The Transformation of Economic Globalization and China’s Role in It Under Profound Changes Unseen in a Century

The world economy prospers when it is open， but declines when it is closed. Since the end of the cold war， economic globalization has developed rapidly， forming a new global development pattern that features intertwined interests of countries all over the world. The report to the 20th National Congress of CPC pointed out that at present， changes in the world， times and history are unfolding in a way unseen in the past. Deficit in peace， development， security and governance are aggravating， and human society is facing unprecedented challenges. Globalization has encountered headwinds， and the world has entered a new period of turbulence and change. It’s both the fundamental measures to promote world economic development and the inevitable choice of China to promote high-quality development to follow the development law of globalization， abandon anti-globalization thinking and come up with new ideas of globalization development.

Driving Force and Pressure of Economic Globalization Transformation under Profound Changes unseen in a Century

Changes in the past century have brought great uncertainty to globalization. Unilateralism and protectionism are on the rise， and the COVID-19 pandemic has inflicted new impacts on open cooperation. The industrial and supply chains are facing reconstruction， which has increased the pressure of economic globalization. From a historical perspective， globalization represents the general trend， and the transformation of globalization is highly charged. The development of globalization strongly promotes the rapid growth of the world economy and constitutes an important driving force for the progress of human society. Major countries in the world attach great importance to and formulate opening-up strategies and as it turns out， benefit from globalization through deepening open cooperation. The digital economy is becoming a new form of development amid changes in the world， with breeding technological revolutions such as artificial intelligence. The world economy is undergoing a period of deep change， and the pressure and drivers of economic globalization and transformation are accumulating.

I. Driving Force of Economic Globalization Transformation

Economic globalization refers to the historical process of constantly reducing various barriers that hinder the free circulation of commodities and production factors among countries in the world， and gradually forming and constantly improving international rules that regulate the free circulation of commodities and production factors around the world. Economic globalization includes trade， financial and production globalization， which converge with each other， feed on each other and continuously evolve. Economic globalization has catalyzed economic competition and cooperation among countries， thereby generating great changes in the pattern of international trade， finance and division of labor. Globalization brings together capital， technology and information beyond national boundaries and creates a single global market， which is vividly summarized by American writer Thomas Friedman as “a flat world”.

The scientific and technological revolution and modern institutional reform constitute the external driving force for the transformation of economic globalization. An observation of the development process of economic globalization will find that the breadth and depth of contemporary globalization have gone beyond any previous period， mainly due to two favorable conditions. First， the modern scientific and technological revolution reduces the communication cost and transportation time between different countries and regions， making the world a “global village” and creating objective conditions for contemporary economic globalization. Second， the deepening of market economic system reform in major countries in the world has created a common market system for economic globalization. The reform of the international financial order promotes the free flow of capital and provides financial support for economic globalization. The end of the cold war has created a peaceful environment for economic globalization. Under the above conditions， multinational enterprises with advanced technology， management experience and capital make production and investment projects globally， which has become an important subject to promote the in-depth development of economic globalization. The World Trade Organization， the International Monetary Fund and the World Bank have served as institutional guarantees for the in-depth development of globalization.

Great changes in the world over the past century are the direct cause of the transformation and upgrading of economic globalization. At present， great changes unseen in the past century not only shape the new environment of economic globalization， but also transfer the cooperative thinking concept of all countries， and even give rise to the deep-seated reform of the traditional economy. Only through transformation can economic globalization keep abreast with the times. Under the current situation， developed economies’ contribution to global growth is waning， and the globalization dominated by hegemony of the United States and the Western countries proves difficult to sustain. Emerging market economies and developing countries have become important driving forces for global development and actively worked to promote a fairer and more rational new globalization. At the same time， great changes over the past century give birth to technological revolution， which relies on the Internet to break through the traditional national boundaries， actively shape a decentralized new environment for global cooperation， and promote the simultaneous transformation of economic globalization underpinned by the traditional economic cooperation model.

II. Pressure on Economic Globalization Transformation

The anti-globalization trend of thought continues to gather strength， and it is difficult to build consensus over globalization transformation. Since the international financial crisis in 2008， the problem of insufficient and unbalanced global development has become ever more prominent. Some countries believe that they have not benefited from the process of economic globalization， and consequently take a negative view on economic globalization. Some countries even think that their own problems are caused by economic globalization， which makes it difficult for countries to reach a consensus over the transformation of economic globalization. As the leader of the global governance system， the United States did not seek to address the difficulties and pains that hindered the development of economic globalization， instead engaged in “small yard and high fence” practice and restricted technology exports by forming technology alliances and other measures， which had an impact on the stability of the supply and industrial chain of the world.

