CCG Book: The Ebb and Flow of Globalization
December 12 , 2022Editor’s Note: The Ebb and Flow of Globalization is the fifth book in the “China and Globalization” series. This series seeks to create a balanced global perspective by gathering the views of highly influential policy scholars, practitioners, and opinion leaders from China and around the world.
The Ebb and Flow of Globalization: Chinese Perspectives on China’s Development and Role in the World
Author: Huiyao Wang
Published in August, 2022
ISBN: 978-981-16-9253-6
Publisher: Springer Nature Publishing Group
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Dr. Henry Huiyao Wang is Founder and President of Center for China and Globalization (CCG), a think tank ranked among top 100 think tanks in the world. He is also Dean of the Institute of Development Studies of Southwestern University of Finance and Economics of China, Vice Chairman of China Association for International Cooperation, and Director of Chinese People’s Institute of Foreign Affairs. He is currently a Steering Committee Member of the Paris Peace Forum and an Advisory Board Member of Duke Kunshan University. He pursued his Ph.D. studies at University of Western Ontario and University of Manchester. He was Senior Fellow at Harvard Kennedy School and Visiting Fellow of Brookings Institute, and an adjunct professor at Peking University. In addition to its top ranking as a world think tank, CCG is also the only non-governmental Chinese think tank that has been granted special consultative status by the United Nations.
The Ebb and Flow of Globalization focuses on globalization and China’s evolving role in the world. The essays in the book center on three interconnected themes – China’s remarkable development under its policy of Reform and Opening-up, China’s deepening integration into the global economy and rise in an increasingly multipolar world, and the quest to reinvigorate global governance and multilateralism to address the pressing global challenges of the 21st century.
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Content
Introduction: The Journey of Reform and Opening-Up
PART 1 VECTORS OF CHINA’S GLOBALIZATION
Chapter 1 China’s evolving role in trade and investment
1.Foreign Investment Law will lift opening-up to a new level
2.Rising FDI reflects China’s openness and improved business environment
3.China rises from “Special Economic Zones” to anchor of the global economy
4.CIIE marks a new economic era
5.A trinity of growth drivers for the post-pandemic era
6.How creating a better business environment can boost foreign investment in China
7.From moderate prosperity to modern society
8.’Consultative democracy’ a key part of China’s approach to democracy
9.Effectiveness of Chinese democracy: meritocracy, market democracy and technocracy
Chapter 2 The rise of Chinese multinationals
10.Partnering for success
11.Smarten up and take the lead
Chapter 3 Education, talent and cultural ties
12.Gaokao resumption was the start of a new era
13.Chinese universities need to attract more foreign students, but not by treating them differently
14.How to encourage the flow of Hong Kong’s youth, talent and innovation across the Greater Bay Area
15.China is running the world’s largest tourism deficit. How can it plug the gap?
16.Building a global talent hub for China’s future development
PART 2 CHINA’S RISE IN A MULTIPOLAR WORLD
Chapter 4 Reflections on the changing international order
17.We should focus on real threats, not illusory ones
18.Beyond “Westlessness”: Building a more inclusive order for the new decade
19.How COVID-19 will reinforce trends shaping the international order
Chapter 5 Chinese diplomacy in a changing world
20.Challenging times, creative efforts – Highlights of Chinese diplomacy in 2018
21.Building a shared future for all – Highlights of Chinese diplomacy in 2019
22.Highlights of China’s diplomacy for the post-pandemic world
23.Creating a new Chinese narrative in the global arena
Chapter 6 China-US relations in flux
24.China-US relations at 40: Different dreams, shared future
25.Instead of US-China decoupling, the new decade should bring acceptance of different development models
26.US and China should seek a truce in tech Cold War
27.How Biden could improve US-China relations
28.Sino-US competition need not entail conflict
29.“Climate Superpowers?” Why the Cold War is the wrong analogy for our heating planet
Chapter 7 China’s role in a rising, more integrated Asia
30.Dawn of the Asian Century
31.New chapter in China-Japan relations can drive Asian integration
32.Can China and India overcome their Himalayan differences to benefit Asia?
