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Dec 26 2016
How to Make a Truly Democratic and Inclusive Globalization?
By Chen Dongxiao
Speech at the T20 Summit
Beijing, July 29, 2016

Dr. Chen Dongxiao
Shanghai Institutes for International Studies (SIIS)

Distinguished guests,
Ladies and Gentlemen,
First of all, I would join other two co-organizers to extend our warm welcome and sincere thanks to all of you travelling to Beijing to attend this year’s T20 Summit on Building New Global Relationships.

Ladies and Gentlemen,

Due to the globalization and technological breakthrough in the past century, we have witnessed unprecedented material and social progresses in human history, while at the same time we have also seen serious problems accumulated. Today, a new age of uncertainties is challenging our world.

First is the environmental degradation, ranging the gamut from the extinction of increasing number of species on the planet, to the climate change and extreme weather, which have not only cost us tremendously but also threatened the survival of Human Being and sustainability of the our planet.

Second are the rising societal stratification or divisiveness around world, both in OECD countries and in larger developing world. Even in the most economic dynamic area like East Asia, according to the estimate of Credit Suisse Global Wealth Database 2015, the top 10% rich people own 50-80% of total wealth and the figure still on the rise. The rich and poor gap in many other least developed regions is even more prominent.

Third is the increasing wave of populism, extremism, protectionism and nationalism across the world. Moderate and central politics seem less appealing. Meanwhile, the traditional and non-traditional security threats are looming larger. Global Peace Index shows the world is getting less peaceful in the last 25 years. More death and refugees have been caused by wars and conflicts, especially in the Middle East.

Who is to blame for? The economic globalization seems to be the focal target of bashing. To be fair, globalization originated in the end of the 19th century has brought enormous wealth and technological advancement especially since the end of World War II in the last century. According to the statistics of World Economic Forum, “in aggregate terms, the human race has never had it so good. Life expectancy has risen by more in the past 50 years than in the previous 1,000. When the Berlin War fell, two-fifths of humanity lived in extreme poverty. Now it’s one-eighth.” Meanwhile the wealth distribution is increasingly unfair. As one report of World Economic Forum has pointed out, “Statistical proof of overall well-being is cold comfort to a middle class whose real wages have stagnated, or to poor people in the US and other so-called ‘rich’ countries whose poverty has deepened.”

How can we make “truly democratic globalization” that will also benefit the 99% people rather than the tiny 1%? There is no fast and miracle cure for the problem. But of course we have no luxury to just sit idly overwhelmed by pessimism.  In response, the more attention of both domestic and global political agenda should shift from maximizing wealth creation and expansion to managing wealth allocation.

This challenge is impending as we have seen a growing backlash against the globalization across the world driven by the political awakening in the age of information and individual empowerment. If we do not actively adjust institutions to respond to the challenges, we will face more fierce nationalism, protectionism and even exclusionism driven by more dramatic and populist forces. This is also the essence of global governance.

Ladies and Gentlemen,

The 2030 Sustainable Development Goals approved by the UN General Assembly last September is a path-breaking agenda. It is the first truly global development agenda that all developed, developing and civil societies have actively participated. It is also the most comprehensive agenda covering People, Planet, Prosperity, Peace and Partnership aiming to provide us a map to “transform our world” into an inclusive and sustainable one “leaving no one behind”.

Then how to turn the vision into a reality? The G20 as primary platform of global economic governance has the special advantage of economic and political weight. Its members should lead by example in accelerating domestic transformation aligned with the 2030 Agenda, contributing to the provision of global public goods and creating enabling frameworks for sustainable development at national, regional and global levels in the long term.

The Chinese presidency of the G20 has created the first momentum in promoting mainstreaming of the 2030 Agenda into the work streams of various G20 tracks, pursuing a G20 Collective Action Plan and voluntary national action plans. This effort and holistic approach are fully applaudable. I also believe that the next year’s G20 host Germany will be as same passionate as China in carrying this implementation agenda forward.