Geo-economic risks are rising， and economic globalization is facing the pressure of stagnation or even backtracking. In recent years， the transformation of economic globalization has not only been influenced by the trend of anti-globalization， but also shocked by geopolitics. The International Monetary Fund believes that the risk of division in geo-economy is rising. In particular， with the Palestinian-Israeli conflict overlapping the Ukraine crisis， geopolitical competition runs deep， and issues related to energy security， as well as food， industrial and supply chains have been affected substantially. In the past， major countries in the world put development on top of their agenda， lay more emphasis on multilateralism， and call for cooperation and joint response among countries in the world. But now many countries shift their focus to security and regional or bilateral negotiations， and economic globalization is facing stagnation or even backtracking.

Compared with the rapid development of digital economy， the reform of global governance system lags behind， and economic globalization transformation thus lacks institutional support. The development of digital technology enables emerging technologies such as Internet of Things， big data， artificial intelligence， 5G and cloud computing and the digital infrastructure to update continuously. Major countries in the world have made artificial intelligence and other related fields their strategic focus to seize the commanding heights. The status and influence of digital economy in the economy and society have become ever more prominent， and it accounts for an important part of contemporary international economic and trade cooperation. Digital economy involves cross-border flow of data. Data is not only a factor of production， it also carries important information related with personal privacy and national security. It directly influences the transformation and development of economic globalization when we take measures to realize the safe transmission of cross-border data， strike a balance between decentralization and national economic sovereignty， and effectively deal with the influence of artificial intelligence on social governance system. However， there has not been any clear governance plan.

China’s Approach to Promote Economic Globalization Transformation

China has been integrated into globalization through more than 40 years of reform and opening up. It not only benefits from the tremendous growth momentum brought by globalization， but also promotes the rapid and in-depth development of globalization. China firmly upholds the United Nations system， takes an active part in the reform and construction of the global governance system， and advocates new economic globalization. China has become an important force to promote economic globalization， and the transformation of economic globalization cannot be realized without China’s positive contribution.

I. China as an Important Force in Promoting the Transformation of Economic Globalization

China has become the biggest engine of world economic growth. Since the international financial crisis in 2008， China’s leadership in global economic growth has become ever more evident as it registered the largest contribution to global economic growth. From 1980 to 1999， China’s contribution to global economic growth was a mere 3.7%， compared with 31.7% of the United States. However， from 2000 to 2007， the period before the international financial crisis， China’s contribution to global economic growth rose sharply to 9.8%， while the contribution of the US dropped to 19.1%. Since the international financial crisis， China’s contribution has been well over 30%， establishing itself as the major engine of world economic growth. Facing the severe challenge of COVID-19 pandemic， China’s economy demonstrated strong resilience and became the only major economy in the world to achieve positive economic growth in 2020.

China has become an important support for the stable development of global industrial and supply chains. First， China has become a “world factory”， and the overall size of China’s manufacturing industry tops the rankings for 14 consecutive years. Second， China has become the world’s largest goods trader. In 2023， China’s commodity exports amounted to US$ 3.38 trillion， keeping its record to be the largest trader of goods worldwide， and became the main trading partner of more than 140 countries and regions. Third， China’s innovation capability has been continuously improved. According to the World Intellectual Property Organization “Global Innovation Index 2023” report， China’s innovation index ranks 12th. With 24 scientific and technological innovation clusters， it ranked first in the world for the first time.

China has become an important force in promoting the reform and construction of the global governance system. China advocates increased exchanges and cooperation between the United Nations， G20， the International Monetary Fund and the World Bank， and strengthening of macroeconomic policy coordination. It calls for improving the capability and efficiency of international financial institutions to operate and raise funds， enhancing the representation and voice of developing countries in international financial institutions and increasing the efficiency of the use of reserve assets such as special drawing rights and investment in international public goods urgently needed by developing countries. China holds that multilateral creditors should be jointly involved in debt handling and improve global economic governance. China adheres to genuine multilateralism， actively participates in the reform and construction of the global governance system， and provides important institutional guarantee for the transformation of economic globalization.

II. China’s Concept of Promoting New Type of Economic Globalization

General Secretary Xi Jinping emphasized that the international financial crisis in 2008 inspired us that， to steer economic globalization on a right path， we need to strengthen coordination， improve governance， and promote the construction of an open， inclusive， universally beneficial， balanced and win-win economic globalization. We should not only make big the cake， but also divide it well following the principles of fairness and justice. His remarks provide new ideas and thinking for promoting economic globalization. China’s concept on the new type of economic globalization hinges upon triple transformation of development mode， governance mechanism and development motive force.

