Interview with Zhang Yuyan on globalization and development

Source:Chinese Social Sciences Today 2021-01-29


Zhang Yuyan is director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences (CASS) and a CASS Member. His scholarly interests include institutional economics and international political economy. Zhang is the author and co-author of many books, such as Economic Development and Institutional Choice (1992), International Economic Politics (2008), The Sources of American Conduct (2015), and Peaceful Development Path in China (2019). His new work Reform, Opening-up, and China’s Changing Role in Global Governance is about to be published. Photo:PROVIDED TO CSST

China has proposed a new development pattern that smooths domestic circulation and lets domestic and international circulations reinforce each other. Meanwhile, many hold that the widespread COVID-19 pandemic may disrupt globalization for years to come. In this context, addressing changes in domestic and global circumstances is paramount. Recently, a CSST reporter sat down with Zhang Yuyan to talk about China's development path and the future of globalization. Zhang also shared insights into how to facilitate high-quality opening up. 

CSST: The globe is in the midst of unprecedented changes. What is the major impact of these changes to China’s security and development?

Zhang Yuyan: In June 2018, Chinese President Xi Jinping made a remarkable assessment of global architecture, saying that "The world is undergoing profound changes unseen in a century." The changes can be interpreted in a wide range of dimensions, including a comparison of major countries" strengths and their changes, long-lasting effects and uncertainties brought by technological progress, increasing public awareness of civil rights, changing demographic structures, the evolution of the global fiscal system, the deconstruction and rebuilding of multilateralism, the winding-down of the US's internal institution, and intensified China-US strategic competition. Against this backdrop, we can't overlook the factors that haven't changed. For example, we still live in a nuclear era. All these factors, changing or unchanging, comprise the global landscape of China's future development. 

The once-in-a-century situation has invited a surge in risks and uncertainties, as well as many security issues that may impede China's development. There are two equivalences of the word anquan in the English language: security and safety. Security, in most cases, is relative to purposeful and conscious threats, such as the risks and challenges caused by other countries’ intentional behaviors. Safety, however, is subject to objective hazards. Loopholes in administration, incomplete regulation, and sluggish personnel are among these sources. As such, security has a defensive nature while safety has an administrative nature.

In terms of extension, we can scrutinize anquan issues through their relationship with risks. Risks can be divided into various categories. For example, security issues related to controllable risks are similar to safety issues. We can tame them by enacting norms. Another category is strategic risk, which is to say the risks that we are willing to take although we are aware of them in advance. Implementing the Going Global Strategy, including programs like the Belt and Road initiative, poses risks. However, we are willing to confront the security issues caused by such risks after weighing the pros and cons. The last category is external risk. It's tough to prevent and control this type of risk. Undoubtedly, we should deepen the study of anquan issues and further our understanding of the concept of anquan. 

CSST: The COVID-19 pandemic has fractured the global industrial chain to some extent. Some countries have advocated for shielding their own industrial chains. Some even proposed a "decoupling"from China. How will such circumstances reshape the global industrial chain? In what ways will it impact China's industrial security?

Zhang Yuyan: The pandemic has quickened the course of history and produced enduring effects, especially when it comes to the "objective" fracture of the global industrial chain which took form amidst globalization. Control over the spread of the virus has put cross-border flows of resources, people, and services into a standstill, magnifying the fragility and instability brought about the current industrial chain that is too long and thin. A pattern featuring self-reliance may take shape within a country, between two countries, or in a region, as countries have successively released their countermeasures against the industrial chain crisis. Its inertia will persist until the pandemic comes to an end. The pattern may even become normalized. 

"Deliberate" fracture, however, deserves more attention. During the two decades after the Cold War, one of the features of globalization was that division of labor and specialized production spread across the world and created enormous trade benefits. As a beneficiary, China turned itself into a significant base in the global industrial chain. Its effective handling of COVID-19 has signaled even brighter development prospects. As a result, under the influence of nationalism and protectionism, a voice that advocates for safeguarding their own industrial chains, even a "decoupling" from China, emerged in several economies.

