Growth Challenges

From “Responsible Stakeholder” to Common Endeavour


To solve global problems, countries should spend less time admonishing China to become a responsible stakeholder, and focus instead on nurturing the domestic coalitions of interest groups and providing the technical capacity that will make it so.


Is there any global policy problem that can be solved without China’s support, or at least its acquiescence? With bird flu and North Korea in the news this week, China’s role in solving global problems seems especially crucial. But for almost any given global problem—financial regulation, ending the violence in Syria, trade liberalization, poverty alleviation, climate change, overfishing, nuclear proliferation, etc.—the road to a solution runs at least partially through Beijing.


For these reasons calls have grown for China to become a “responsible stakeholder” in the international system. That is, to contribute to problem-solving and global public goods to a degree commensurate with its rising status, and also to avoid exacerbating “global bads” like pollution, currency manipulation, or dangerous regimes. Because so many of the problems we face today are global in nature, the stakes are high. No country will be able to manage the basic issues that matter to citizens without global cooperation, and global cooperation requires China.


Contrary the rhetoric in the Western press, China has arguably become a more responsible global citizen than many feared. After joining the World Trade Organization, it has largely complied with multilateral rules. It has done a better-than-average job of implementing the environmental agreements it has joined.  After a scare during the SARS outbreak, it has become a far more cooperative partner in global coordination to track and stall pandemics. And though it insists that the United States agree to a binding limit on carbon emissions before poorer countries do, China has undertaken ambitious measures to support renewable energy and increase efficiency. For a lower-middle income country that only came out of isolation 30 years ago, China’s re-engagement with global governance is in many ways remarkable.


But the goal posts for global responsibility are moving. As globalization deepens, countries become more dependent on one another. While the benefits from this process are substantial (China’s rise is the greatest example), deeper interdependence also creates new risks. As the 2008 global financial crisis showed, bad mortgages in the United States can lead to real economic costs for citizens in Iceland, Spain, or other corners of the world. Managing these “second order” interdependence problems requires a much deeper level of international cooperation than China has managed to achieve thus far. Will it be able to rise to these new, harder challenges of global governance?


For example, calls are now being made for China to work toward joining the Organization for Economic Cooperation and Development (OECD), the club of rich countries, and other organizations that manage many of the less visible but absolutely essential functions that keep the global economy running: e.g. tax cooperation, accounting standards, competition policy, etc. But many of these agreements would require enormous policy changes in China: e.g, making the financial sector more transparent; being more open about companies’ ownership structures, making government procurement more competitive; increasing enforcement of intellectual property violations; de-carbonizing the economy.


Not coincidentally, many of the challenges China will have to overcome to move global cooperation forward are the very policy shifts needed to rebalance its economy from a statist, investment- and export-led growth model to a more balanced system in which domestic consumers, private companies, and social and ecological welfare all play a larger role. And this overlap suggests a more productive path for other countries than to continue repeating the “responsible stakeholder” mantra. China’s problems are the world’s problems, and vice-versa.


The key challenge, then, is to increase the Chinese government’s capacity to manage the transition of the economy and the deeper level of cooperation that is needed. Instead of just calling for “responsibility,” outsiders should seek to build China’s capacity to solve our common problems.  This approach would include identifying and nurturing those interests within China that benefit from reform and global cooperation. Ultimately it is the domestic struggle between the modern elements of China’s political economy and its more retrograde interest groups that will determine how the country engages in global governance, and thus the world’s prospects for managing global problems.

Lauren has worked in economic policy and research at the World Bank, World Economic Forum, EIU and for the governments of Sierra Leone and Guyana. She has learned Chinese since 1995, and lived in Beijing for almost six years, on and off since 1997. Lauren has a PhD in Economics from Peking University, an MSc in Development Economics from the School of Oriental and African Studies (SOAS) and a B.A/B.Com from the University of Melbourne.

Leave a Reply

Your email address will not be published. Required fields are marked *