33.India, China must look to the future
34.From the Syrian civil war to Yemen to energy, China has a larger role to play in the Middle East
35.The two sides of Asia: China’s economic priorities vs the US’ focus on security
Chapter 8 China-EU relations
36.Transcending “us versus them”: China-EU relations in a changing era
37.China and EU can boost cooperation on digital economy
38.China, a land of opportunity for EU firms willing to adapt
39.EU deal is a milestone for China’s globalization that can help build a new world economic order
40.Germany as a mediating power
41.Looking back at and beyond the Merkel era
PART 3 REINVIGORATING MULTILATERALISM
Chapter 9 Global challenges and joint solutions
42.China can be the unifier the world needs to tackle environmental crisis
43.No country is an island in the climate crisis
44.Embracing the green spirit
45.Cooperation is the core of humanity’s immune system
46.COVID-19 is a call for a resilient globalization
Chapter 10 Finding a way forward for free trade
47.From confrontation to cooperation: How to manage the next era of globalization
48.Why China should lead the mission to save the ailing WTO and revive multilateralism
49.The WTO can be an institutional catalyst for post-pandemic recovery
50.How China’s economic heft can reshape the WTO and global trade for the better
51.A transpacific window of opportunity
52.China should seize the day and join the CPTPP to promote a more integrated trading order in Asia
53.China should join the trade deal the US abandoned
54.RCEP’s synergy with China’s economic strategy bodes well for Asia-Pacific
Chapter 11 Evolution of the Belt and Road
55.Spurring global cooperation and development through the Belt and Road
56.AIIB can be a key benchmark for the BRI
57.Redefining the BRI as a global growth project
58.How the China-led AIIB can expand its remit to build a greener, more inclusive post-pandemic world
59.Build back better vs Belt and Road: to improve infrastructure, competition must yield to cooperation
The three broad storylines covered in these three parts—China’s domestic reforms, it’s rising international role, and the evolution of global governance—are not only major themes of this book, but have also shaped my own career and life trajectory. So, before we get onto a more detailed description of the aims and contents of this book, please allow me a short personal detour that will also serve as a brief account of China’s transformation in the reform era, leading up to the birth of our think tank and our work on China and globalization in the twenty-first century. Let’s start from the journey of reform and opening-up.
Introduction: The Journey of Reform and Opening-Up
The writings collected together in this book center on three interconnected themes—unfolding stories with global significance that also constitute the main threads of CCG’s work.
The first theme, covered in Part I, is China’s remarkable development under the Reform and Opening-up policy, a process that began in the late 1970s and continues to this day. Over the course of four decades, these reforms have radically changed China’s economy and society, reshaped its cities, and helped raise living standards for citizens across the country.
The launch of Reform and Opening-up also set the scene for the second theme of this book: China’s deepening integration into the global economy and rise on the world stage. In four decades, China went from being a poor and isolated developing country to become the world’s second-largest economy and the leading driver of global growth. As will be discussed in this book, not only has China’s relative economic weight grown, but its role in the global economy has also changed. Previously, China was known as the “factory of the world” for its prowess in manufacturing and exports. Today, while China remains the world’s leading exporter, it is the nation’s role as a major import market and source of outbound investment that is ever more salient. As will be discussed in Part II, with its growing economic heft and the “go global” movement of its companies, China’s overseas interests and foreign relations have become ever deeper and more multifaceted, calling for Chinese diplomacy to broaden in scope and adopt new tools to achieve its aims.
China’s rise—part of a broader geopolitical shift toward a more multipolar world—is closely linked to the third theme of this book, covered in Part III: the evolution of global governance. The international order created in the aftermath of World War II has done much to underpin global peace and prosperity over the past 75 years. However, this multilateral system is increasingly under strain as it has failed to adapt and evolve in light of fundamental shifts such as the rise of developing countries, major changes in the global economy, and the growing importance of transnational threats. In the period covered by this book, these tensions have come to the fore as never before and the resulting frictions between countries have cast a shadow over the global economy. However, this period also saw the birth of new forms of international cooperation and innovations in global governance, particularly at the regional level, that offer hope and guidance for the quest to revive multilateralism.
These three broad storylines—China’s domestic reforms, it’s rising international role, and the evolution of global governance—are not only major themes of this book, but have also shaped my own career and life trajectory. So, before we get onto a more detailed description of the aims and contents of this book, please allow me a short personal detour that will also serve as a brief account of China’s transformation in the reform era, leading up to the birth of our think tank and our work on China and globalization in the twenty-first century.
Growing Up in Parallel with Reform and Opening-Up
On a personal level, the course of China’s Reform and Opening-up process and its gradual integration into the global economy have had a profound impact on my own career path, as key policy decisions and international events intersected with my life journey at several critical junctures.
I was born in 1958 in Chengdu, capital of the vast, mountain-ringed province of Sichuan in western China. To the north and west lies the vast Tibetan Plateau, while going southward leads to the diverse border areas of Yunnan. Today, Chengdu is a global city connected to the outside world by high-speed railways and highways that cut through mountains and airlines that fly all over the globe. However, for much of China’s history, the region’s challenging terrain made Sichuan difficult to reach. Historically, while Sichuan was relatively remote compared to China’s major cities in the east, the province is steeped in rich cultural tradition and over the last few centuries and millennia has produced some of China’s most well-known intellectuals, poets, painters, and officials.
From an early age, I always felt a sense of excitement about travel and learning more about the outside world. My parents worked as engineers on China’s vast railway network, and I sometimes had the opportunity to travel around with them. Every time we were set to go north over the Qin Mountains—which mark the divide between the drainage basins of the Yangtze and Yellow River systems and serve as a kind of natural boundary between North and South China—I would become so excited at the prospect of overcoming this barrier to see the world outside that I could not sleep at night.
The other way I traveled was through books. My mother, who came from a scholarly family, put a high value on reading and always tried to provide us with enriching books to read. In middle school, I had a lot of older friends that would lend me books from foreign countries that were not widely available at the time. I immersed myself in books, which helped to spark my curiosity about the wider world and broaden my horizons, although this passion did also get me into trouble once when I was disciplined at junior high for reading books that were banned.