Some Americans expect the US to "decouple" from China and eventually implement containment policies. However, it is difficult, and also unnecessary, to entirely isolate China. This strategy is not feasible because the successful isolation of China calls for collective action from major economies and quite a few developing countries. This strategy is unnecessary because China's competition with developed countries comes from advanced technology, rather than the competition for middle-and-low end products. 

The principle guiding America's policy toward China aims at benefiting from China's middle-and-low end position in the global value chain, while sustaining a development gap with China in the advanced technology arena, particularly digital high-tech fields. I call such policy "confinement" whose goal is twofold. The US aims to adopt a fresh set of international rules to restrict China in the high-tech sphere. In addition, doing so will lock China's position in the global value chain, so that the US can keep leading technologically.

The global value chain has connected the world together. Although most "system integrators" at the top end of the value chain are developed economies like the US, European countries, and Japan, the cost of their "decoupling" from developing economies has risen to levels that are unbearable for the entire world. Once their gains from trade start to dwindle, countries will find oppositional action from different parties or groups, which will offset the effects of deglobalization. 

China will continue to uphold the policy of opening up and its ties with the world will grow tighter in the next five years. Despite setbacks, economic globalization remains trending in human development, and inter-dependency between countries will keep expanding. Holistically, the pace of globalization confronts temporary hardships. No fundamental reversions have been made. Globalization, a crucial juncture in the course of history, doesn’t always proceed on a straight, flat road lined with blossoming flowers and lush trees. Its odyssey is destined to run into roughness and even hazards. We are currently on a road full of twists and turns.

CSST: Under the new development pattern, how can China develop new advantages for international cooperation and competition by putting domestic and international markets into better use. 

Zhang Yuyan: China has proposed a new development pattern that smooths domestic circulation and lets domestic and international circulations reinforce each other. Rather than split these two forms of circulation, we should treat them as a whole. An emphasis on domestic circulation is by no means a closed-door policy. Domestic circulation, to some extent, is also dual circulation.

Foreign-funded companies generate about 15% of China's output. Meanwhile, this figure will endure or grow, as China is striving to become a magnet for global investment.

Through a regional prism, the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement marks China's participation in the world's largest free-trade zone. Also, China is actively seeking to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These moves testify to the country's resolution to remain involved in the global division of labor, implement the opening-up policy, align with international rules regarding economics, trade, and investment, and therefore promote effective global allocation of production factors. 

Creating advantages for international cooperation and competition should start with the domestic market. We should establish a unified domestic market, and a level playing field under market rules. Only through fair competition can competitive Chinese companies excel within the country, secure a place in the increasingly fierce global market and contribute to more efficient resource allocation across the world. The 14th Five-Year Plan (2021–2025) has illustrated in detail how to forge a favorable market environment in the country. Through a higher level of opening up, technological innovation and expanding scale will further consolidate and optimize China's advantageous sectors and products. Therefore, these sectors and products will become an irreplaceable link in the global industrial chain, thus providing constant stimulus for the new development pattern.

CSST: China plans to take an active approach to development during the 14th Five-Year Plan period. However, some countries have labeled China a threat. What's your take on this view? 

Zhang Yuyan: Considering China as a threat is an erroneous assumption. China's active approach to development intends to implement the 14th Five-Year Plan and long-range objectives through 2035 by promoting itself. China highlights achieving its goals with mutual benefits. This active approach also means that China must be proactive about many issues without hesitation. After the coronavirus outbreak, its proactive measures handled the domestic situation in a timely manner and contributed to the global fight against the pandemic. Prosperity largely stems from effective and orderly competition. Joint evolution of competition and cooperation has helped reasonably allocate global resources, thus improving the common well-being of mankind in the long run.

China has a tremendous economic size, so its participation in the global division of labor may generate spillover effects, bringing competitive pressure to some companies in several countries. However, there is two-way pressure. Chinese companies also feel pressure from external competition. 

I want to point out that the concepts of success and victory are different. A man must bring a rival or enemy to his knees when pursuing a victory. China, however, strives for success, not victory. It seeks ways to construct a community of shared future for mankind. Instead of defeating rivals or enemies, Chinese people aim for the goal of fulfilling themselves while also benefiting others.




Editor:Yu Hui

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