Wednesday, November 7, 2018

China’s Role in Rebalancing the Global Economy

CEIBS Distinguished Professor and former Prime Minister of France, Jean-Pierre Raffarin

The following is an edited excerpt from a keynote speech given at the inaugural China International Import Expo on November 6, 2018.

“I am very happy to be with you today because I love the China Europe International Business School. This beautiful school has built a bridge between China and Europe. It is very important for Europe and China to discuss the rebalancing of the world economy based on a shared vision, so I am happy to discuss this topic with you. I am currently Charles de Gaulle Professor of Global Leadership at CEIBS. Fifty-five years ago, French head of state Charles de Gaulle decided to establish diplomatic relations with China, and France became the first western country to recognize China.

For Europeans, global rebalancing is already a very important issue. Although not everyone recognizes its importance at the moment, those who have long-term plans for the future have realized that Europe must find a balance. Why? Because in the past, Europe and the United States have had a very good relationship, the United States is our ally and saved us during World War II. Europe has a very close relationship with American civilization, and the two have many things in common. But now American politics is hard to like. I remember that President Hu Jintao once told me that it is very simple for the Chinese to judge whether or not it’s worth making friends with a person. His past behaviour has to be examined. Europe is looking for such a friend.

The similarity of their political systems is the basis of the link between the European Union and the United States, but what will it be tomorrow? The world is dangerous and people need to give priority to their own security. Today, Europeans are no longer as convinced as they have been in the past to rely on the United States to provide security. The world today is dangerous and it is changing at rapid speed. In the past, the United States represented openness and free trade, while China was a closed country; but now, the United States is moving toward closure, while China is advocating openness. This is a major change in the world today.

Europe faces a difficult but important issue, which is to seek rebalancing. This change happened in Paris. On the issue of tackling climate change, I remember that China opposed the Kyoto Protocol in the past, while the United States supported it. But for the recent Paris Agreement, the United States became an opponent, and China became a supporter. China even assisted the French government and finally contributed to the Paris Agreement. This agreement is vital to the common future of mankind and will save humanity. How to deal with climate change is also an important issue related to world rebalancing.

The second big question is, how to share economic growth? We need to share growth. Europe needs China's economic growth, and France also needs China's economic growth. If the global economic growth momentum is getting weaker, both Europe and China will face huge problems. For the sharing of economic growth, protectionism has already constituted a serious obstacle. We need to grow together. At the Davos Forum last year, President Xi Jinping pointed out that once a vessel encounters a storm, it will return to harbour, and it will never be able to reach the other side. It is necessary for the countries of the world to achieve shared growth. We must grow by ourselves and we need other countries to grow.

Some countries in the world today are indulging in unilateralism and are unable to extricate themselves. The implementation of a unilateralist strategy is highly unfavourable for economic growth sharing. We French people particularly dislike the use of the words "trade war". If a country has never experienced war, it may be willing to play on the word "war." But if we know very well what war means – people in China, Britain and France know this very well – we should not use the term “war” to describe trade disputes. We can compete in trade, we can debate, we can argue, but we can't fight trade. Many Europeans are very worried about the current world situation, and the clouds of war are lingering around. I belong to the generation born after World War II. Our generation once believed that there would be no more world wars, but today our children and grandchildren may not agree with this. Therefore, in addition to sharing economic growth, we should also develop a common strategy.

Another big problem in Europe is the euro. Who is a friend of the Eurozone? Which country bought the euro when we were facing a debt crisis? China. Who disseminated information that made it difficult for the euro? American media. Looking ahead, many countries such as China and India support the euro zone because it helps to promote world balance; however, some countries do not support the euro zone because it is not conducive to the dominance of the dollar. On the currency issue, we should also communicate our position. This is our shared problem.

Next, let’s talk about multilateralism. If the United States, Russia, Turkey, Iran and other countries pursue unilateralism, multilateral reform will be difficult to advance around the world. It is true that the United Nations is not efficient enough, but it is not a reason to circumvent the United Nations, not a reason to withdraw from UNESCO. We must support multilateralism. In fact, multilateralism was originally proposed by the West. Western countries used to be strong, but today the world has changed. We should start new discussions with more countries and seek a rebalancing of the world. Therefore, we should discuss how the UN Security Council should be reformed and how the WTO should be reformed. This requires us all to sit down and discuss. The vision of multilateralism cannot be just the vision of one country. It cannot be the vision of just China or Russia, nor can it be just a vision of Europe. We need to form a common vision of multilateralism through consultation. To save multilateral institutions, multilateralism itself needs reform. The importance of multilateralism is even more pronounced today than at any time in history. There are many other aspects of the world’s rebalancing. On the issue of the Iranian nuclear deal, if France wants to cooperate with the United States, the French company will have to close its factory in Iran. This difficult issue also needs to be discussed jointly by Europe, Russia, China and the United States.

There are also many similar issues, such as security issues in Eastern European countries and Ukraine. We need a peace strategy, not a strategy for war, to prevent the situation from descending into turmoil. France attaches great importance to safeguarding the future of Europe. We do not want Europe to move towards embarrassment, so we need to identify which countries want Europe to remain strong. This is also a question about the rebalancing of the world.

In the next decade or two, Europe will pay more attention to the East. Europe has realized that the world's general trend determines that the future of mankind will not only belong to the West, but will enter a more ‘Yuan’ pattern. But I can also tell you that in my political career of more than 40 years I have never seen the world situation facing such a great danger. We must respect each other, talk to each other, and advance the common cause. I have heard many people say that the "One Belt, One Road" initiative is a unilateral proposal from China to enhance China's influence, but as long as everyone sits down, many issues can be discussed together. If we want to develop peacefully into the main theme of the world, we need a common cause. We need to negotiate together and pursue common interests. For this reason, world rebalancing is a very important issue.

The future of Europe is not simply Europe or the West. Europe is concerned with the entire Eurasia. It does not talk to Russia. There is no real peace in Europe. So we have to talk to Russia, talk to the Middle East, talk to Asia, and talk to China. Europe is both a part of Eurasia and closely linked to Africa. It should be a bridge between Asia and Africa and become an overlapping point between Europe and Asia and Europe and Africa.

So I think the vision for Europe in the next two decades is to strike a balance between the West and the East. Europe cannot abandon US and Western strategies, but at the same time we need an Eastern strategy to strike a balance in our future vision.

Of course, Europe and Asia need a common cause like the “Belt and Road”, but they also need forums and fairs like today to discuss major issues such as trade and cooperation, and to consolidate our shared vision for the world.

Everything is developing and changing. I have always been a good friend of the United States, but for my country, our future is also in the East. This is the rebalancing we are seeking.”

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