Xinning and Cheng : The Dilemma of Reform in Current International Economic Order and Its Chinese Solution


Speech by Zhang Xinning, Associate Dean of the School of Marxism, Fudan University People’s Republic of China, at the NIEO 50th Anniversary Congress in Havana. Co-authored by Cheng Enfu.

Currently, under the continuous impact of de-globalization and generalization of security, the global economic recovery is expected to weaken, while the trends of increasing challenges and obstacles to global economic growth and of insufficient recovery momentum have persisted. With mounting global challenges such as food crisis, energy insecurity, climate change, and development imbalances, the international economic order is undergoing significant changes.

1. New characteristics of international economic development

Against the backdrop of a global economy still struggling to recover from the 2008 global financial crisis, which was further affected by de-globalization and the rampant spread of COVID-19 pandemic worldwide, a significant slowdown in the process of global free trade has taken place, posing additional challenges to global economic recovery.

(1) Slowing down of global economic growth

Influenced by ongoing issues such as Russia-Ukraine conflict and Israeli-Palestinian conflict, there is a continued deceleration in global economic growth beyond initial expectations due to increased risks associated with geopolitical-economic fragmentation and deteriorating financial environment. Global trade activities remain sluggish. According to the World Economic Outlook released by the International Monetary Fund in January 2024, it is projected that global GDP growth will be 3.1% in 2024 and 3.2% in 2025. These forecasted values for 2024-2025 are lower than the historical average level (3.8%) during the pre-COVID-19 period from 2000 to 2019. This reflects factors such as contractionary monetary policy measures, withdrawal of fiscal support policies, and slow potential productivity growth.

(2)The divergence of global economic recovery is widening across the board

 In the slow global recovery, the divergence in performance of developed and developing countries is widening across the board. The United States and some large emerging-market and developing economies are showing greater resilience than expected. The growth of U.S. economy is projected at 2.1% in 2024 and 1.7% in 2025. Asian emerging-market and developing economies are showing strong performance, with growth projected at 5.2% in 2024 and 4.8% in 2025. The Euro zone is showing significant weakness, with growth projected at 0.9% in 2024 and 1.7% in 2025. This reflects the continued impact of weak consumer confidence, high energy prices, and weak manufacturing and business investment sensitive to interest rate. Japan ranks behind Germany in 2023 with weak growth, with growth slowing down from an estimated 1.9% in 2023 to 0.9% in 2024 and 0.8% in 2025.

(3)A competitive dynamic between China and the United States has taken shape

As the two major players in the global value chain, the United States' strategy of comprehensive competition with China has basically taken shape, with the main tone being China as the central target in a long-term strategic competition. The key to Sino-US strategic competition lies in who can build a more stable, more solid and better path of domestic construction and development, and the competition in science and technology will be the key "battle" of strategic competition between the two countries.

(4)Uncertainties about global economic growth have further intensified

The current geopolitical conflicts are greatly influencing market trends, exacerbating global commodity supply shortages and leading to sharp increases in food, energy and transportation costs. Deepening geo-economic fragmentation will in turn restrict cross-border commodity flows, further triggering price volatility and thus adversely impacting the global recovery. At the same time, the global market is increasing its expectation that the US Federal Reserve may maintain high interest rates for a long time in the future to curb inflation. Developed countries are forced to follow up, further aggravating the debt burden of developing countries. An increasing share of limited government revenue is swallowed by interest expenses, and the risk of debt crisis is accelerating.

2.The dilemma of the international economic order

International economic conditions are determined by the international economic order, which is not a one-way logic of linear causation, but an iterative product of dynamic interaction of numerous factors. The current international economic order has always followed the rigid order led by the United States, the international coordination mechanism has failed, and the joint action of global governance has been obstructed by the will of the United States, which implies the dilemma of collective action.