After two years of high school, at the age of 17, like many people my age from urban areas across China, I was sent to live in a village as part of the “down to the countryside” movement. I lived in a thatched hut next to a pigsty in a village 30 km from Chengdu, spending almost a year and a half as a farm laborer.
While the living conditions were tough, reading continued to be a great solace to me. I spent dozens of yuan a year to subscribe to newspapers and magazines, including the “Reference Times” (Cankao Xiaoxi), which was quite an extravagance considering how scarce money was at the time. The hut I stayed in was dark inside, so I made a hole in the roof and installed a piece of glass to let sunlight in so I could read during the day. At night, to extend my reading time, I picked the wick of my lamp down to a few threads to conserve the half-catty of kerosene we had for each month. I also listened to news from China and around the world on the radio. Looking back, my curiosity for the wider world is captured in the last two lines of a poem I wrote at the time, which read: “Though I stay in this cold room, the wind and clouds of the world fill my chest.”
A New Dawn Breaks as the Gaokao Returns
On the evening of October 12, 1977, over the village broadcast system I heard the news that would change my life and the fate of the country forever. After a full day of hard work in the fields, I stayed at home reading by kerosene lamp. Then, I heard from the loudspeaker an announcement with the stirring news that the gaokao examination would be restored in December. I was full of excitement and hope as I saw a glimpse of my future and brighter hopes for China.
The modern gaokao examination, under which aspiring undergraduates take a unified national examination to enter university, was introduced in 1952. When I heard the announcement, the examination had been discontinued for a decade, meaning that a generation of young people had missed out on the opportunity to go to college.
Today, the gaokao is the be-all and end-all of any young student’s life, a defining moment that is seen to shape one’s life prospects more than any other. However, for me at the age of 19, the gaokao had already become a distant and irrelevant word. After the examination was suspended in 1966, it was replaced by a college admission policy that relied solely on recommendation. That meant only workers, farmers, and soldiers were selected to attend college, irrespective of academic achievement.
However, after Chairman Mao died, political winds were changing in Beijing. Deng Xiaoping had returned to the political scene and had taken charge of science and education, which he saw as crucial to the future of China. At a symposium on science and education in August 1977, he successfully pushed to resume the gaokao examination.
The news soon swept the country like a fever. I was so excited, knowing that it was an opportunity to change my life. While I had suspected that the gaokao would be revived sooner or later from following the news and picking up on political currents at the time, none of us really knew when it would happen. Prior to the announcement, I could not understand why people across the world were trying to move from rural areas to cities for better lives, but “sent-down youth” (zhiqing) like me were moving in the opposite direction. The resumption of the gaokao was a sign that China was changing course for the better.
Looking back, it is difficult to overstate the impact that the news about the resumption of the gaokao had at the time. As well as giving a generation of lucky students the chance to go to university again, it also signified the restoration of a merit-based system that reinforced people’s faith in the power of knowledge and their respect for talent. Later in life, these values would go on to become central themes of my career and research at CCG.
The 1977 gaokao is also notable because it was held in winter and had the lowest acceptance rate since 1952. Around 5.7 million candidates participated but just 5% of examinees were granted places at colleges, compared with around three-quarters today. In addition to having passed highly competitive examinations, this bright and motivated group was also more diverse than the current cohort of college students. There were over 10 years of accumulated students who wanted to try and gain a place at college, so many were older and had had difficult experiences during the Cultural Revolution. They came from different family backgrounds, ages, and social classes; and from farmlands, factories, and barracks. A high proportion were the children of farmers.
The next spring, I was among the 270,000 lucky winners whose dream of being admitted to a university came true.
Today, those lucky students who started university between 1977 and 1979 are known as the xinsanjie or “new three classes” of students. The xinsanjie can also be called the generation of China’s Reform and Opening-up policies, because their fates turned out to be closely linked with this historic turning point. They witnessed, experienced, and implemented China’s Reform and Opening-up and helped to safeguard its achievements and progress. Emerging from adolescence in a volatile period, many of this group went on to play prominent roles in various walks of life and form the backbone of culture, politics, and business in China, including a raft of successful entrepreneurs and government officials such as Premier Li Keqiang, who took the gaokao the same year as me and went on to study law at Peking University.
Off to College: New Language, New Horizons
Growing up in Sichuan in the 1970s, English was an unfamiliar language spoken by very few people. When a foreign expert once came to give a lecture in Chengdu, people found it incredibly unusual and crowded around. However, some of my friends had started to learn foreign languages by listening to broadcasts of foreign language lectures, and this stimulated my courses in after hearing news of the gaokao resumption I had initially planned to take courses in science and technology, but just 20 days before the examination I decided to shift to English instead. It was a decision that would have a huge impact on my life.
Eventually, I was accepted to the English and American Literature Department of the Guangzhou Foreign Language Institute. So, on a spring day of 1978, I hopped onto the train going southward from Chengdu. It took three days and two nights to travel across half of China to reach Guangdong—a province at the forefront of Reform and Opening-up.
