China, ACFTU and Global Governance Processes

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1 Trade Union Training on Global Governance and Roles of Trade Unions China, ACFTU and Global Governance Processes ALL-CHINA FEDERATION OF TRADE UNIONS Mingfei Zhao

2 Contents Emerging Countries and the Reform of Global Governance The Role and Contributions of China in Global Governance Process ACFTU in Global Governance:Actions, Proposals and Challenges

3 1.Emerging Countries and the Reform of Global Governance 1.1 The Role of Emerging Economies in Driving Global Growth 1.2 Existing Problems in Global Governance 1.3 New Platforms for Global Governance

4 1.1 The Role of Emerging Economies in Driving Global Growth The international governance built on old global structures has been falling short of today s new requirements, and its representation, fairness and efficiency have all been challenged by the international community- the emerging and developing countries in particular. Voices worldwide smell to demand a restructuring of international governance and expanded representation for developing countries, to ensure fairness and enhance efficiency.

5 More Contribution from Emerging Economies: Human Development Report 2013: A Between 1980 and 2013, the share of emerging and developing economies in global output surpassed that of developed economies, increasing from 33% to 55%; B Over the same period, their share of world merchandise trade increased from 25% to 47%; C Between 2000 and the third quarter of 2011, global foreign exchange reserves rose from $1.9 trillion to $10.1 trillion, with a dominant share of the increase accumulated by emerging and developing countries, whose reserves are $6.8 trillion, accounting for 67.3% of the global total.

6 Since the economic reform implemented in 1978, China s economy has a rapidly booming and emerged as a powerful economic actor in the global economy.as a result of the extraordinary performance, there has been a dramatic change in China s status in the global economy.

7 Figure 1. China s share of world GDP (%) Source: World Development Indicators, The World Bank.

8 Figure 2. China s share of world exports of goods and services(%) Source: World Development Indicators, The World Bank.

9 1.2 Existing Problems in Global Governance A major flaw in the current global economic governance structure is that of under representation of developing countries in international economic organizations such as the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD). IMF IBRD

10 IMF data shows that the U.S., whose GDP accounts for percent according to the 2013 world total has percent of voting rights in the IMF and percent of voting rights in the IBRD. Similarly, other developed countries have voting powers in major international economic organizations related to their economic aggregate. The situation is different for the developing countries.

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13 A new platform calls for reconfiguration and reforms to the global governance system WTO IMF WB? Bretton Woods Institutions

14 1.3 New Platforms for Global Governance In the wake of the financial crisis, the economic weight has shifted from developed countries to developing ones, prompting adjustments to the international division of labour. There is also the urgent need to enlarge the role and voice of emerging markets in international economic decisionmaking.

15 From G8 to G20

16 about the G20: The G20 is an international economic cooperation forum, set up in Berlin on 16 December 1999 as an informal dialogue arrangement under the Bretton Woods framwork. It consisits of the G8 and 11 major emerging economies (Argentina, Australia, Brazil, China, Indonesia, Mexico, Republic of Korea, Saudi Arabia, South Africa and Turkey) and EU. The IMF and The World Bank also usually participate in G20 meetings. The G20's GDP accounts for 85% of the world total and its 4 billion population accounts for two thirds of the world total.

17 G20 Summits Washington Summit, US, November 14-15, 2008 London Summit, UK, April 1-2, 2009 Pittsburgh Summit, US, September 24-25, 2009 Toronto Summit, Japan, June 26-27, 2010 Seoul Summit, Republic of Korea, November 11-12, 2010 Cannes Summit, France, November 3-4, 2011 Los Cabos, Mexico, June 18-19, 2012 St. Petersburg, Russia, September 5-6, 2013 Brisbane, Australia, November 15-16, 2014 Antalya, Turkey, November 15-16, 2015

18 China will host the 2016 G20 Summit

19 The leaders statement released at the end of that summit announced, We designate the G20 as the premier forum for our international economic cooperation, turning 2009 into a milestone in the history of modern global governance

20 The G20 Seoul Summit has confirmed the 6-percent shift of quota shares to emerging economies in the IMF. The EU would cede two of its seats in the Fund's Executive Board to develoing countries, which is a new step forward in the development of global governance

21 The Brisbane Summit 2014 The G20 members should foster a sense for "win-win" development, where each country had the right to develop but should allow others to develop too. All countries should be committed to a just, inclusive and orderly international financial system, where emerging economies and developing countries had a greater representation.

22 BRICS Summit and BRICS Development Bank

23 Brics Development Bank The bank, along with a currency reserve pool, is aimed at providing financial support for infrastructure and sustainable development projects in not only the five BRICS member states but also emerging economies worldwide.

24 the Role and Functions of BRICS Development Bank: include a common foreign exchange reserve and an emergency fund, and make investment policies, including medium-and long-term credit and investment in the infrastructure and industries of development countries; simplify the mutual clearance and credit procedures between BRICS countries so as to reduce dependency on the US dollar and the euro, and ensure liquidity and trade among members; allow developing countries in economic or fiscal difficulties to resort to the Bank, rather than just the World Bank or IMF.

