In 2014, despite general stability, the world experienced greater turbulence with rising hotspot issues, faster shifts in regional situation, intensified competition among major countries and divergent performance of different economies. The global architecture underwent complex and profound adjustment and transformation focusing on the goal of greater peace and development.

 

I. A New Round of Turbulence in Global Security

 

The crisis in Ukraine broke the relative tranquility Europe had been blessed with for decades. In early 2014, demonstrations in Ukraine escalated into violent clashes. The opposition took control of the parliament and formed a new government. President Yanukovych sought refuge in Russia. Crimea joined the Russian Federation after a referendum. Military conflicts broke out between government troops and local militants in South-Eastern Ukraine. Despite the signing of the Minsk ceasefire agreement mediated by relevant parties, the conflicts continued.

 

In the Middle East, the hotspot issues went through intricate shifts. Four years into turmoil, West Asia and North Africa remained unstable. All chemical weapons were shipped out of Syria. President Bashar al-Assad won reelection. As part of the international community’s continued effort to seek a political solution to the Syrian issue, the Geneva II International Conference on Syria was held, and the United Nations Security Council extended the authorization for the mechanism responsible for the delivery of humanitarian assistance to Syria until January 2016. On the Iranian nuclear issue, the P5+1 and Iran failed to reach a comprehensive agreement despite rounds of talks, and the deadline of the talks was extended to 30 June 2015. The Palestine-Israel peace talks remained in deadlock. Israel’s Operation Protective Edge resulted in mass casualties. The two sides were again locked in a tense stand-off. The United Nations designated 2014 as the International Year of Solidarity with the Palestinian People.

 

The instabilities led to the surge of extremist and terrorist forces. The “Islamic State” declared an Islamic caliphate covering eastern Syria and large swathes of western Iraq and urged Muslims around the world to join the jihad. It captured areas in Iraq and Syria, carried out genocide and executed American, British, French and other western hostages. The global counterterrorism campaign became increasingly challenging. The United States revamped its counterterrorism strategy and assembled an international coalition against terrorism with its allies in the West and the Middle East to launch military strikes against the “Islamic State”. The Iraqi government troops fought back and reclaimed some territories. Complicated by political, racial and sectarian issues in the Middle East, the fight against terrorism remained an uphill battle.

 

The Ebola outbreak turned into a global public health crisis. The epidemic swept Guinea, Sierra Leone and Liberia and spread into Nigeria, Senegal, the United States, Spain and Mali. The outbreak, which resulted in more cases and deaths than the combined numbers since the discovery of the virus back in 1976, was the most serious public health incident in the world in nearly 30 years. The international community responded forcefully to the disease. Countries raised the level of prevention and control, provided humanitarian aid to the three West African states and relevant international organizations and engaged in active diplomacy on epidemic prevention and control.

 

II. A New Round of Adjustment in Major-Country Relations

 

As a result of the crisis in Ukraine, US-Russia relations plunged to the lowest point since the end of the Cold War. The two countries engaged in fierce confrontation over the issue of sanctions. The United States led a boycott against the G8 Summit in Sochi and Russia’s G8 membership was suspended. Together with other western countries, the United States intensified sanctions on Russia, involving Russia’s energy, defense, finance and other sectors. US President Obama even listed Russia together with Ebola and extremism as the three biggest threats to the world. Russia, defiant of US pressure, adopted countermeasures to revitalize its economy and strengthen its military power.

 

Europe-Russia relations also came under the impact of the Ukrainian issue. The EU and major European countries such as the UK, France and Germany kept piling pressures on Russia and stepped up sanctions on Russia together with the United States, deepening the rift between Europe and Russia. That being said, Europe exercised greater restraint in dealing with Russia due to their geopolitical, economic and energy ties which are closer than those between Russia and the United States. Europe and Russia also tried to seek a solution through the Trilateral Contact Group on Ukraine and maintained diplomatic communication through ways such as high-level interactions.

 

Relations between the United States and Europe improved, though their interests were not fully aligned. The issue of Ukraine highlighted the need for stronger cooperation between the United States and Europe, which offered an opportunity to mend their ties strained by the Snowden incident and NSA surveillance. NATO adopted the Readiness Action Plan at its summit in Wales to strengthen rapid reaction forces and military presence in its eastern part. Negotiations on the Transatlantic Trade and Investment Partnership (TTIP) were expected to include an agreement on energy to create possibilities for Europe to import shale gas from the United States and reduce energy dependence on Russia. On the other hand, due to different levels of economic interdependence with Russia, the United States and Europe were divided in their stances on sanctions against Russia.

