After World War II, the developed West, led by the United States, established an international system based on the United Nations and the Bretton Woods institutions to bring the nations of the world together around the principles laid down to provide a platform for settling disputes and promoting common development. But over the last forty years, the centre of gravity of the global economy has slowly shifted eastwards, essentially returning to its starting point. This longer-term structural transformation of the global economy has been accelerated by the 2008 global economic crisis, so the argument that the global North corresponds to the Western world and the global South to the East is becoming less and less valid.
While in the 1980s, the developed countries accounted for 80 per cent of global GDP, by the 2000s, they accounted for 60 per cent, and today they account for just over 40 per cent. At the same time, global population growth continues to be driven by developing countries, while developed countries are stagnating in terms of population size in their ageing societies. The proportion of people living in developing countries has increased from 66 per cent in 1950 to 83 per cent today, and is expected to reach 86 per cent by 2050. The problem of developed and developing countries, or the North-South problem, also stems from the dominance of international financial institutions such as the World Bank and the International Monetary Fund, established by the countries of the global North after World War II, and from the trade and economic disadvantages of the South.
Almost 100 years on, the international institutions that shape and influence world affairs are in need of renewal. For example, among the member countries of the International Monetary Fund, which has a major impact on the global financial system, there is a need for reform of the way the IMF is financed. Emerging markets are increasingly voicing their demand for quota shares to reflect their economic strength, and following the failure of the 15th quota review, member countries are committed to reaching an agreement on quota distribution this year. Under the current quota, the US is in a position to veto the decision. Accordingly, the US is not expected to support any initiative that could benefit Russia or China.
In the wake of rising geopolitical tensions, a slowing world economy, and the difficulties caused by global social trends, a new era in the history of globalisation has dawned, and the global community has arrived at a new "Bretton Woods moment", as Wang Huiyao, President of the Center for China and Globalization, has noted.
The Global South aims to assert its increased economic weight on the global political stage. Accordingly, over the past decade, China has placed great emphasis on promoting multilateral cooperation within various international organisations and platforms and has also made several attempts to reform global governance.
In terms of major global initiatives, the year 2013 proved to be a landmark year, with Chinese President Xi Jinping launching the New Silk Road Project (Belt and Road Initiative, BRI), which has become a flagship for international cooperation, while also serving China's geopolitical, economic and financial ambitions. According to official Chinese figures, the BRI, which is 10 years old this year, involves 150 countries and 32 international organisations, creating a cooperation mechanism covering two-thirds of the world's population and 40% of the world's GDP.
China, as a responsible member of the international community, is committed to supporting global development, which is why Xi Jinping proposed in September 2021 the Global Development Initiative (GDI), through which Beijing will seek to enhance its international relevance and role in the UN by supporting the global South. With this development-oriented initiative, it has launched a complementary programme to the BRI. The Global Security Initiative (GSI), launched in 2022, aims to increase China's role in reducing US influence on global security issues by increasing China's own role. And in 2023, President Xi launched the Global Civilisation Initiative (GCI), which focuses on cultural diversity and equality. The initiative also calls for greater dialogue between different nations.
The wave of deglobalisation has led to an increasing focus on regional NGOs, which are also apparently seeking to expand their membership. China could be one of the big winners in this respect, as in light of events, the Asian superpower seems to have discovered the potential of emerging regions and has, in recent years, increasingly sought to deepen cooperation mechanisms with these regions. Among other things, China aims to increase the recognition and membership of groupings such as BRICS (Brazil, Russia, India, China, and South Africa) and the Shanghai Cooperation Organisation (SCO).