Therefore, based on the general framework set by the Chinese presidency, we need to identify more tailored and specific priorities for our future work. Here are some of my primary thoughts:

First, different types of countries need to identify their strategic priorities for SDGs

For those least developed and low-income countries (LDCs & LICs), their working agenda should focus on promoting sustainable industrialization, job creation and enhancing the capacity to move up the global value chains. Improving infrastructure should be the key nexus agenda for both productivity increase and social inclusiveness. The G20 should clearly identify its infrastructure agenda as one of the top priority to help the LDCs & LICs for implementation of the 2030 Agenda.

For those developed economies or high-income countries, they really need to transform their macroeconomic policies and regulatory rules respectively and improve social security net to enhance inclusiveness and sustainability of their economies. Developed economies has dominated the global financial, industrial, trade and technology systems, hence their regulations and policies. They need to integrate more social considerations into their economic regulation and take into account of the overall interests of the external world when making their own policies. For instance, the G20 Green Financing Study Group’s recommendations should be adopted by all developed economies to green their financial system. They should also show their leadership by promoting the initiatives such as technology access and Open Science across the world.

For the middle income emerging economies, they also need to shift their focus from seeking economic expansion to managing economic structure toward a more balanced and sustainable development. Social inequality and environmental degradation are also accumulating rapidly to a critical point in middle-income countries that will hinder their further development.

Second, new global partnership for sustainable development should be enhanced.

The Addis Ababa Financing for Development Conference last year signaled a strong push toward the “beyond aid” alternative resources, especially more domestic resource mobilization and other private resources. This is certainly understandable, but the critical role of ODA should not be overlooked, especially for those LDCs & LICs, as well as those fragile and conflict states that still rely heavily on aid and the global public goods agenda.

Major economies of G20, particularly developed economies, should play their leadership role in providing global and regional public goods, such as infrastructure connectivity, for the developing world to be better integrated into the global value chains. The total debt level is rising again in developing countries and we need to be cautious of a new round of debt crisis.

For the global partnership of sustainable development, an increasing number of middle-income countries have been more proactive in international development cooperation, particularly in terms of facilitating or bridging the new type of South-South Cooperation. This kind of partnership, on one side, will work on leveraging capital flows from the new donors such as China, India, and Brazil to low-income countries. In the meantime, knowledge creating and experience sharing has become an important part of such partnership.

New global partnership also demands comprehensive institutional reform in the major international organizations, in particular the UN Development System, to have more coordinated, efficient, and result-oriented distribution of development financing. The approach taken in raising funds needs to be made in the way conducive to the systematic implementation of the UN 2030 Agenda, which means that the increasing earmarked fund received by various development organizations should be aligned with the overarching and integrated goals of the UN 2030 Agenda.

At national level, new development partnership should go beyond implementation of programs and projects. It’s also of critical importance for both sides of the partnership, including major donors and recipient countries, to be involved into the process of drafting and identification of national priority areas in need of special focus. It should be an inclusive process to get the participation of all the major stakeholders. The same approach should also be taken in the case of drafting Nationally-Determined Implementation Strategy of the 2030 Sustainable Development Agenda.

As for partnership with private sector agencies, it’s correct to bear in mind the caution that some private sector agencies join partnership with the UN mainly to exploit the opportunities provided by the reputation of the UN system. The UN should set clear standards and code of conduct for the private sector actors in the partnership. It’s also important to get the national government involved into the process so as to have more leverage on the private actors.

Finally, I would say a few words about the think tanks role in this process.

It’s been the 5th year since the Mexican presidency introduced the first think tank 20 meeting. There have been quite a number of conferences and workshops held across the world involving a very big think tank network. They have played big roles in promoting second track dialogue among G20 members. But think tanks need to enhance joint focused research on major systematic and prospective issues that other international organizations have not yet covered. The implementation of the 2030 Agenda is a good topic for them. They can go beyond short-term political cycles and make strategic proposals.

With that, I will conclude my remarks and look forward to a very fruitful and lively discussion in the next two days. Thank you very much.

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