First of all， we should adhere to win-win cooperation， advocate inclusive economic globalization， alleviate the imbalance of global development， and promote the transformation of economic globalization cooperation methods. Although globalization fuels world economic development and is conducive to making bigger the global economic cake， there are differences in the benefits obtained by countries around the world from global economic growth， and some countries with the belief that they have not received enough benefits in the process even witness populist and nationalist tendencies. In this regard， General Secretary Xi Jinping proposed that we should adhere to the concept of win-win cooperation， trust instead of suspicion， shaking hands instead of fists and consultation instead of swearing， focus on the common interests of all countries， and steer economic globalization towards a more open， inclusive， universally beneficial， balanced and win-win direction.

Secondly， we should make innovation on global economic governance that takes into consideration both representativeness and efficiency， improve the representation of developing countries in the new economic globalization， and promote the transformation of the economic globalization governance mechanism. The challenges faced by the current global economic governance system are complex and diverse， among which representativeness and efficiency are the core factors that determine whether the system can operate stably. Since the end of World War II， the United States and other developed countries in the West have dominated the global economic governance system， mainly through governance platforms such as G7， but there has been no reform in sync with the expansion of emerging market economies and developing countries. As a result， the global economic governance system is challenged by a lack of representativeness， and the voice for reform is getting higher and higher. In light of this， China actively works to promote fairer and more reasonable global governance， and calls for the reform of governance mechanisms such as the World Trade Organization， the International Monetary Fund and the World Bank， so as to enhance the representation and voice of developing countries and make the global economic governance system more balanced between efficiency and representativeness.

Thirdly， we should promote the construction of a community with a shared future in cyberspace， bridge the digital divide of globalization， and transform the drivers of economic globalization. With the rapid development of internet since the 1990s， digital economy has become a new driving force for global economic development. In this context， countries with advanced internet technology and developed digital industries have rapidly turned from traditional economy to modern economy dominated by digital economy， enjoying the dividend of digital economy. But countries with underdeveloped digital infrastructure have been left as “information islands”. In this regard， General Secretary Xi Jinping stressed that China is willing to join hands with other countries in the world to embark on a global digital development path featuring joint construction of and accessibility to digital resources， dynamic digital economy， accurate and efficient digital governance， prosperous digital culture， strong digital security guarantee and mutual benefit and win-win digital cooperation， accelerate the construction of the community with a shared future in cyberspace， and contribute wisdom and strength to the peaceful development of the world and the progress of human civilization. China advocates accelerating cross-border digital cooperation among countries around the world， promoting the orderly flow of data elements， actively cultivating new business types and modes， and providing new impetus for economic globalization transformation.

China’s Path towards New Economic Globalization

In recent years， at the new development stage， China has implemented the new concept for development， accelerated the construction of a new development pattern， continued to promote institutional opening， taken an active part in the reform and construction of the global governance system， promoted the high-quality joint construction of the Belt and Road， continuously deepened cooperation with countries around the world， actively shaped new rules and standards for international cooperation， and initiated important practice of new economic globalization.

First， China has promoted the implementation of high-quality joint construction of the Belt and Road and global development initiatives， and led the efforts towards inclusive economic globalization. In 2013， President Xi Jinping proposed the Belt and Road Initiative for the first time， and now it has become a popular platform for international public goods and cooperation. High-quality joint construction of Belt and Road follows the governance concept of win-win cooperation and inclusiveness， does not restrict the participation of relevant countries due to differences in ideology， economic and political system， and fully accommodates the development demands of all parties involved. It engages countries to work together to build a broad community of interests， which will help alleviate political and other issues arising from global development imbalance. On September 21， 2021， when addressing the general debate of the 76th session of the United Nations General Assembly， President Xi Jinping put forward the Global Development Initiative （GDI）. The GDI addresses the real needs of the people of the world for peaceful development， fairness， justice， win-win cooperation， strengthens the alignment of development strategies at the global， regional， sub-regional and national levels， and injects new impetus into efforts to implement the UN 2030 Agenda for Sustainable Development.