At its 15th Summit in August 2023, BRICS added Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to its membership. The enlargement was mainly backed by China, and substantive negotiations on the enlargement took place under the Chinese presidency of BRICS, hence Beijing's role in the diplomatic success. Given that the GDP output of the BRICS member states in 2022 exceeded that of the G7 (BRICS global GDP 31.67 per cent, G7 global GDP 30.31 per cent), it can be said that Eurasian-centred cooperation, which challenges Western cooperation systems, is playing an increasingly important role in the world economy. In November 2020, the BRICS member countries adopted the Economic Partnership Strategy 2025, which identified key areas of cooperation, including trade, investment and finance, the digital economy and sustainable development, as well as the objectives of cooperation in each area. The enlarged BRICS will undoubtedly be an important forum for global dialogue among middle-income countries, but the often divergent and competing views may also challenge the bloc's coordination. Although the idea of a common currency or basket of currencies has been mooted among the formation, the most likely scenario at present is a further strengthening of settlement in national currencies, and in particular, the Chinese renminbi (RMB), which could lead to a reduction in the share of the US dollar (USD) in intra-BRICS transactions (the RMB currently accounts for 30-35 per cent of intra-BRICS trade).
The Shanghai Cooperation Organisation (SCO) also points to increasing cooperation. The SCO's founding members are China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, while India and Pakistan joined in 2017, and Iran has been a member since 2023, with Belarus becoming the tenth country to join. The SCO's main objective is to promote a new type of international political and economic order. As a sign of the SCO's expansion in the Middle East, Egypt, Qatar, Saudi Arabia, Kuwait, and the United Arab Emirates have officially become "dialogue partners" as of 2021. The SCO also maintains close ties with the international community, with ASEAN, the world's 5th largest economy and Asia's 3rd largest, as a prominent partner. In addition, ASE-AN is a strategic partner of the European Union from 2020 onwards, a prime example of cooperation on economic, security, digital and sustainable development within the continent.
These expansion efforts are in line with China's ambition to increase its own and the developing world's influence in the UN, G20 and WTO. Last year, China was the first country to call for the African Union, which brings together 55 member states from the continent, to join the G20. In addition, China established the Group of Friends of the Global Development Initiative, a new UN forum in January 2022, with some 70 member countries. Its members include the countries with the greatest exposure to China under the BRI. These countries have voted with China at least 75 per cent of the time in the UN General Assembly. China has recognised the importance of the Global South as the largest and fastest-growing region in the world. According to Xi Jinping's 2021 declaration, China will always be a member of the developing countries family and will do its utmost to increase the representation of developing countries in the global governance system, thus supporting their stable development. In this way, it will institutionalise its leadership over the developing world through the groups of countries it leads. Accordingly, the Group of Friends is also seeking to redefine the UN's remit in order to serve its own interests more effectively.
In recent years, China has embarked on an intensive and complex international strategy to strengthen its geo-political presence and reform the existing international system. On the one hand, it is seeking to take the lead in existing international financial institutions, backing developing countries through diplomatic and economic diplomacy. In this context, it is stepping up its financial contribution to international organisations, launching new initiatives, playing a positive and active role as a mediator in international conflicts and redefining the watchwords of the last century (e.g. equality, global cooperation, multilateralism, globalisation). On the other hand, it is creating new platforms for international cooperation in parallel with existing international organisations, with a stronger focus on emerging and developing countries. To support these new international organisations and initiatives, it is setting up politically neutral multilateral development banks, offering an alternative to similar international institutions led by the US.
China aims to become a more significant and positive player in globalisation and global governance. The unexpected twists and turns of globalisation require countries to cooperate in a spirit of mutual benefit and common interest. This initiative has led to an unprecedented strengthening of Eurasian cooperation on the one hand and East-West relations on the other. China's promotion of peaceful coexistence in the new multipolar world order, in which other states have the opportunity to rise, while firmly refraining from interfering in the internal politics of other countries and not making its aid and other assistance conditional on domestic political conditions, contributes to this. The new harmonious model of globalisation must embrace inclusiveness, multilateralism and sustainability.
The author is Executive Director for International Relations at the Magyar Nemzeti Bank, the central bank of Hungary