An intense academic atmosphere pervaded the school as top-ranking students around me cherished the opportunity to study. I studied late into the night and would be woken early each morning by the sound of my fellow classmates yakking in English, German, and Japanese. The school had a foreign language library where I would pour over newly arrived English-language publications such as Time magazine.
It was not just in the classroom and library that opened my eyes to the outside world. Guangzhou was a different world from the one I had left at home. Guangdong Province has long been a gateway for trade and interaction between China and the outside world. It continued to be a forerunner in the reform era, playing host to the China Import and Export Fair and an increasing number of foreigners who began to arrive in the country. In Guangzhou, I encountered students who had tape recorders and played albums by Teresa Tang and other singers from Hong Kong and Taiwan. Students would dance to this fresh-sounding music on campus. Fashion was changing too, as bell-bottoms became all the rage.
Not far from Guangzhou, to the south across the other side of the Pearl River Delta, the small city of Shenzhen was soon to be transformed into a launchpad for China’s Reform and Opening-up as it was made into the nation’s first special economic zone. Recognizing that China needed to be flexible and adaptive, Deng Xiaoping famously said that the nation needed to experiment with many policies to see what worked— “crossing the river by feeling for stones.” The Pearl River Delta was a testbed for these policy experiments and continues to be a vanguard of opening-up to this day, with Shenzhen having been long since transformed from a small fishing town into a hub of high-tech research and development.
As I threw myself into studies in Guangzhou, major changes were unfolding in Beijing. In December 1978, the historic third plenary session of the 11th Central Committee of the Communist Party of China had formally endorsed Reform and Opening-up, paving the way for reforms that would transform China’s economy and society over the coming decades.
One day in 1979, I was walking into the school cafeteria as usual and was happily surprised when I heard the news on the school loudspeaker that China had established diplomatic relations with the US. I soon realized it was a clear signal of China’s path toward opening-up and had a strong sense that things were going to change significantly. Originally, when I chose to major in English and American literature, there were still some doubts in my mind as to whether these subjects would be the most useful thing to study. The news about America came as a most welcome validation of my hopes that learning English would be useful and that maybe one day I would be involved in the turning tides of history.
Into Government: Early Glimpses of China’s Burgeoning Commercial Relations
When I finished college in the early 1980s, jobs were still assigned to fresh graduates by the government. However, I had my heart set on joining the Ministry of Foreign Affairs, and so to the surprise of my classmates, I took the train to Beijing by myself to inquire whether the Ministry had plans to recruit recent graduates. In the end, this avenue proved to be closed, but eventually I landed a job in the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), now known as the Ministry of Commerce.
At the time, Reform and Opening-up policies were opening new doors to economic cooperation with the outside world and in the business bureau at MOFTEC I had the chance to learn about China’s burgeoning international commercial relations. After work, I read and translated books on foreign trade and investment to build up my expertise, one of which was the Guide to Contracting Projects in Developing Countries published by the United Nations. By a twist of fate, it turned out that this book would open up new opportunities for me.
This was a period when multilateral institutions were beginning to engage more with China. On one occasion, World Bank representatives came to MOFTEC to brief Chinese experts and officials on the bank’s projects. I was given the chance to interpret, and because the subject matter turned out to be very close to that dealt with in the UN publication I had translated, I was familiar with the terminology and able to interpret well enough to facilitate a free-flowing exchange between World Bank officials and the audience. After that, I was assigned to interpret for the remaining days of the lecture course too. This was a big break for me and allowed me more exposure to fascinating exchanges and negotiations that were going on inside MOFTEC at the time. This included work supporting the early phases of Chinese companies “going global” such as foreign contracting and labor cooperation and working on bids for projects in various regions such as the Middle East. During that time, I also participated in drafting a report on China’s foreign contracted projects and labor cooperation, which was approved by the then general secretary of the CPC Central Committee Hu Yaobang and implemented throughout the country. Feeling the importance of the great responsibility thrust upon us, I was encouraged to work harder.
It was a fascinating time to work in MOFTEC, at the forefront of China’s deepening economic relations in the early stages of Reform and Opening-up. But it also made me aware of gaps in my understanding of modern economics and trade and eager to learn more about international business. I decided to give up my stable “iron rice bowl” from working in government and in 1984 went to Canada to pursue an MBA, at a time when few people in China knew what an MBA was.
Early Forays Overseas
During this period, more Chinese were starting to go abroad to study, but the numbers were still tiny—especially compared to today. The decision to send students abroad to study was the other momentous decision that Deng Xiaoping had made in 1978 along with the decision to resume the gaokao examination. Deng felt this move would be a vital part of Reform and Opening-up. Before that, you would be hard-pressed to find a single Chinese student that went overseas to study. Today, China has become the largest source of international students, with 703,500 Chinese students studying overseas in 2019.
When I went to do an MBA in Toronto, I found that I was one of the few Chinese people in my school. My classmates knew next to nothing about China and would ask me questions like whether China had aircraft or electric lights yet. In general, Westerners tended to see China through a rather distorted lens and lacked any understanding of my motherland, so I took the initiative to hold a discussion to introduce China and how to do business there. It was an early experience of trying to bridge cultural gaps and overcome misunderstandings, something that remains central to my work to this day.
