China’s Economic Diplomacy Entered the New Era

By Zhang Jun*

China’s economic diplomacy in 2017 was unveiled with President Xi Jinping’s important speech at the opening session of the World Economic Forum annual meeting in Davos. The speech captured broad interest of and resulted in in-depth studies by the global political, business, media and academic communities. It is generally agreed that President Xi’s reassuring and encouraging speech provided the answer to fundamental issues concerning the complex situation of world economy and economic globalization, charted the course for the confused international community and helped various parties reach consensus, demonstrating the responsibility and leadership of China as a major country.

This was an episode of President Xi’s diplomatic activities in recent years, and also an epitome of China’s economic diplomacy in the new era. In recent years, China successfully hosted the APEC Economic Leaders’ Meeting in Beijing and the G20 Summit in Hangzhou. President Xi’s economic diplomacy can be found on many important international occasions such as the UN Sustainable Development Summit, BRICS Summit, G20 Summit and APEC Economic Leaders’ Meeting, where he proposed China’s initiatives, solutions and ideas. China’s economic diplomacy now stands at a new historical starting point with more distinct features of the time.

I. Guiding World Economy
Since the outbreak of international financial crisis in 2008, the international community has been actively exploring effective ways for recovery, yet has not seen much progress. The world economy faces increasing uncertainties and instability with slow growth, lackluster global trade and investment, rising trend of protectionism and de-globalization, accelerated restructuring of global industrial, supply and value chains and major changes in the geopolitical landscape. China now ranks second in total economic volume, first in manufacturing and trade in goods, and third in utilizing foreign investment and making outbound investment. For the world economy, China is not only an anchor, but also an engine and tractor. China is also seeking measures and ways to get the world economy out of trouble and actively sharing China’s solutions with various parties. On many important occasions, based on China’s own development experience and ideas, President Xi took the pulse of the world economy and provided a holistic prescription with distinct Chinese features addressing both symptoms and root causes. 

First, China has targeted the root causes. The Chinese people emphasize targeting the root causes to cure the disease. In his speech at the World Economic Forum annual meeting in Davos, President Xi pointed out three critical issues as the root causes of the problems facing the world economy, namely lack of robust driving forces for global growth, inadequate global economic governance and uneven global development. He also proposed a new way to lift the world economy out of trouble by calling for building a dynamic growth model, a model of open and win-win cooperation, a model of fair and equitable governance and a model of balanced and inclusive development. In the speech, President Xi also addressed the rising trend of de-globalization by giving an in-depth elaboration on the law and characteristics of economic globalization. He called on various sides to recognize that economic globalization is a double-edged sword and that we should guide economic globalization, rebalance the process of economic globalization and ensure that different countries and different groups of people all share the benefits of economic globalization. The speech has played an important role in helping countries build confidence in the future of economic globalization and work together to make it more inclusive.

Second, China is committed to innovation-driven growth. The slow growth of world economy is mainly due to the lack of internal driving forces, and the fundamental solution lies in breaking the bottleneck by releasing and developing productive forces through innovation. With China’s initiative, the 2016 G20 Hangzhou Summit discussed the topic of innovation for the first time and formulated a G20 Blueprint on Innovative Growth, calling on various parties to seize the opportunities brought by innovation, digital economy and new industrial revolution and to reach consensus on the priority areas, guiding principles and indicators of structural reform. These unprecedented moves in the G20 history have laid a solid foundation for unleashing the growth potential of world economy and ushering in a new round of world economic growth.

Third, China emphasizes openness and win-win cooperation. With deep integration of the world economy, a community of shared future is formed in which countries are interdependent with intertwined interests. Only by sharing opportunities and interests through opening-up and cooperation can we realize win-win outcomes. In his speech in Davos, President Xi emphasized that China will remain committed to growing an open global economy, practice and promote global cooperation based on openness and vigorously build a global network of free trade arrangements. Thanks to China’s efforts, the 2014 APEC Economic Leaders’ Meeting in Beijing made the important decision to kick off the process of a Free Trade Area of the Asia-Pacific (FTAAP) and endorse the Beijing Roadmap, marking a concrete step in the establishment of the FTAAP. In 2016, facing the setbacks in the global opening-up and cooperation and the Asia-Pacific regional cooperation, President Xi, at the APEC Economic Leaders’ Meeting in Lima, called on various parties to stick to the set agenda and translate consensus into concrete and effective actions to realize the FTAAP at an early date, showing China’s firm support to advance the open economy of the Asia-Pacific.