(1)The tension of the new diversified world economic structure is intensifying

At present, the number of factors affecting international economic order is increasing, the dispersion of power is speeding up, and international relations are becoming increasingly complicated. In the past, the vertical, monopolistic and hierarchical "unilateral power structure" model under the dominance of a single subject, a single region and a single idea is moving towards a flat, nodal and gridded "multilateral power structure" model with the coordinated coexistence of multiple subjects, diverse civilizations, multiple regions and multiple ideas. In particular, with the economic development of Asia, its voice in international economic governance has been increasing, breaking the situation that the international economic rules have been dominated by European and American countries since modern times. Although the "rise of the East and fall of the West" are increasingly obvious, "the West is strong and the East is weak" is still a fact. The United States is the world's largest economy and the only hegemonic country, and its economic ideas and policies have long gone beyond its domestic scope and negatively affected the global economic order.

(2)Deepening Influence of Neoliberalism in Developed Countries

Since the 1980s, the guiding ideology shaping the economic order in developed countries has been neoliberalism, with its core tenets being deregulation, trade and industrial liberalization, and privatization of public goods. Even after experiencing financial crises, the dominant ideology in developed countries remains neoliberalism, reflecting their distinctive neoliberal characteristics. The neoliberal development model, against the backdrop of a highly integrated global economy, has led to synchronized economic cycles, making it difficult to control economic crises once they erupt. Additionally, the speculative nature of financialized accumulation patterns and economic bubbles has amplified the risks of crises, thereby affecting the stability of the entire economic system.

(3)Increasing Complexity in the Forms of Obstruction to Globalization in Global Governance

With the growing strength of the Chinese economy, developed economies such as the United States have actively chosen to dismantle global economic integration. They have adopted direct or indirect "decoupling" and so-called "risk prevention" through trade protectionism, and have erected barriers to the flow of research and development factors such as technology, talents, and data with developing countries. Various forms of obstruction to globalization and trade conflicts have become external manifestations of geopolitical risks and important means of great-power competition. Essentially, "risk prevention" is just a euphemistic form of "decoupling," and its core meaning remains selective and gradual "decoupling." The ultimate goal is still the "de-Chinaization" of industrial chains. The resulting trade conflicts will exhibit characteristics of normalization, complexity, and generalization.

(4)Continued Expansion of the Differentiation Effect of Technological Competition on the International Economic Order

Currently, with the deepened development of the new round of technological revolution and industrial transformation, emerging technologies represented by 5G, artificial intelligence, and quantum communication continue to make new progress. Particularly, various disruptive technologies continue to emerge, and the role of science and technology as the primary productive force is becoming more prominent. This has brought about significant changes and profound impacts on the development of social productive forces and the enhancement of labor productivity. The leverage effect of technology on economic and social development continues to strengthen.

In the Fourth Industrial Revolution, the focus of strategic competition among major powers has shifted from traditional finished products to the technological commanding heights and key nodes of industrial chains. The disruptive, rapidly iterative, and emergent characteristics of new technologies themselves have attracted increasing attention. While developed economies have already taken the lead in relevant technologies, gradually phasing out old-generation networks, and adopting advanced technologies such as 5G, low-income countries are still using 2G and 3G networks. The least developed countries are still striving to catch up with first and second-generation technologies. The technological gap and digital divide continue to widen, further exacerbating the vulnerability of developing countries.

3. The "Chinese Plan" in the reconstruction of international economic order

 At a time when the international economic order is in trouble, China is also facing great challenges. It is more important than ever to achieve global economic governance based on equality, guided by openness, driven by cooperation and aimed at sharing. In the medium and long term, maintaining the basic stability of relations among major powers serves the fundamental interests of the vast majority of countries in the world. In particular, in the context of increasing global security challenges and significantly increasing uncertainties, China-US relations are more open than the traditional zero-sum game.

The "disordered era" will create opportunities for "vertical and horizontal alliance." The international community has seen a steady, innovative, open, confident and cohesive China. It is more optimistic about the huge potential of China's economic and social development, and expects that China's high-quality development will bring more opportunities to the world.

"Anti-globalization" is only a process of policy trial and error in the current "changes on a scale unseen in a century".  "No country can cope with the challenges facing mankind alone, and no country can retreat to a self-enclosed island." "China actively participates in the reform and construction of the global governance system, practices the global governance concept of extensive consultation, joint contribution and shared benefits, adheres to true multilateralism, promotes democracy in international relations, and promotes global governance towards a more just and equitable direction."