After pursuing my MBA and Ph.D. studies in Business Administration, I went on to serve in a number of roles that would turn out to be useful experiences for my future work with CCG. This included becoming the only person from mainland China working in a large engineering consulting firm of 6,000 employees and later representing the Quebec government in Hong Kong as chief commercial and economic counselor. In the latter role, I worked to promote economic cooperation between Quebec and China in areas such as hydroelectricity and communications, supporting a company from Quebec to become the first foreign company to participate in the massive Three Gorges Dam.
Returnees and China’s Development
In the late 1980s and early 1990s, many changes took place at home and abroad—the demise of the Soviet Union, upheaval in Eastern Europe, and the receding of socialist movements around the world. These developments cast a shadow over prospects for socialism. The road to Reform and Opening-up seemed littered with obstacles.
In January 1992, 87-year-old Deng Xiaoping again traveled southward, speaking with regional leaders regarding the destiny of socialism in China. The speeches Deng made during this tour spurred the nation and its people to devote themselves once again to the program of Reform and Opening-up. “If you wish to make greater contributions to the nation, you’d better come back from overseas,” he said.
I was touched by Deng’s words and knew that China’s development could not be pushed forward without cooperation with the outside world. In 1993, the Chinese government launched a policy to support studying abroad and encouraged the return of those that had gained experience overseas. A large number of individuals with overseas experience would be needed to bridge China and the world. I hoped that I could be a pioneer among them.
So in the mid-1990s, I returned to China to become a private entrepreneur. Deep in my heart, I believe that everyone should try and launch their own endeavor at least once in their lifetime. Regardless of whether the outcome is success or failure, the entrepreneurial experience can open up new horizons and new worlds in which one gets a chance to try and fully realize his or her potential.
Chinese entrepreneurs that returned from overseas to do business have made considerable contributions to the nation’s development. From 1978 to 2007, 1.21 million Chinese scholars went to study abroad and 319,700 returned to China. These returnees have started numerous high-tech firms and been a major driving force behind China’s entrepreneurial movement, starting businesses in many sectors including technology, the Internet, telecommunications, and media.
However, when I returned to China in the mid-1990s, the environment to support returnee entrepreneurship was still underdeveloped, so I mainly had to rely on my own initiative to launch new business ventures. With savings from my work overseas I rented a room at the Friendship Hotel, which served as my both living space and office, and engaged in various business ventures related to international cooperation and attracting foreign investment.
To get to know more people with common interests, I joined the Western Returned Scholars Association (WRSA), the largest platform established by Chinese overseas returnees. Later, I proposed setting up the WRSA Chamber of Commerce and was nominated as the founding president. In my opinion, a sound society should be jointly supported by the government, enterprises, and organizations, which are all deeply interconnected. Entrepreneurs are not just the heads of their companies but also a driving force for social development.
It was an exciting time to be doing business as a returnee in China, especially as the country’s integration into the global economy accelerated after 2001 when China joined the WTO. Given China’s centrality in today’s global economy, it is easy to forget what an arduous process it was to overhaul China’s legacy command economy to join the WTO. Accession negotiations had taken 15 years—longer than those to form the organization itself. To adapt to WTO commitments, China’s central government modified more than 2,300 national laws and regulations, while a further 190,000 were modified or canceled at the local level. Trade-weighted average tariffs fell from 32.2% in 1992 to 7.7% by 2002, falling further to an average of 4.8% between 2003 and 2017, according to the World Bank. Institutions were reformed, and China enhanced protection of intellectual property rights, an ongoing process that would eventually lead to the creation of dedicated IP courts in Beijing, Shanghai, and Guangzhou, as well as special judicial organs in 15 intermediate courts.
These changes opened China’s economy to the world and spurred a period of miraculous growth. In 2001, China’s GDP was less than Italy’s and ranked only eighth in the world. Today, China is the world’s second-largest economy and the world’s largest trading nation. Over the past 20 years, China has seen its exports grow sevenfold and imports rise sixfold. The country now accounts for 12% of global trade and is the largest trading partner of over 120 countries. Meanwhile, China’s share of global service exports has doubled from 3% in 2005 to 6% in 2020, while its share of service imports has grown even more impressively, from 3.3% in 2005 to 8% in 2020.
The Birth of CCG and the Rise of “New Style Chinese Think Tanks”
I had been a part-time professor at the Guanghua School of Management of Peking University for three years, teaching international business management. During that period, I felt that China’s market system was developing well and private enterprises were springing up like bamboo shoots after the spring rain. China’s development and integration into the global economy had been turbocharged by entry to the WTO, and the number of issues that policymakers had to grapple with was multiplying as China’s economy and society became increasingly complex.
However, at the time, there were few think tanks focusing on policy studies, especially private think tanks not under government institutions. This gave me the idea to launch a non-governmental think tank that could bring global insights to China and also help to share Chinese perspectives with the rest of the world. So, in 2008, with my wife Dr. Miao Lü, I set up the Center for China and Globalization (CCG) in Beijing. The research focus of the think tanks was issues related to China and globalization, including global governance, international relations, and the internationalization of talent and enterprises.