II. Championing Global Development
As the world's largest developing country and an important representative of emerging market countries, China is fully aware of the far-reaching implications of development and has been actively committed to advancing shared development in the world. At the United Nations Sustainable Development Summit in September 2015, President Xi advocated equitable, open, all-round and innovation-driven development, called for greater international development cooperation and announced a series of practical measures in support of such cooperation, which demonstrated China's role as a responsible and constructive major country in the process. President Xi and other world leaders adopted the 2030 Agenda for Sustainable Development at the summit, charting the course for the development of countries and international development cooperation in the future.

A year later, China championed development again at the Hangzhou Summit, which set a record in the G20 history in terms of the number of participating developing countries and the distinctly pro-development agenda and outcomes. For the first time in the G20 history, the Hangzhou Summit put development at a prominent place in the global macro policy coordination framework, adopted the G20 Action Plan on the 2030 Agenda for Sustainable Development, and took collective actions in support of the industrialization of African countries and the Least Developed Countries, which was fully recognized and widely acclaimed by developing countries. Not long after the summit, China released its National Plan on Implementation of the 2030 Agenda for Sustainable Development, amplifying the positive effects of the Hangzhou Summit. It has become one of the highlights in national plans on implementation of the 2030 Agenda, and advanced in tandem domestic and international development agendas. 

China has been playing a positive role in working for an early entry into force and implementation of the Paris Agreement on climate change, an important consensus in international development cooperation. At China's initiative, a presidency statement on climate change was issued during preparations for the Hangzhou Summit for the first time in the G20 history, in which all members pledged to sign and implement the Agreement at an early date. Under China's thoughtful presidency, the presidents of China and the United States deposited the instruments of joining the Paris Agreement with then UN Secretary-General Ban Ki-moon during the summit, demonstrating the exemplary role of the two countries in addressing climate change. In his speech in Davos, President Xi reiterated China's firm support for the Paris Agreement and called on all signatories to stick to it instead of walking away from it as this is a responsibility countries must assume for future generations. These actions have highlighted China's strong sense of responsibility in addressing climate change.   

III. Improving the Model of Economic Governance
The global financial crisis has demontrated that global economic development is unbalanced and the reform of the international financial system has lagged far behind. It has also highlighted the importance and urgency to further strengthen and improve the global economic governance system. The global economic governance system can only provide stronger support to global growth when it adapts to the new global economic landscape and its requirements. As the balance of global economic powers is taking on significant and profound changes, it has become ever more urgent to put in place a global economic governance system that is more equitable, reasonable, reliable and efficient. The most salient feature of the current changes is that China and other emerging market countries have been gradually taking up the central place on the world stage. This has been decided by their rising economic strength and global influence and also represents the trend of the reform and development of the global economic governance system.

By hosting the G20 Hangzhou Summit, China has made a successful attempt to take a more active part in global economic governance and accelerate the reform of the system. At the opening ceremony of the B20 Summit, President Xi expounded for the first time a comprehensive vision of global economic governance which is based on equality, oriented toward openness, driven by cooperation and aimed at shared benefits. President Xi also called for joint efforts to ensure equitable and efficient global financial governance, open and transparent global trade and investment governance, green and low-carbon global energy governance and inclusive and interconnected global development governance. These proposals have drawn a blueprint for improving the global economic governance system. During its presidency, China vigorously encouraged the G20 to remain relevant and responsive to the changing times, which laid a solid foundation for transforming the G20 from a crisis response mechanism to a long-term governance mechanism and expanding its focus from short-term policy response to a combination of short-, medium- and long-term policymaking, consolidated its status as the premier forum for international economic cooperation, and provided sound institutional safeguard for global economic stability and recovery.  

China has been actively promoting the reform of the international financial institutions. During China's G20 presidency, with its strenuous efforts, the long-delayed IMF quota reform plan was followed through, the RMB was included in the SDR currency basket of the IMF, and the International Financial Architecture Working Group, which had been dormant for years, was relaunched. These major breakthroughs in the reform of international financial instututions have greatly increased the representation and voice of emerging markets and developing countries.   

China is also an active participant in the establishment of new international economic and financial mechanisms which have complemented the current global economic governance system and international financial institutions. At China's initiative and with its efforts, the BRICS New Development Bank was formally inaugurated, the first international financial institution independently founded by developing countries since World War II; the Asian Infrastructure Investment Bank was formally put into operation, which, with its 57 founding members from countries of all sizes from the five continents, has injected new impetus and vigor into the development of international infrastructure and connectivity.  
With vision, mechanisms, actions and concrete outcomes, China has been pushing forward the reform of global economic governance. Taking into account both its own development needs and common interests of all countries, China has been spearheading the reform and improvement of the global economic governance system.

IV. Supporting National Development Strategies
Foreign affairs are an extension of domestic affairs. To support and promote development has always been the aim and purpose of economic diplomacy. As China becomes ever more integrated into the world, what happens in and outside the country has been more closely interconnected. This means both greater responsibilities and good opportunities for us to support China’s development through economic diplomacy.

