Chinese Finance Minister Lan Fo’an said that his country’s fiscal system has sufficient flexibility to achieve budget targets, generate stable revenue and balance expenditures through comprehensive measures at a press conference On Saturday 12 October 2024. Lan explained that the Chinese government uses a variety of policy tools such as deficits, special purpose bonds and ultra-long-term special government bonds, tax incentives and fiscal subsidies to reduce risks and promote sustainable economic growth.[i]
In the 21st century, as in all other areas of development and change, the effects of power struggle can be seen in the global economy. Especially the rise of China emerges as one of these changes. Since it is very important for a country which has been excluded, isolated and backward in the past to become a power in the global economy from an agricultural society with its development in various fields such as roads, technology, smart/electric vehicles, energy transformation, nanotechnology and mines, to follow an alternative path different from the path taken by the West and to achieve this based on its own historical experiences.
From the perspective of the “neoliberal consensus”, China, which is considered by other countries as a pioneer state in economic development, has set an example for different visions in the world. In the concept of the developmentalist state model applied by China, the state prevents the market from acting according to its own rules and does not allow market initiatives that would risk the continuation of a single political party and undermine its legitimacy. The way of implementing capitalism is different from that of the United States. Regarding its achievements, it can be said it is a rival to the United States.
Thanks to the Belt and Road Initiative (BRI), China has extended its cooperation with other countries beyond the economic dimension with increasing trade volume and signed various agreements in political or cultural fields. Furthermore, by applying the principle of ‘soft power’, China has been able to establish more stable and long-lasting ties with projects that will help the development of the countries with mutual investment cooperation.
China’s impact on global poverty reduction, peace, stability and sustainable development has resonated worldwide and shaped the future of international cooperation. Over the past 40 years, China has rescued nearly 800 million people from poverty and achieved more than 75 percent of global poverty reduction in the same period. It has worked with other countries to reduce poverty around the world and encouraged a global community with a shared future for humanity.[ii]
China’s basic and important economic policy is simple: “China will only prosper when the world prosper and vice versa”. The country has always closely linked its future with the rest of the world. Moreover, China has launched the Belt and Road Initiative to expand deep and high-level regional cooperation on economic and social development and help countries reduce poverty. According to a study by the World Bank, BRI-related investments will enable 7.6 million people to escape extreme poverty and 32 million from moderate poverty.[iii]
Although there seems to be a multipolar distribution in the economy, it should not be ignored that the US has advantages such as the dollar, keeping central bank reserves in the dollar, being a centre that manages global finance, and being able to impose economic sanctions. Such instruments are still effective in making the US stand out as the hegemonic power. The rise of China over time has caused this unipolar structure to change and evolve towards the so-called ‘multipolar world order’. Another issue emphasized in this context is the changes in the economic balance as the G7, which is part of the Western Bloc, has fallen behind the BRICS. This is not because the USA has lost its economic power, but because its allied states (such as the EU) are experiencing economic difficulties such as not being able to meet their energy needs, especially due to the Russia-Ukraine War.
In the Global Trade Outlook and Statistics update published by the World Trade Organisation (WTO), it was announced that the volume of global trade in goods is expected to increase by 2.7% in 2024. According to the report, global goods trade entered an upward trend in the first half of 2024 with an annual increase of 2.3 percent. This growth is expected to be followed by a more moderate expansion in the rest of the year and in 2025.[iv]
“We expect a gradual recovery in global trade for 2024, but remain vigilant to potential disruptions, particularly the escalation of regional conflicts, such as in the Middle East,” said WTO Director-General Ngozi Okonjo-Iweala. The report forecasts that exports in Europe will decline by 1.4 percent and imports by 2.3 percent in 2024. European exports were negatively affected by the automotive and chemical sectors in the region. On the other hand, exports in Asia are expected to increase by 7.4 percent this year, outpacing other regions. Driven by production centres such as China, Singapore and South Korea, the region’s exports recovered strongly in the first half of this year.[v] At this point, it is seen that Europe and the USA are becoming consumers, while China is becoming a power that keeps production in its control.
In fact, China has stated that it will continue to develop and improve its mechanisms for resolving international commercial disputes, ensure that the legitimate rights and interests of parties from all countries are equally protected, and promote the fair, efficient settlement of such disputes. The Supreme People’s Court (SPC) said that since 2013, Chinese courts have finalized approximately 500,000 first-instance commercial cases involving foreigners and involving Hong Kong, Macau and Taiwan, with parties from more than 100 countries and territories.[vi]
To conclude, it is possible to say that the multipolar structure has been shaped by the US-China rivalry over time and it has changed from a multipolar to a bipolar structure. This is because, with the expansion of international organizations, a grouping towards the Global West and East is being accepted. In this context, the fact that BRICS is both seen as an alternative path against the Western Bloc and the significant increase in the number of countries wishing to join it can be cited as an example. Meanwhile, Washington, through organizations such as AUKUS and QUAD, is putting pressure on Beijing both ideologically and politically, paving the way for the formation of a bipolar structure. Regarding the economic aspect, China, with the positive results of the projects it has implemented in line with its policies, including the BRI, and thus becoming an economic power, is taken as a guide by many countries and even helps them in terms of reducing their dependence on the West.
Author: Berra KIZILYAZI
[i] “China confident in hitting full-year budget goals with comprehensive measures, says minister” Global Times, https://www.globaltimes.cn/page/202410/1321075.shtml, (Date of Access: 12.10.2024).
[ii] “Guest Opinion: China majör contributor to global poverty alleviation, peace” Xinhua News, https://english.news.cn/20241001/bb1dc29303144208ad78675336c837b1/c.html, (Date of Access: 12.10.2024).
[iii] Ibid.
[iv] “Global trade to increase 2.7 pct in 2024: WTO report” Global Times, https://www.globaltimes.cn/page/202410/1321036.shtml, (Date of Access: 11.10.2024).
[v] Ibid.
[vi] “China promotes fair, efficient resolution of international commercial disputes” People’s Daily Online,http://en.people.cn/n3/2024/1005/c90000-20226170.html, (Date of Access: 11.10.2024).