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Gregory T. Chin and Kevin P. Gallagher, "China and the Global Economic Order" (Cambridge UP, 2025)
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- [00:00]
A
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- [01:07]
B
Happy New Year and welcome to the New Books Network. I am your host, Nome Anthony Kanayo. Today I am delighted to be joined by Dr. Gregory Chin, Associate professor of Political Economy in the Department of Politics at York University, Canada. Dr. Chin is a non resident Senior Fellow of the Global China Initiative at Boston University's Global Development Policy center, the Foreign Policy Institute at the Johns Hopkins University School of Advanced International Studies and the center of International Affairs, Diplomacy and Strategy at the London School of Economics and Political Science. He is a former diplomat with the Canadian government and a multiple grant and award winner. Today we will be discussing his newly published book, China and the Global Economic Order, published by Cambridge University Press and co authored with Kevin Gallagher, professor of Global Development Policy at the Paris School of Global Studies at Boston University and the Director of the Global Development Policy Center. Thank you, Dr. Chin, for joining me today.
- [02:19]
C
It's a pleasure. It's a pleasure to meet you.
- [02:22]
B
Thank you for coming. The book examines China engagement with Britain, world institutions, primarily the International Monetary Fund, IMF and the World bank, as well as its evolution within the institution from 1980s to 2025. In it, you advanced the point that through a strategy of hybrid institutional engagement, China exercises two way countervailing power, which basically entails increasing influence within the Bretton Wood institutions. But outside of it, also providing and creating alternative non Bretton Wood institutional options and policy spaces, which cumulatively, which is cumulatively transforming the global economic order toward a more pluralistic and multipolar configuration. Please. Prof. Can you help us understand this more clearly? Talking about the hybrid institutional engagement and China's two way countervailing power.
- [03:30]
C
Oh, thank you, Kanao. And thank you for reading our book so closely and for summarizing it so nicely. Yeah, I think, if you allow me, our book basically makes three or four main points, some of which you've already nicely highlighted by Global Economic Order. The title of the book, China and the Global Economy. We really mean the Bretton woods order. And in particular, as you said, we focus on China and the IMF and China and the World bank group. So in other words, China and the international monetary realm and China and the global development finance realm. And of course, there's one pillar that we don't really address, except for in a footnote in this book, which is the world trading system. Right. The wto. And we had to make a strategic decision. And in fact, when we originally, when Professor Gallagher, Kevin, my good friend, was approached, when we were first approached to write this book by the editor of the series, the Global China Series for Cambridge, Cambridge Elements, we were asked to write on China and the wto. But our feeling was that the much more interesting and perhaps transformative story was actually China and the other pillars of the Bretton woods, the IMF and the World Bank. And part of that has to do with the paralysis that the world trading system is in right now. The WTO is kind of a bit frozen with all the disputes and, you know, the fact the United States has not appointed the judges. You know, there's a number of issues with the WTO and also other scholars have written on China and the WTO in the 20 years since China joined. And so we actually decided, rather than just duplicate or just replicate them, we thought we would focus instead on China and the IMF International Monetary and China and the World bank, global development finance. One of the things, though, that we found is that our basic findings and conclusions about how China has been positioning vis a vis the IMF and the World bank, that our basic points, our conceptual points and our main findings largely carry over also for China and the World Trade Organization and World Trade. And as you mentioned, our basic second point is that China's positioning vis a vis these two major Bretton woods institutions, inf World bank and China's positioning has been evolving over time over those four decades from the 1980s to the current, and that China has been after a joint. You can see how for the first two decades, the 1980s and the 1990s, China's behavior was largely rule taking, taking, absorbing, internalizing the existing rules and norms in these institutions, if you want Bretton woods rules and norms, socializing itself within the existing. Very interestingly, though, starting in the late 1990s and henceforth, China also started taking on more kind of rulemaking behavior with one foot outside of these Bretton woods institutions. Right. So the rule taking was inside. And then you have the rule making, which is the making of new rules and. Right. New norms outside of those institutions, creating new institutions outside. But then also after making some new rules and some new institutions, China also at times going back into the Bretton woods institutions and kind of reshaping the existing norms and rules. And we call that rule shaking. So it's this kind of inside, outside, inside. And that's the whole point of, as you mentioned, our other concept that we advance in addition to the rule taking, making and shaking, is this idea of two way countervailing power or influence, and how China has been kind of adopted this hybrid behavior, one foot inside, one foot outside, and kind of going back and forth. And China's not the only one who has these ambitions or desire to kind of position in this interesting hybrid way. But China has been the most successful arguably in doing so. And so we say that, you know, China with its multiple and mixed objectives, right, vis a vis the Bretton woods institutions, has been relatively successful in achieving its goals, more successful than others. And part of that is about the weight of China, the growing weight and, you know, kind of gravity of China within the global economy over the last 40 years. But it's not only about weight. It's also how is China diplomatically leveraged its weight for influence and power inside and outside in this kind of two way countervailing power. And I think that those are the main points that our book advances. Thank you.