First, we worked to create a favorable external environment through economic diplomacy. In the past few years, China successfully held multilateral economic summits, engaged intensively in global economic governance, and advanced the reform in the international financial system. These efforts have boosted China’s institutional power in global economic governance and carry great significance in stabilizing the external economic environment, safeguarding China’s development interests and expanding space for growth both in the immediate future and in the long run.

Second, we focused on mutually beneficial cooperation to help advance economic transformation at home. Under the framework of the Belt and Road Initiative, we took active steps to strengthen complementarity between development strategies of China and relevant countries, deepen practical cooperation in trade, investment, infrastructure, among other fields, and enhance people-to-people exchange, which produced important cooperation agreements and outcomes. China has engaged actively in international cooperation in production capacity and signed agreements with over 30 countries in this field, giving a strong boost to the transformation and upgrading of domestic economic and industrial structure. China made good use of major home diplomacy events to inject vitality and energy into development at sub-national levels. Cities like Hangzhou refreshed their economic and social positions after hosting such major events, putting into reality the goal of “upgrading a city by hosting an international forum”.

Third, we leveraged various mechanisms to safeguard interests of and expand space in China’s going-global efforts. There are currently over 30,000 firms operating overseas. The Chinese people made 122 million trips to other parts of the world in 2016. The Chinese Foreign Ministry and Chinese embassies and consulates have acted proactively to provide information and legal services to overseas Chinese companies, strengthen oversight on major projects, and fully protect the lawful rights and interests of Chinese businesses and citizens abroad. The Chinese diplomatic missions in foreign countries have taken full advantage of their overseas presence to deliver timely information on relevant countries regarding their policies for economic development and priority areas of cooperation to provinces and cities in China and link up Chinese firms with foreign partners. The foreign ministry has translated new ideas into practice, putting forth the global promotion events, a new hallmark platform for provinces and cities such as Ningxia, Guangxi, Shaanxi, Sichuan, Guizhou and Yunnan, to explore cooperation opportunities with foreign countries without crossing borders and for diplomatic envoys from around the world to reach Chinese localities without leaving Beijing.

V. Sharing China’s Development Philosophy
China’s rising economic standing and international influence triggered ever-growing reflections and studies in the rest of world on China’s economic mode and development path. Many ask: What are the secrets for China’s fast economic growth? Can the Chinese economy be transformed successfully? What are the prospects for the Chinese economy? On multiple major international occasions such as economic summits, President Xi elaborated on the Chinese path from both angles of history and reality and in comparison with the paths of other countries. He articulated the philosophy of innovative, coordinated, green, open and shared development, revealed the essence of the miracle of Chinese growth and shared China’s experience with the world. The “Chinese stories” resonate across the globe, showcasing China’s confidence in its path, theories, institutions and culture.

At the opening ceremony of the B20 Summit in Hangzhou, President Xi gave a full review of how China was integrated into the world through 38 years of reform and opening up, shared China’s experience on development with other countries, and attributed China’s success to trail-blazing efforts, result-oriented actions and sharing prosperity. These ideas were warmly received by various communities at home and abroad. At the opening ceremony of the World Economic Forum annual meeting in Davos, President Xi gave an overview of the development path with Chinese characteristics, providing a useful reference for the international community. He stressed that the path is based on China’s realities, drawing on both the wisdom of its civilization and the practices of other countries in both East and West. The path puts people’s interests first. Development is of the people, by the people and for the people. The path has enabled us to unleash productivity and social vitality. It is a pursuit of common development through opening-up. While developing itself, China also shares more of its development outcomes with other countries and peoples. These insightful remarks by President Xi have presented great vitality of China’s development path, provided a multi-dimensional perspective from which the world may learn about China’s development mode and philosophy, bolstered the confidence of all parties in China’s development, and brought China closer to the rest of the world.

2017 is not just another year for China’s economic diplomacy. We will host two major events---the Belt and Road Forum for International Cooperation (the BRF) and the BRICS Summit in Xiamen. They will be opportunities not just for China’s own development, but also for the development of other countries and the world economy. The Belt and Road Initiative is China’s response to the world economic conundrum and the bottleneck in global growth. It is one of the important public goods China provides for the international community. By hosting the BRF, China looks forward to working with all parties to deepen partnership, put in place new platforms for cooperation, and bring about a new landscape of development. By hosting the BRICS Summit, China aims to strengthen South-South cooperation, further raise the position and the role of emerging markets and developing countries in global economy, and inject new impetus for better global economic governance and closer international cooperation for development.

China is marching toward a new era where its economic diplomacy can make remarkable achievements.

Zhang Jun is Director General of the Department of International Economic Affairs, Ministry of Foreign Affairs.