First, grasp the turbulent period of transformation in the international economic order, implement the concept of building a community with a shared future for mankind, and promote the establishment of an inclusive new international economic order. The foundation of this order lies in rational rules, not hegemonic power. With the end of the traditional great powers' unparalleled advantages and the collective rise of emerging countries, changes in the evolving landscape will exert pressure on the existing order, disrupting the stable structure within the system and opening windows of opportunity for innovative development. China's proposals and initiatives, such as the "Belt and Road" Initiative, global security initiative, global development initiative, global civilization initiative, and the latest proposal for global AI governance (six major initiatives), represent efforts to meet the international governance challenges, the need for international economic and trade cooperation, the threat of war, development obstacles, cultural conflicts, and AI risk management faced by human society at this stage. China aims to provide a Chinese solution for the future of the people of all countries around the world.

Secondly, China is currently in a crucial period of accelerating the transition of old and new driving forces. As a vital engine for global economic development, China's economic resilience will contribute certainty to the world. From 1950 to 1979, China's economy grew at an average annual rate exceeding 6%. Over the past 40 years since 1980, China's average economic growth rate has reached 9%, which is 5.6 percentage points higher than the average world economic growth rate during the same period. In the years 2009 and 2020, when the world economy suffered huge shocks and entered recession, China's economy grew against the trend. In 2009, China's economic growth rate was 9.2%, bringing brightness to the recession-hit world economy; in 2020, despite the impact of the COVID-19 pandemic, China's economy still grew by 2.3%, becoming the only major economy in the world to achieve positive economic growth. In 2023, China's gross domestic product (GDP) exceeded 126 trillion yuan, with a growth rate of 5.2%, 2.2 percentage points higher than 2022. In 2023, China's contribution to global economic growth exceeded 30%. The government work report of 2024 proposed a growth target of around 5%, showcasing the strong resilience, great potential, and vitality of the Chinese economy. This target not only exceeds the economic growth expectations for China set by the International Monetary Fund and the World Bank for this year but also far surpasses the International Monetary Fund's growth forecasts for the United States and Europe, implying enormous development opportunities.

Third, countries of the global South, including China, should further strengthen cooperation. China has made great efforts to support and safeguard the economic interests of the global South and promote the high-quality development of the global South’s cooperation mechanism. The countries of the global South are not core members of the Western Allies of the United States and are not at the center of the international power system. They share similar international circumstances, interest demands, development tasks and political views, forming the collective identity of the South. With regard to the restructuring of the international economic order, the global South advocate the establishment of a fair and equitable new international order based on the UN Charter and principles, for the purpose of the practice of genuine multilateralism, and the realization of equality, co-governance and win-win cooperation. In the field of global economic governance, the global South faces greater vulnerability than Western countries. The core aspiration of them is to seek common development, safeguard the principle of common but differentiated responsibilities, and promote the development of the global economic governance system in a more just and reasonable direction. In the international economic field, the global South advocate the concept of open, inclusive, mutually beneficial and win-win cooperation, uphold multilateralism and fair trade, address challenges through reform and improvement of international cooperation mechanisms, and build an open world economy. In the new era, emerging countries such as China, India, Brazil, Turkey and Indonesia have begun to rise, especially the BRICS countries such as China and Russia and their expansion and the development of the Asian Infrastructure Investment Bank, as well as the trend of "de-hegemony of the dollar" caused by the irresponsibility of the United States, which not only promotes the adjustment of the global economic pattern, but also enhances the overall strength and international status of the global South. As an important member of the global South, China has always shared a common destiny with other developing countries, and can share its own development experience with the South, promote South-South cooperation in political, economic, scientific and technological fields, provide meaningful assistance and support, jointly address global risks and challenges, and make important contributions to improving the current international economic order, Promote prosperity and progress in the world.

Finally, it must be pointed out that the United Nations General Assembly has adopted more than 20 resolutions demanding the United States to lift the economic embargo against Cuba, which the United States has roguishly failed to implement. We call on this Forum to issue a consensus declaration to sternly condemn the evil act of the United States that undermines the UN Charter, democratization of the international economy and the international economic order.

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Cheng Enfu and Xinning Zhang
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