 

China steadily advanced relations with Russia, the United States and Europe. For the second year, President Xi Jinping chose Russia as the first destination of his overseas trip. President Putin visited China. The two presidents met five times in 2014. Progress was made in a number of important cooperation projects between the two countries. US President Obama visited China. After their Sunnylands meeting in 2013, President Xi and President Obama held in-depth evening discussions at Yingtai in Zhongnanhai Compound. The two sides reached important agreement on reciprocal visa arrangements, climate change, mutual confidence building mechanisms between the two militaries and other fields, achieving an early harvest in building the new model of major-country relationship between the two sides. China and the EU had frequent high-level exchanges, and their practical cooperation was extended to innovation. President Xi also visited India and Brazil. Solidarity, coordination and strategic communication between China and other BRICS countries was further strengthened.

 

III. A New Round of Divergence in the Global Economy

 

The global economy witnessed slow growth with uneven recovery in major economies. According to the IMF World Economic Outlook, “world growth is mediocre” and “the world economy is in the middle of a balancing act.” International institutions further lowered global growth forecast for 2014 and 2015 to 3.3% and 3.8% respectively.

 

Advanced economies continued to recover albeit at uneven pace. The US economic recovery picked up speed, with the growth rate rising to 5% in the third quarter and the unemployment rate falling to 5.8% in November. Other major economic indicators were also at their best in recent years. The Federal Reserve ended the six-year-long QE. President Obama stated confidently in his 2015 State of the Union Address that the United States has emerged from the recession. The EU continued to experience sluggish growth and unemployment rate remained above 10%. Lately, the European Central Bank announced the launch of a €1 trillion Quantitative Easing (QE) program. The European Commission put the growth forecast of the EU and the eurozone for the year at merely 1.3% and 0.8% respectively. In Japan, Abenomics failed to deliver its intended results amid economic fluctuations. And the IMF forecast puts Japan’s growth rate at 0.9% in 2014 and only 0.6% in 2015.

 

Emerging economies also grew at different speeds. China’s economy reached a “new normal”, as it was shifting from high to medium-high speed growth driven more by innovation than productive factors and investment. China continued to improve and upgrade its economic structure and remained one of the fastest-growing countries in the world. India’s economy, driven by its reform, population expansion and urbanization, registered a 5.5% growth in 2014 and was expected by some institutions to become the seventh largest economy in the world in 2015. Pounded by plummeting oil price and US and western sanctions, the Russian ruble fell by 41% against the US dollar and the inflation rate in Russia went over 10%. Russia’s central bank projected a 0.6% GDP growth in 2014. International credit ratings agencies downgraded Russia’s sovereign credit rating. Growth in Brazil was weak in 2014, standing at merely around 0.2%. In South Africa, trade deficit expanded and its currency stayed on a downward trajectory amid fluctuations. Its growth rate in 2014 was forecast to be 1.4%.

 

IV. A New Round of Transformation of the International System

 

The significance and role of G20 as the premier platform for global economic governance continued to grow. The G20 Brisbane summit set the goal to lift the GDP of the G20 countries by at least an additional 2% above the expected levels by 2018, adopted comprehensive growth strategies and the Brisbane Action Plan, which identified more than 1,000 measures to boost growth, and agreed to establish a Global Infrastructure Hub, sending a positive message of major economies coming together to promote strong, sustainable and balanced growth of the global economy. G20 members also openly urged the United States to ratify the IMF quota reform as quickly as possible to advance the reform of the international economic system.

 

Cooperation among BRICS countries made more concrete and solid progress. The BRICS summit in Fortaleza decided to establish the New Development Bank (NDB) and the Contingent Reserve Arrangement, providing strong support to the economic development of BRICS countries and other developing countries and greater resilience against financial risks. A new approach of equal contribution and quota will be adopted for the NDB, which reflects the principle of equality and mutual benefit of BRICS cooperation and creates a new format of assigning quota in international financial institutions. These two arrangements represent the exploration by developing countries to establish multilateral financial institutions on their own and serve as a useful complement to the existing international economic and financial mechanisms.

 

The global multilateral trade talks moved ahead amid difficulties, while regional trade negotiations became more dynamic. The Protocol of Amendment to implement the WTO Trade Facilitation Agreement was eventually adopted, which officially inserted the agreement into the WTO rule system. The APEC Economic Leaders’ Meeting decided to launch the process towards a Free Trade Area of the Asia-Pacific (FTAAP). Good progress was made in the negotiation on the Regional Comprehensive Economic Partnership (RCEP). The aim is to finish the negotiation by the end of 2015. Parties to the Trans-Pacific Partnership (TPP) negotiation are trying hard to smooth out their differences. The seventh round of negotiation on the TTIP was completed and consultations on the draft of the specific text started. International cooperation on development entered a crucial phase of redistributing the responsibilities, reshaping the rules and readjusting the order.