2008 turned out to be a momentous year in international affairs. The global financial crisis hit and caused huge economic fallout across the globe. It was also the year of the Beijing Olympics, which served as a celebration of China’s rise on the world stage after a remarkable three decades of growth and transformation under Reform and Opening-up.
Over the next decade, CCG continued to grow and develop, conducting in-depth research on various aspects of China’s globalization process, providing suggestions to policymakers both in China and abroad, and acting as a bridge between China and the rest of the world.
CCG’s development was aided by favorable tailwinds in Beijing. Since the 18th Party Congress, the government began paying more attention to think tanks as an important mechanism to provide information and advice to help policymakers make the right decisions. In 2014, President Xi Jinping called to develop a “new type” of think tank with Chinese characteristics to promote China’s modernization and governance. China’s public policy research community has generally been dominated by large state-run research institutes, but in the period since CCG was established, bureaucratically and financially independent think tanks have come to play a more prominent role.
Not only was the operating model of CCG as a non-governmental think tank new for China, but the topic we focused on was also relatively novel. When CCG was established in 2008, “globalization” was yet to become a widely accepted concept in China. Some Chinese viewed globalization as a rather double-edged sword or even another label for “Americanization.” However, over the next decade, China’s senior leadership and its people were to fully embrace globalization and increasingly recognize the benefits of free trade, cross-border investment, and global cooperation. Unfortunately, China’s embrace of globalization was not mirrored in every country. Globalization would face increasing resistance, particularly in the industrialized nations that had shaped the process during the twentieth century.
Globalization Under Fire
The 2008 global financial crisis had far-reaching implications for global integration, leading to a period of what Dutch trendwatcher Adjiedj Bakas later dubbed “slow-balization.” The crisis was a huge shock for banks, and many became more reluctant to finance trade. Meanwhile, the global rise of multinational firms stalled as foreign direct investment (FDI) fell from 3.5% of world GDP in 2007 to 1.3% in 2018.
Perhaps, even more significant was the political fallout from the financial crisis. The recession compounded decades of wage stagnation among blue-collar workers in industrialized countries. Discontent arising from economic hardship and a sense of being “left behind” was whipped up by opportunistic politicians pointing the finger at free trade and emerging economies such as China, leading to a rise of anti-globalization sentiment. The post-crash period was marked by rising populism and protectionism in OECD countries, ultimately contributing to such political earthquakes such as the election of Donald Trump and the Brexit vote in the UK.
Moving into the period covered by the articles in this book, under President Trump, the US opted for an “America First” path that saw Washington veer toward protectionism and unilateralism, undermining the very international order it helped create. Our system of global governance came under increasing strain, in no small part because it had failed to adapt to fundamental long-term shifts such as the rise of developing countries, the evolution of the global economy, and the growing importance of transnational threats. For example, with the failure of the Doha Round, major negotiations to upgrade the WTO effectively ground to a halt, leaving the main rules that governed global trade largely unchanged since 1995. The organization was dealt another blow as its dispute settlement mechanism became paralyzed in late 2019 following Washington’s refusal to appoint new judges to its Appellate Body.
COVID-19 should have been a chance for global governance to shine and reinvigorate itself. Pandemics are a prime example of a transnational threat that no country can solve alone. Unfortunately, rather than proving the worth and relevance of multilateralism, the pandemic and our failure to mount an effective international response did more to expose the fractures and fragilities in our current system of global governance.
The pandemic once again inflamed debate about the future of globalization. Even before the outbreak, rising protectionism and the China-US trade war had led some to question the wisdom of open borders and long, multistep supply chains. However, far from sounding a death knell for globalization, in many ways, the pandemic would only serve to underscore its enduring importance and the growing need for global cooperation.
An Irresistible Force
Globalization can be thought of as an ongoing process through which different parts of the world become ever more interlinked and interdependent. By this definition, when viewed over the long term, it is an almost irresistible force driven by myriad factors including ecological processes, technological progress, and even human nature. Advances in technology continuously bring down the costs of communications and transport, opening new possibilities for interactions across the globe. At the individual level, history has shown over and over again that when humans have the means and opportunity, they venture overseas in search of new experiences, opportunities, ideas, and commodities.
Some might see COVID-19 as a major challenge to globalization, but from another perspective, the pandemic has underscored the rising importance of “ecological globalization” which refers to interdependence resulting from physical or biological processes, such as climate change, marine pollution, and pandemics.
Meanwhile, even though the pandemic temporarily interrupted physical flows of goods and people around the world, it accelerated digitally mediated forms of globalization such as cross-border e-commerce and online international exchange such as business meetings, academic conferences, and global summits. Cross-border data flows soared in 2020 as work, play, and education shifted online. International Internet traffic surged 48% from mid-2019 to mid-2020 according to data from TeleGeography. More recently, the revival of global trade in the first half of 2021 has firmly demonstrated both the resilience and momentum of globalization. By April 2021, the global order book for enormous container ships had risen to over 15% of the existing fleet, up from 9% in October 2020.
