The question posited in this paper was what China's role in an
emerging global multilateral financial system would be? The answer I offer is
that it will be primarily a role, which sacrifices national freedom for the
collective good in a way in which everyone in the system is better off. On the
question of currency reserves, China's vast resources can help underpin a
multilateral reserve currency that is not vulnerable to the economic cycles in
a single country and is managed above the national level. When considering
foreign direct investment, China again has the potential to have the largest
investment of any country, relatively, but not enough to be the only
consequential player in the system - however, its position would give it the ability
to indirectly influence economic trends and investor interests; the implications
are that it can indirectly affect economic growth and development more in the
developing world, and to a lesser extent in the developed world - all in the
context of its own maturing investor culture.
Finally, trade flows in the current system produce imbalances that, left unchecked, threaten the overwhelm the entire structure; China's role in a multilateral design, conversely, would be to lead the development of the framework that will anticipate, limit and discipline states that produce system-threatening imbalances, be they positive or negative; their existence today suggests that current oversight procedures by the WTO are not adequate. As far as hegemonic stability theory is concerned, we have seen that historically, Britain and now, the United States, have each had their moment in the sun as the trendsetters in global finance. However, today's world is more interconnected, bigger and more interdependent than any point in known history. It is too complex for a single actor to handle and no single actor has the resources, nor the political, ideological or economic capacity to govern a world as complicated as ours.
China will have the strongest relative position in this century, but it will never be able to govern unilaterally. That is why, its potential for global leadership must happen through multilateralism - for the sake of both itself, and that of the world.
Georgi Ivanov is a graduate student in political science at Carleton University in Ottawa, Canada. He was among the organizers of the 2012 Model NATO Youth Summit. For more information on the summit, click here.