Second， China has promoted the reform and improvement of the global economic governance system and thereby provided institutional guarantee for the new economic globalization. Firstly， China has worked to promote the reform of international institutions such as the International Monetary Fund， the World Bank and World Trade Organization to enhance the representation and voice of developing countries and the crisis relief capacity of the International Monetary Fund. China has prompted the World Bank to provide more loans to developing countries， and made intensive efforts to help enhance the economic endogenous power of developing countries. It helps to consolidate the consensus on the reform of the World Trade Organization and works to promote the reform of the dispute settlement mechanism of the Appellate Body. Secondly， China has worked to promote the development and improvement of global or regional governance mechanisms such as G20 and BRICS. China advocates strengthening international coordination of macro-policies， rallying the consensus of G20 to deal with global challenges such as weak world economic recovery， climate change and artificial intelligence， and actively providing international public goods. At the same time， China calls for the expansion and improvement of BRICS and SCO mechanisms， and strives to improve their ability to cope with risks and challenges such as energy crisis and food security. Thirdly， China has worked to improve the quality and efficiency of the Asian Infrastructure Investment Bank and the BRICS New Development Bank. The New Development Bank provides strong guarantee for infrastructure construction and sustainable development in emerging markets and developing countries， and promotes global inclusive growth. The Asian Infrastructure Investment Bank has become the largest joint financing partner of the World Bank and the Asian Development Bank， and has carried out close joint financing cooperation with institutions such as the European Bank for Reconstruction and Development and the European Investment Bank. It has also signed important cooperation agreements with many international partners including the African Development Bank and the German Bank for Reconstruction and Credit （KFW）.

Third， China has worked to promote high-level opening-up and facilitated deep integration and interaction between China and the new economic globalization. Firstly， China has aligned itself with high-standard international economic and trade rules and strengthened high-level open cooperation with relevant countries and regions. The Regional Comprehensive Economic Partnership Agreement （RCEP） is the largest free trade agreement in the world. Since China’s entry into RCEP， the trade volume of relevant countries and regions has shown rapid growth. In September， 2021， China formally applied to join the Comprehensive and Progressive Trans-Pacific Partnership Agreement （CPTPP）， which demonstrated China’s determination to conform to international economic and trade rules of high standard. In addition， China also applied to join the Digital Economy Partnership Agreement （DEPA）， an important signal of its active participation in international digital governance. Secondly， the institutional opening-up in China is led by the efforts to establish free trade zones and ports to promote innovation on international economic and trade cooperation rules and standards. By the end of 2023， China has set up 22 free trade zones in seven rounds nationwide， forming a pattern of reform， opening up and innovation that features wide geographic coverage and coordinated development among coastal， inland and border areas. Thirdly， China actively works to create a new platform for international cooperation. China has built new platforms for international economic and trade cooperation， such as China International Fair for Trade in Services， China Import and Export Fair， China International Import Expo and China International Consumer Goods Expo， set up the Guangdong-Hong Kong-Macao Greater Bay Area and Yangtze River Economic Belt， facilitated the integrated development of Beijing， Tianjin and Hebei， and established a new development pattern with domestic and international circulation reinforcing each other.

Fourth， China has explored new rules and standards of digital economy and cultivated new drivers for new economic globalization. The digital economy is large in scale and wide in range， but the construction of rules and standards of the digital economy is not yet up to speed. The international cooperation of the digital economy thus faces challenges such as disorder. In light of this， China has explored the formulation of rules and standards from three aspects， taking into account the current situation of digital economy development. The first is to build a system of rules and standards for value production in the digital economy. In the field of digital economy， relevant parties involved are discussing the promulgation of the “People’s Republic of China （PRC） Digital Economy Promotion Law” to strengthen international cooperation and exchanges with relevant countries and regions in the fields of digital infrastructure construction， data trading and digital trade. The second is to set up rules and standards for the flow of data elements. China promulgated the Regulations on Promoting and Regulating the Cross-Border Flow of Data， which clarified the systems of data exit security assessment and personal information exit standard contract， and promoted the orderly and free flow of data according to law. The third is to formulate rules and standards for profit sharing in the digital economy. China is partnering with other countries to study digital tax and explore new rules and standards for profit sharing in the digital economy， so that development results can benefit people all over the world.

Looking back at history， economic globalization has broken geographical boundaries， facilitated the cross-border allocation of production factors， deepened international cooperation， released great drivers for economic growth， and vividly interpreted the endogenous potential of open development. At present， the world is experiencing great changes unseen in a century. Unilateralism and protectionism are prominent. Anti-globalization trend is on the rise. Globalization is confronted with setbacks. Geo-economic division is intensifying， and consensus on globalization transformation urgently needs to be consolidated. Looking ahead into to the future， China， the biggest engine of global economic growth， is making great efforts to promote the transformation of globalization development mode， governance mechanism and development drivers. A new economic globalization has shown a sound trend of steady development.

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Chen Jianqi is Director and Professor of Global Governance and International Organization Department， Institute of International Strategic Studies， Party School of the Central Committee of the CPC