Whether we look at its economic, ecological, or digital forms—like it or not, globalization is here to stay. Trying to reverse globalization is like trying to turn back time; we cannot stem the tide of global integration any more than we can uninvent smartphones or build barriers to somehow isolate the atmosphere of individual countries.
A Process that Must Be Managed for the Good of All
While globalization is inevitable, watching the world change around me with my own eyes has also given me the firm belief it can be a major force for good in the world. My experiences at home and abroad, from witnessing the transformation of China since the launch of Reform and Opening-up, to the positive impact that globalization has had on development for many countries I have visited, and the benefits that accrue to organizations, research teams, and companies that combine talent and resources from around the world—these have all shown me the benefits that globalization can have.
Clearly, globalization can also have serious downsides and negative impacts, which have contributed to the pushback against free trade and international institutions discussed above. Yet, I believe that in most cases where globalization is perceived to have caused harm—whether that is economic, social, or environmental in nature—the problem is not globalization per se, but rather has more to do with how globalization has been managed (or not) and whether the interests and voices of particular stakeholders have been neglected.
If we look at the big picture, globalization creates net gains for humankind. However, as with any wide-reaching economic shift, it creates both winners and losers. Making globalization work for all requires that we take an active and inclusive approach to managing the process, ensuring that all can share in its benefits while working together to address the costs and dislocations it causes. If we fail to do this, globalization will continue to face the kind of backlash we have seen in recent years, stymying global cooperation when we need it most. Domestic governance certainly has an important role in helping local communities adapt to globalization and tack- ling questions of equity and sustainability that may arise. However, in an increasingly interdependent world where the most serious challenges we face transcend borders, it is also crucial that global governance works effectively.
Unfortunately, the pandemic has shown our existing global institutions are ill- equipped to deal with the complex challenges we face in the twenty-first century because they have failed to keep up with important shifts in the global economy and geopolitical landscape.
Making Globalization Work for Our Multipolar World
One of the most striking deficits of our current model of globalization and global governance is that it is increasingly unrepresentative of the multipolar world we live in. The form of globalization that emerged after World War II has been dominated by institutions, norms, ideas, and perspectives shaped by a relatively small group of countries led by the US. It was designed for a world where power was highly concentrated, as reflected by the voting structures of bodies such as the UN Security Council, IMF, and World Bank.
These institutions that make up the postwar international order have played a huge role in promoting peace and prosperity across the globe over the past three- quarters of a century. However, they are out of sync with long-term structural trends, in particular the rise of developing countries. From economic outcomes to security and the environment, developing countries will exert a growing influence on global affairs. In our multipolar twenty-first century, no single country or narrow alliance will be able to dictate global norms and rules by itself.
Nowhere is the shift to multipolarity more evident than in the rise of Asia. By many measures, Asia’s economy is now bigger than the rest of the world combined, for the first time since the nineteenth century. If globalization is to fulfill its potential, our global governance frameworks must adapt to give developing countries a stronger voice in decision making, while harnessing the combined strengths of industrialized and emerging economies to work on global challenges.
China’s Role in Globalization
This brings us back to China. The country has benefitted enormously from participating in the current system of global governance. Embracing globalization and its institutions such as the WTO, IMF, and World Bank have spurred development and helped to transform the country.
Globalization has given China a lot, but China also has a lot to offer to globalization. Looking ahead, the nation will continue to be the leading engine for global growth for many years to come. As its influence grows, China has growing capabilities, and indeed a growing responsibility, to help address gaps in global governance and increase its contribution to global public goods. For many years, the reform of global governance has been held back by a lack of global leadership and consensus. China is well placed to help overcome this gridlock and galvanize international cooperation. As it transitions from being a developing nation into a developed one, China can help bridge the divides that have stalled reform as well as propose new global governance solutions of the post-pandemic era.
As the world’s most populous country, soon to be its largest economy, and the largest emitter of carbon dioxide, China has a major impact on almost any global issue one can think of. I strongly believe it is in the best interests of all parties that China plays a constructive role in globalization by continuing to open up to the global economy, helping to strengthen and reform global governance, and contributing to global public goods. If it does not, we will all be the worse off for it.
Unfortunately, in our current geopolitical atmosphere, in some quarters there is a reflexive tendency to resist any efforts for China to play an international role commensurate with its rising capabilities and responsibilities, and to cast suspicion on any new global initiatives that come from China. The trade war and pandemic have exacerbated this trend, and at present, it seems that the international debate about China’s rise and role in the world is becoming ever more heated, polarized, and distorted. This has fed misunderstandings and misperceptions on both sides, hindering cooperation on our shared challenges and fueling the re-emergence of an age-old narrative that conjures up an existential threat to the established order and divides the world into “us” versus “them.”
In some ways, it is quite understandable why people outside China should have difficulty grasping China’s unique developmental model. After all, the nation’s political and economic system is complex and radically different to anything that most people around the world are familiar with. Significant linguistic and cultural barriers do not make the job any easier. Compounding these difficulties, the picture of China that audiences get through the news is usually mediated and colored through editorial desks thousands of miles away.
