December 10, 2012 |  1 comment |  Print this Article  Your Research  

Topic Term Paper: Rising Dragon

Georgi Ivanov: The ongoing financial crisis is a forewarning of America’s declining role as the custodian of global finance and China’s increasingly important role in the world economy. The hypothesis posited and analyzed here is that a multilateral global economy, led by China, is the best alternative for a stable global financial system in the 21st century.

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.

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December 14, 2012

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China remains impressive with an even more impressive legacy left behind by Hu Jintao. Hopefully its new leadership will be able to ensure the growth and security of China on more stable lines that include mechanisms for safeguarding it from its own internal compulsions and contradictions. Ascension always lends a sense of high that may be false, including the notion of an ascension. While there undoubtedly has been an impressive performance by China, China needs to constantly compare its living standards (of its poorest and the most backward of its populace with the richest and most forward of its populace) to know where it needs to settle down for having that sense of achievement lull it into some complacency. Something the new leadership should always warn itself against and from. Next would be its technological finesse that also includes longevity within technical products and/or inventions. Its economy would be dictated largely by these two broad needs or demands and China needs to ensure its strategic security in this sense, including its fulfillment. There are many kinds and types of governance and there are many manners of going about them - with prudence demanding that the two broad concerns mentioned here are taken care of in most efficient manners that includes within efficiency the notion of longevity (or strategic security in the sustenance as well a further development) . However corruption as an institutional practice or a societal one is definitely not one of them - no matter what Italians or Indians or other states may so cite or like to cite as their wooden leg syndrome when not sweeping them under the carpet. When sweeping-under-the-carpet marks the norm that is sought to be done, the pile can go so high that you probably begin wondering if the stench from your pile also contributes to the global climate change! Anyone would know that such a state and its people are to be avoided like plagues! Global Leadership is something that China should not aspire at though if there has to be one, it shall come to it naturally by the virtue of having various states following its model rather than be like the USA or the NATO states that seek to push it through. Respect, as everyone knows is earned and not demanded. Can not be demanded and that is where China's role as leadership in any fashion should hinge upon where leadership is something that comes from states that seek to follow its example without China making any effort to lead in manners the USA has sought to impose its supremacy and has emerged in some places as a belligerent boor.
Militarily, China has a lot to look at for including perhaps forging strategic alliances with the CIS states who shall remain outsiders to NATO in more senses than one, though Russia's internal challenges and compulsions (corruption being merely one of those) would remain as part of the factors that would have to be considered before China engages into any economic agreements in the strategic sense - despite the emergent Shanghai Co-operation. Any strategic economic agreement without factors inbuilt into it that ensure China's strategic security as mentioned in broad terms here would be a strategic mistake.
The biggest factor going in China's favour is its perception as a fast-modernizing secular state that respects International Laws (alongwith Russia though Russia emerges much weaker here since it's impressions remain of its abilities being hinged upon its leaderships and not a phenomena of the state - something where China emerges much stronger and stable in having its own institutional arrangement that ensures a stability of the state.). That is something the NATO states and the USA sadly have seriously eroded in their self-exfoliations that any analysis of geo-politics marks - in such ironical absences!
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