S. could well cooperate on the G7 global infrastructure plan. The G7 initiative and the China-led BRI could well be complimentary, not mutually confrontational. For years, Chinese companies have enjoyed excellent cooperation with GE, Honeywell, Caterpillar and other U.S. and European companies in numerous infrastructure projects in low-income developing countries along the BRI route, including subcontracting and project financing. Why not make it a new pathway for infrastructure investment by all countries and for all low-income economies? Beyond any doubt, this collaboration will provide a new push to the attainment of UN 2030 SDG, and to the common prosperity of all humanity.

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