The global media and communications environment which China faces has become more challenging in recent years. However, I think we must also recognize that Chinese voices have often failed to do an adequate job of engaging international audiences and explaining China’s development model. China needs to strengthen its ability to tell its story to the world, crafting narratives that are easier to understand and that resonate with the discursive style of the international community. This book is a small attempt to fill this gap.
CCG’s Mission and the Aim of This Book
Given the high stakes at hand—for stability, continued growth, and the future of our planet—it is more important than ever that China gains a deeper understanding of the rest of the world, and that the rest of the world also comes to a clearer understanding of China. Indeed, in retrospect, this has been a defining theme of my career in government, academia, and business, and continues today with my work at CCG.
Our think tank aims to provide a bridge for dialogue and mutual understanding between China and the outside world by sharing our research findings, organizing annual forums, hosting foreign diplomats and scholars for discussions with CCG experts at our Beijing headquarters, and conducting Track II diplomacy missions to the US and other countries. This kind of non-governmental exchange came to play a particularly important role during the period covered by this book as intergovernmental interaction between China and the US atrophied.
As the debate about China’s global role heats up, it has become more important to tell “China’s story” in a way that international audiences can understand, engage, and answer questions, and to share Chinese perspectives on the pressing issues of our times. This is a major part of CCG’s work and a central aim of this book: to share Chinese views and ideas on our nation’s development, its rise in the world, and its role in the future of global governance; to tell the story of what China is like today, where it has come from, and where we think it should go.
Contents of This Book
Having set the scene by recounting the story of China’s Reform and Opening-up, my own personal journey, and the birth of CCG, we now turn to the contents of the rest of this book.
The Ebb and Flow of Globalization is a collection of articles written during the period 2016 to 2021 on a range of topics related to China’s development and globalization. As discussed below, the articles are arranged thematically into relevant chapters, though readers will note that many of the articles touch on recurring ideas and common underlying trends that have shaped China’s development and globalization over this period. Broadly speaking, with a few exceptions, within each chapter, articles are sequenced chronologically to help readers track the unfolding of events over time.
Most of these articles originally appeared as opinion pieces in Chinese or inter- national media outlets. A few were first published as contributions to scholarly journals or international organizations such as the World Economic Forum. The articles appear here with only minor edits, mostly for style, brevity, clarity, and consistency. As such, each article represents a snapshot in time, and no doubt some of the views and ideas contained in the following pages could have been refined or developed with the benefit of hindsight. By preserving the articles in their original form, I hope this material will be of interest and provide a useful reference, sharing contemporaneous Chinese perspectives on key events that took place during this period of ups and downs in globalization. This collection of articles also serves to catalog policy proposals that CCG has made over this period based on our ongoing research and external engagement.
The book is divided into three parts, with 11 chapters in all. Each part focuses on a different aspect of CCG’s work and the story of China and globalization.
Part I Vectors of China’s Globalization focuses on domestic developments that have shaped different aspects of China’s integration into the rest of the world. These changes are tracked through three different “vectors” or components of China’s opening-up—cross-border flows of goods, capital, and people. Chapter 1 covers trade and investment, including the government’s ongoing efforts to improve China’s foreign investment environment, the continuing relevance of the nation’s SEZs, and its growing importance as an import market. Chapter 2 looks at the rise of Chinese multinational corporations, highlighting their remarkable achievements, the challenges they face, and offering suggestions on how they can overcome these hurdles. Chapter 3 focuses on the role of talent and cultural ties in China’s globalization, featuring issues such as the internationalization of China’s universities, steps to enhance talent mobility in the Greater Bay Area, and how China can attract more foreign tourists.
Part II China’s Rise in a Multipolar World takes a step back to look at China’s external relations in a changing world. Chapter 4 contains articles offering broad reflections on the changing international order, highlighting key “megatrends” which have been accelerated by the pandemic—such as increasing multipolarity and digitalization—which are reshaping the global context of China’s rise. Chapter 5 gives an overview of China’s diplomatic activities from 2018 to 2020, outlining the focal areas of China’s external engagement and the diplomatic tools it has developed such as summit diplomacy and new international platforms such as the BRI. The remaining chapters in Part II focus on China’s relations with key countries and regions. Chapter 6 looks at China’s most consequential bilateral relationship—the US—over a period that saw many twists and turns as the trade war unfolded. Chapter 7 looks at China’s relations in its own backyard of Asia. Moving to the other end of the Eurasian landmass, the last chapter of Part II looks at China-EU relations, which are increasingly multifaceted but also contentious (Chapter 8).
Part III Reinvigorating Multilateralism looks at the strains on our current system of global governance and identifies key areas for reform and innovation that will allow us to cooperate effectively and address the pressing global challenges of the twenty-first century. This starts with Chap. 9, which analyzes transnational challenges such as environmental degradation, climate change, and global pandemics that can only be overcome through joint efforts. Chapter 10 features articles on economic globalization, including the need to reform the WTO and the promise of new regional Free Trade Areas (FTAs) in the Asia-Pacific region. Finally, Chapter 11, the last chapter in this book, contains articles on the Belt and Road Initiative, including suggestions to ensure it can live up to its full potential as a global development plan.
