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How can China realize a strategic development under the new global order

On August 22, Zhang Yuyan, Director of Institute of World Economics and Politics Chinese Academy of Social Sciences, delivered a speech at the 15th Hongru Forum of 2014, explaining the way for China to realize self-development under the new global political and economic order.

In the international issues, globalization is an inseparable concept. Globalization in its essence is the process that nations and states get increasingly interdependent. Globalization promotes a great development of global economy. Yet it brings about some problems such as climate change, terrorism, and problems in the stability of global monetary and financial system, etc. Meanwhile, economists noticed items that may reverse the gains of globalization such as trade barriers between regional economic organizations. Therefore, Professor Zhang raised the idea of “re-globalization” that is to make a new system of global rules, relocate resources, make new division of labor, so as to achieve further globalization.

Rules determine global order. Most of the international rules indicated by Professor Zhang are non-neutral, which means that a rule has different effect on various countries; those who hold the voice of global rule making will be of a favorable position in the international game. A country with strong powers and favorable international rules can take the lead in international system. International rules making is a complicated process. China must take an active part in this process and promote to make rules favorable for it.

Prof. Zhang stressed on the significance of currency in the global game for many times. For example, currently multiple countries of Europe are in lowinflation. Without incentive policies from the government, it may develop into deflation. Coupled with heavy national debts, these countries must adopt relative loose monetary policy to dilute national debt with inflation and resolve debt crisis. In addition, Prof. Zhang emphasized that the major advantage of the superpowers such as the United States is collecting seigniorage as one of the major income. Previously Iran applies Euro instead of US dollar in settlement for oil export; this is a game between currencies: such great transaction settling without US dollars greatly reduced seigniorage income of the United States. The above also explains one of the reasons for RMB internationalization strategy.

At last, Prof. Zhang put forward several suggestions for Chinese strategic development objectives: first, to maintain national territorial sovereignty while promote and guarantee global peace and stability; second, to further develop national economic strength, realize the Chinese dream of people’s wealth and a powerful country; third, enhance the soft powers of China, increasing the country’s value emotional appeal with Chinese culture and Chinese images; fourth, to accelerate internationalization of RMB, turning it into one of the world’s key currencies; last but not the least, to make the strategic objective of fully enjoying the power to make global rules. Enjoy greater voice in making rules of activities such as global governance, regional cooperation and international organization decision making process, etc.

This forum is hosted by Fu Weigang, executive president of SIFL Institute. And Professor Song Guoyou, executive vice director of Fudan University Center for American Studies, Zhang Xin, researcher of East China Normal University Institution of International Relations and Regional Development, and Liu Haiying, researcher of SIFL Institute made comments respectively. Also, they had discussions on the establishment of global financial security system and historical issues of globalization.

“Hongru Forum” is a public seminar jointly launched by Liu Hongru Financial Education Foundation and SIFL Institute, and is held regularly once in two weeks. The seminar pays attention to various issues in China’s finance and macro-economy, and devotes itself to building a platform for cross boundary exchanges among excellent scholars, government and market institutions.


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