Gu Bin: Associate law professor at Beijing Foreign Studies University and China Forum expert.
When there was “taxation without representation”, there was a revolution. That is the story of the American Revolution in the 18th century. Today in international relations, there is a similar dismay of “contribution without representation” among China and other emerging economies: they have long represented the bulk of global GDP growth, but lack a comparable position in global governance. Such disparity brings evolution, not revolution, luckily.
The reforms of global economic governance have caught on for decades, but American hegemony delays the process, frustrating emerging powers. Specifically, the WTO has largely been paralyzed both in terms of negotiation and dispute settlement, the World Bank has been crying for capital inadequacy, and the IMF lacks a credible quota formula to reflect the changed landscape.
Since the reform of those old institutions has been difficult, China decides to walk on a new path of multilateralism, i.e., establishing new institutions that secure the voice, as well as catering for the needs, of the most. They include the Belt and Road Initiative (BRI, since 2013), the Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB, both since 2015), and the most recent Multilateral Cooperation Center for Development Finance (MCDF, since 2020). All of them have focused on one sector— infrastructure, revealing China’s commitment to share its story of success, i.e., “roads and dams lead to prosperity”, a household saying in China.
Luckily, as I said, the new institutions unequivocally uphold international best practices. For example, the BRI summit in 2019 vowed zero tolerance for corruption, and promotion of debt sustainability by promulgating a BRI-devoted debt sustainability analysis framework, drawing upon the IMF/World Bank practice while avoiding the latter’s anti-investment bias. The Chinese government has prohibited overseas investment in new coal power starting 2022. The AIIB recently revised its energy policy, explicitly banning coal mining and coal power investment; as a matter of fact, it has not invested a dime in coal since day one. The China-led institutions are all determined to be clean and green.
The BRI surprisingly embraces the promotion of high standards, amid popular criticisms of environmental deterioration, human rights violation, and China’s debt trap diplomacy. The Export and Import Bank of China (CEXIM), the lead bank in BRI investments, upgraded its environmental and social standards last year, to be fully consistent with those of international financial institutions. In other words, each dime the Chinese bank invests thereafter should agree to international best practices.
China’s top diplomat Wang Yi stated in 2016, ‘We are not trying to build a rival system; on the contrary, we are trying to play a bigger role in the existing international order.’ Over the years this language has revealed its truth— i.e., Chinese multilateralism is built upon American multilateralism, inheriting the latter’s pros (i.e., a rules-based system and upholding best practices) and dropping its cons (i.e., overly bureaucratic; and one size fits all, neglecting local condition).
Will Chinese multilateralism lead to Chinese hegemony, as were the cases of UK and US in history? The UK tried to cling to imperial preferences when the US surpassed it in 1940s; and since the end of WWII, the US has never hesitated to kick away the ladder when Germany, Japan and now China as newcomers climb it.
However, power and hegemony are different, and one does not necessarily lead to the other. As a world power historically, China expanded not by conquest but by osmosis. It now induces respect and admiration, seeing others come to it. As Confucius said :“If people from afar do not submit, influence them to do so by means of virtue and civil culture.”The missionary culture, in contrast, tends to convert and impose one’s will upon another; when it comes to international relations, it tends to intervene, and even to overthrow foreign governments by force.
These days the US behaves in a detrimental manner to multilateralism. Both the CHIPS Act and the Inflation Reduction Act, appropriating subsidies contingent upon local manufacturing of semiconductor and electric vehicles (EV), serve the American version of forced technology transfer, as showcased in the Ford-CATL EV battery deal, and they trample the law and spirit of free and fair trade. It is American unilateralism, practiced consistently by the Trump and Biden administrations, that is defeating multilateralism as built by their forefathers.