Tongzhou Global Development Forum: need for new governance system

Renmin University of China recently concluded its first global development forum. The forum was organised to deliberate on contemporary development challenges and future courses of action to tackle them. China presented its vision of development for building a better global society – a society where development is an equal right of every individual without discrimination.

The Chinese officials and scholars presented their ideas for devising a fair and people-oriented development system. They highlighted China’s unwavering commitment to the global development agenda and willingness to contribute.

The participants from all over the world discussed China’s role in achieving the global development agenda. They also discussed the existing global governance system and its role in realising it. They appreciated China’s robust commitment to the global governance system and the United Nations’ central role.

They also deliberated on whether the current governance would deliver equitable development or there was a need to reform the system.

The analysis of the international governance institutions – financial, economic, development and political – is not very encouraging. It indicates most powerful global institutions have deep-rooted structural flaws and imbalances.

The imbalances have significantly impacted the development agenda of the world.

We have selected some leading institutions for the discussion to understand the structural imbalances and their impact on the development agenda. Let’s start with the International Monetary Fund (IMF). It is a leading financial institution created after the economic crisis of 1930, with the objectives of achieving sustainable growth and prosperity for all. It was envisioned the IMF would be working to further international monetary cooperation, encourage trade and economic growth expansion and discourage policies that would harm prosperity. The institution committed itself to being accountable to all members and run it democratically.

However, the governance and voting structure of the institution shows it does not follow democratic norms. The voting structure is highly skewed in favour of a few. The US has the maximum number of voting rights – 16.50 percent. It makes the US the most powerful member of the IMF.

The decision-making formula gives veto power to the US. According to the rules of the IMF, there would be a need of 85 percent votes for any major decision. So, without the US’s participation, it is impossible to make any major decision. The US can reject any decision, regardless of the support of the whole world.

Another interesting example is the comparison between voting rights of Japan and China. Japan has 6.14 percent, while China 6.04. Even though China is the second-largest economy and the biggest trade partner of the world, it has fewer votes than Japan. It is against the vote calculation formula. If applied to calculate votes, China must have more votes than the current number. Thus, there is a need for reforms to correct the mistake That are not happening because the influential players are not allowing meaningful reforms.

Second, the World Bank Group (WBG) is another institution with structural imbalances. The Group was created with the mission to end extreme poverty and boost prosperity on a livable planet. Again, it was decided the WBG would be run democratically and member countries would play a role in the decision-making and implementation. However, like the IMF, WBG also has structural issues obstructing it from achieving the objectives. The World Bank’s voting power distribution is also biased in favour of a few powerful countries. The US has veto power with 15.68 percent voting rights.

On the political side, the United Nations is the most prominent organisation. It was established to ensure peace, development and dignity of humanity, among others. It preaches equality of humans and countries. It is also considered a symbol of democratic governance. However, in reality, it has deep structural imbalances. For example, the General Assembly is the biggest platform of UN, as all the member countries sit in the assembly.

Unfortunately, it has limited powers to finalise decisions or implement them. The real power is somewhere else – in the hands of members of the Security Council. It is concentrated in the hands of a few countries. They enjoy decision-maker status. Nothing can happen without their approval.

For example, in 1950, during the selection of the Secretary General of the UN, the decision of the General Assembly was not respected. The US rejected it. On the other hand, USSR refused and vetoed the US nomination.

In 1996, the US again refused to accept the decision of the majority. It is widely accepted Boutros-Ghali was forced to suspend his candidacy. Moreover, members of the Security Council use their veto to protect their national interests and allies.

Apart from the institutions, the economic growth and development discourse is heavily biased in favour of a few powerful actors and countries. The global governance actors have captured the driving seat to steer the discourse and actions. For example, the military-industry complex of the West is promoting economic security as a fundamental pillar of national and global security. It is a good idea and must be appreciated, but the devil is in the details.

Unfortunately, they are militarising the economy in the name of economic security. They are shifting focus from human-centric economic security to military-centric one. It has greatly impacted global development objectives and disturbed international peace.

Will it be possible for China to deliver fair and equitable development to all without discrimination? The answer is a big no. Thus, if China wants equitable development and ensure human dignity, as was discussed during the Tongzhou Global Development Forum, it will have to work for a better governance system. There are two options China can explore for answers.

China is already working with Global South and striving for fruitful global governance reforms. The reforms can lead to sustainable development. President Xi Jinping has accelerated the efforts to pursue reforms and made it one of the core areas of work. President Xi has asked China’s leadership to lead in reforming the system. In the pursuit of the vision of President Xi, China’s diplomats and leadership from other areas have adopted a proactive and efficient approach to materialise the vision into reality.

However, despite all efforts by China and other countries, there is a limited success. The influential players of the system are not allowing meaningful reforms. China will now have to look for the second option.

It should work with other countries to create new institutions to materialise the dream of equitable development by adhering to principles of dignity of humanity and respect for sovereignty of countries. It is good to note China is cognizant of this fact and has started working on it.

It has launched numerous initiatives: Belt and Road Initiative, Global Development Initiative, Global Security Initiative, Global Civilisation Initiative, Asian Infrastructure and Investment Bank, Shanghai Cooperation Organisation, etc. All these initiatives have been undertaken to assist developing countries to meet their economic and financial needs for achieving development goals. China is also putting efforts into strengthening the BRICS and working with regional organisations like ASEAN, Arab League, etc.

Through the Tongzhou Global Development Forum, China is trying to bring back discourse on human-centric economic security.

It is the right time for China to show leadership and solve the global problems. It should lead the course by reforming or creating new institutions, sticking to the discussion-based and collaborative economic growth and development philosophy. It would be a step in the right direction to materialise the development dream.