Maximum benefit, minimum risk
The last quarter of a century has witnessed political, economic and social processes that have brought about trend changes and a transformation of the world order.
Maximum benefit, minimum risk

Maximum benefit, minimum risk

Photo: iStock
Petra Halkó 31/05/2024 13:03

The last quarter of a century has witnessed political, economic and social processes that have brought about trend changes and a transformation of the world order. In this context, the focus of world economic growth has shifted from the transatlantic world to Asia, Africa and South America, and the developing world has become an inescapable part of the world order of tomorrow. This is why the struggle between the United States and China to support the Global South has become increasingly fierce.

The first international economic cooperation agreements were an allocation of resources from developed countries to less developed countries, giving them an unintended vertical orientation. This was countered by the idea that only economic liberalism could work in the global environment and, at the same time, by the Washington Consensus, which modelled it in terms of economic policy. The basic principles of this model include free markets, privatisation and trade liberalisation, which it promises will promote economic growth and modernisation in developing countries. In reality, however, they are value-driven infrastructure projects: the new generation of agreements are full of globalist ballast, human rights clauses and civilising missions, and although moral arguments have overridden pragmatic considerations, they have not led to economic prosperity. Furthermore, the capital re-exported to Western donor countries through capital flight processes has made developing countries 'sink' FDI investments rather than economic powerhouses.

The Beijing Consensus has a different vision for economic development, based on active state intervention in key industries. China's approach is clear: since the UN's 2019 Investment Report, it has been known that whatever developing region we look at - developing Africa, developing Asia, heavily indebted poor countries - China has consistently worked its way up to the top five foreign capital investors, and has even courted the Balkan states. It is itself implementing the largest infrastructure and investment programme in history under the Belt and Road Initiative. According to the Boston University Global Development Policy Center's 2023 report, China provided $331 billion in financing between 2013 and 2021; nearly a third of that amount went to African countries. In the meantime, it has helped boost economic growth in developing countries and helped support institutions led by the Global South to provide financial assistance, access to energy and address infrastructure gaps.

This model has also provided China itself with rapid growth and full integration into the world trading system, enabling it to achieve a leading position in global economic governance and create new value in the new rules: maximising mutual benefits and minimising risks. This approach, while offering Chinese companies new markets and profitable projects, also gives the country room to expand its economic and political influence on the global stage against the traditional dominance of the West.

The author is a senior analyst at the 21st Century Institute

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