 

In 2014, there were intense discussions internationally on important junctions such as the 100th anniversary of the outbreak of WWI and the 75th anniversary of the outbreak of WWII and on disturbances in the world, expressing views on world peace and international order. These discussions and views reflect the concern of the international community over increased destabilizing factors and provide insights into the ongoing shifts in the international system and the reshaping of the international order.

 

V. A New Round of Change in the Asia-Pacific

 

According to the IMF, emerging and developing economies in Asia grew by 6.5% in 2014, almost twice as fast as the world average. The major countries in the Asia-Pacific enjoyed political stability and a booming economy in sharp contrast to regions troubled by instability, making the Asia-Pacific the foundation of prosperity and anchor of stability for the world.

 

That being said, the security situation in the region was undergoing complex changes. The United States continued to advance its “rebalancing” to the Asia-Pacific and held military exercises and strengthened defense cooperation with its allies in the region. The Abe administration pushed for lifting the ban on Japan’s right to collective self-defense and faced greater frictions with its neighboring countries on history issues. The situation on the Korean Peninsula experienced twists and turns. Afghanistan was in a “triple transition”. The political situation of some transitioning countries in Indo-China Peninsula could become a source of concern. There were a growing array of destabilizing factors and uncertainties in the region.

 

China played an important role in upholding security and promoting regional cooperation in the Asia-Pacific. In the first half of 2014, China successfully hosted the summit of the Conference on Interaction and Confidence Building Measures in Asia, during which the outlook for common, comprehensive, cooperative and sustainable security in Asia was outlined systematically for the first time and important initiatives such as a new architecture for regional security and cooperation were put forward, which were widely accepted. In the latter half of the year, China successfully hosted the APEC Economic Leaders’ Meeting, where it called for the pursuit of the Asia-Pacific dream, pushed for the launch of the process towards an FTAAP, put forward a four-point proposal to shape the future through Asia-Pacific partnership, build an open Asia-Pacific economy, find new drivers of growth and draw a blueprint for all-round connectivity, pointing the way for future regional cooperation. China also championed the initiative of building the Silk Road Economic Belt and the 21st Century Maritime Silk Road in accordance with the principle of wide consultation, joint contribution and shared benefits, which received the understanding and support of more than 50 countries along the routes. Important progress was made in establishing the Asian Infrastructure Investment Bank initiated by China. The Silk Road Fund was established. These initiatives helped accelerate regional cooperation in infrastructure connectivity.

 

Looking toward 2015, the world will jointly commemorate the 70th anniversary of the end of the world anti-fascist war, celebrate the 70th anniversary of the founding of the United Nations and adopt a post-2015 development agenda and post-2020 global agreement on climate change. The world is increasingly defined by the pursuit of peace and development, and the call for cooperation and change and for a community of shared interests and common destiny is stronger. On the other hand, various complicating factors are increasingly intertwined and more risks and challenges are cropping up. There are uncertainties about the timing, extent and pace of the US Fed raising of interest rate; the over €1 trillion QE program in the eurozone brings new variables into the world economy; deep-seated issues left over by the financial crisis in developed countries such as heavy debt and unemployment problems are yet to be resolved; and the drop in commodity price, especially that of oil, undermines the economic stability of countries that depend on resource exports. Tensions get escalated from time to time on hotspot issues such as Ukraine, the Korean and Iranian nuclear issues, Syria and the situation in Palestine and Israel. Geopolitical competition between major countries has intensified. The consequences of the US and western sanctions on Russia and Russia’s countermeasures are increasingly manifested. Parties are actively pushing forward new trade rules and free trade arrangements that serve their own interests and competing for rules-making power and voice on new strategic frontiers such as cyberspace, outer space, deep sea and polar region.

 

As the world undergoes faster adjustment and change, it is necessary to strengthen strategic thinking and act proactively in order to be well prepared and stay ahead of the curve. In 2015, China’s diplomacy will firmly uphold China’s sovereignty, security and development interests, follow a distinctive approach that befits China’s role as a major country, and demonstrate China’s distinctive features, style and vision. China will continue to play a positive, constructive and responsible role as a major country in regional and international affairs and make new contribution to world peace and development.

*Du Wei is Deputy Director General of Policy Planning Department,

 

Ministry of Foreign Affairs of the People’s Republic of China.