25 China Voice: BRICS bank diversifies global finances, not zero-sum game The bank is established by emerging economies for emerging economies. Along with the 100-billion-U.S.-dollar contingent reserve arrangement that will help countries forestall short-term liquidity pressures, the new bank is expected to strengthen the global financial safety net and complement existing international arrangements. It reflects developing countries' understanding of how the world financial system should be remolded. It represents not only a practical result of cooperation among emerging economies, but also their increasing influence in the world and active role in the reform of the global governance mechanism.

26 Senior management positions in the international financial institutions: Justin Yifu Lin, former Vice President and Chief Economist of the World Bank Zhu Min, special adviser to the IMF Managing Director

27 2.The Role and Contribution of China in Global Governance Process 2.1 International Trade 2.2 International Finance 2.3 Green Economy 2.4 Regional Cooperation

28 Contributing Chinese wisdom and Chinese thinking to global political and economic governance Build an Asia-Pacific partnership featuring mutual trust, inclusiveness, cooperation, and win-win results, and promoting the Free Trade Area of the Asia Pacific (FTAAP) Advocate for the new BRICS development bank and a US $100 billion Contingency Agreement Fund among BRICS countries the Asian Infrastructure Investment Bank (AIIB), championed by China and well received by 57 countries

29 2.1 International Trade Since its accession to the WTO in 2001, China has performed its duty as a member, making notable efforts as regards tariff cuts and exemptions, open markets, and legislative improvement. Since the Doha round slid into a stalemate, China has pushed forward and participated in regional economic cooperation. Building free trade areas (FTA) is regarded as a critical route to this end.

30 13 free trade agreements that involve 20 countries and regions have been signed:

31 Eight more free trade deals in negotiations:

32 In addition, China completed in 2007 the joint feasibility study of a Regional Trading Arrangement (RTA) with India, and started feasibility research on FTAs with Colombia in 2012 and Sri Lanka in These efforts have significantly boosted trade and two-way investment between China and its trade partners, contributed to mutual-benefit and win-win economic cooperation, and fueled economic cooperation and integration in East Asia

33 2.2 International Finance To break the U.S. dollar monopoly, China also advocates reforms to international financial organizations and reserve currency diversification, and establishment of an international monetary system conducive to healthy development of the world economy.

34 The appointment of the Bank of China s Sydney branch as the clearing bank for the Australian Renminbi market on February 9, 2015 represents an important step in the internationalization of the Renminbi.

35 The Internationalization of the Renminbi The RMB Internationalization Index, created by Renmin University of China, rose to 1.96 percent in the second quarter of 2014, compared with 0.92 percent in early A 2014 HSBC survey shows that as many as 58 percent of HK firms use RMB in their cross-border businesses, so leading other offshore RMB markets. This figure is 38 percent for Taiwan companies, 26 percent in France, and 23 percent in Germany. As it is more globally used, the RMB functions as both a settlement and investment currency, and as a reserve currency.

36 2.3 Green Economy

37 The International Chamber of Commerce (ICC) representing global business defines green economy as an economy in which economic growth and environmental responsibility work together in a mutually reinforcing fashion while supporting progress on social development.

38 Green GDP: The System of Integrated Environmental and Economic Accounting (SEFA), a handbook published by the UN in 1993, established the idea of Environmental Domestic Product (EDP), or what we call green GDP. The reality is that, due to the inertia of using the old system, deficiencies in the EDP system and lack of interest in some countries, a global green GDP evaluation framework is yet to be put in place. China began to experiment with green GDP auditing at the start of the 21 st century, one of the first developing countries to do so, demonstrating its resolve to change the growth pattern.

39 China's Green GDP and nominal GDP : Source: National Bureau of Statistics and State Administration of Environmental Protection, China InfoBank,

40 2.4 Regional Cooperation The Chinese President said the G20 members attach great importance to the role of infrastructure in fuelling the global economy. He said that China fully supports a global infrastracture center and stressed the World Bank should set up a global infrastructure fund. China would make its contribution to this through the establishment of a Silk Road Economic Belt and a 21st Century Maritime Silk Road (the Belt and Road Initiatives), and Asian Infrastructure Investment Bank (AIIB)

41 the Belt and Road Initiatives China has proposed the Belt and Road Initiatives, which are expected to stimulate international economic growth and regional economic cooperation, and have far-reaching impact on global economic governance patterns.

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43 the Belt and Road Initiatives

44 the Belt and Road Initiatives

45 the AIIB Initiative : Chinese President Xi Jinping and Premier Li Keqiang announced the AIIB initiative during their respective visits to Southeast Asian countries in October The Bank was envisaged to promote interconnectivity and economic integration in the region and cooperate with existing multilateral development banks (MDB). The AIIB is a MDB conceived for the 21st century. Through a participatory process, its founding members are developing its core philosophy, principles, policies, value system and operating platform. China Voice: AIIB, A Case for Cooperation. The AIIB will complement existing multilateral development banks and support the infrastructure and economic development in Asia

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