- [08:56]
B
Thank you so much. So talking about the policy objective, there is an ongoing sort of scholarly debate about what the objectives are for China, what China's objectives are really in this strategy that it adopts, this hybrid strategy. There are scholars who would, you know, advance the argument that China is intent on preserving the status quo and probably consolidating its power within these existing Bretton Wood institutions. But there are other scholars who lean towards the argument that China seeks to dismantle existing institution, you know, and establish its own, basically because of China's often argument about existing Institutions not reflecting its values and mostly some of the values of other global south countries. I, I would like to understand where your analysis in this book, you know, is within this binary, these two colors of arguments or spot.
- [10:13]
C
Yeah. And so the way Professor Gallagher and I position. Yeah. Vis a vis these debates is to say that it's not so much an either or. Right. That China was either only a status quo actor or a radical revisionist looking to overturn everything. We suggest that for the first two decades China was largely a status quo actor. And those who argued that China was socializing itself in the 1980s and 1990s, they were largely correct at the same time, as you say, and China, the one point of continuity throughout the four decades is that China has looked to benefit from being a member within the Bretton woods institutions, imf, World bank and then WTO later on too. And China has benefited enormously from being a member in these institutions. It learned a lot of things as far as how to reform its economy, both on the, from the standpoint of monetary policy, exchange rate policy, fiscal policy, you know, macroeconomic policy. Right. That it learned from the imf, but also on the side of development, its own development from the World Bank. China learned a lot. Now, China didn't exactly just accept all the rules of these institutions. That's one thing that's also unique about China's behavior. China was rather strategic and selective. For example, with the World bank, it didn't accept a lot of loans in the so called soft areas. Right. Health and, and education, but infrastructure, energy, power. Right. And these are areas where China's also become a global power over time. They drew a lot, learned a lot from the World bank and I think, you know, employment creation and industrial, you know, industrialization. China drew a lot from these two institutions. So China benefited enormously at the same time. And especially this is where crises, the Asian financial crisis of 1997, 98 and then the global financial crisis of 2008, 2009, these crisis scenarios also created debate at the global level. But what caused these crises, you know, who's to blame? And in the Asian financial crisis, the Western northern traditional leading powers blame the Asian countries themselves. And they had their recipe that they, you know, conditionality that the IMF basically said that if the Asians wanted the bailout money during the Asian financial crowd, they would have to make a lot of the neoliberal, if you want, you know, changes to their economies, open up their economies to foreign investment, reduce the regulatory barriers, allow the foreign investors to come in, free up the Capital markets reduce the public spending. Because the argument from the institutions, IMF and World bank and US treasury was that it was crony capitalism, all right, that the Asians were too corrupt. China didn't necessarily agree with this argument, nor did the East Asian countries, as we now know. And though some took the recipe, the, the help from the imf, they also eventually pushed back. And China from the beginning pushed back. China didn't need the help of the imf. China was able to avoid the damage from the Asia financial crisis. But China and the other Asian countries drew a lot of lessons from that crisis. And they pushed back on the recipe and the advice of the IMF and the World Bank. And I think that's where you see the beginnings of China as a rule shaker and rulemaker, because that's where China and the East Asian countries were largely ignored by the G7 and the Northern powers with their response. So they realized they had to do something on their own outside and not completely confronting and opposing the imf, but they needed to create their own mechanisms too. And I think that that's where China. And then you see similar kind of dynamic with the BRICS countries in the global south countries, developing countries, with the, with the global financial crisis in 2008, 2009. Right. Where China and the others pushed back against the so called model. Right. That the IMF and the World bank was offering up. And that model had done a lot of damage in place like Africa and Latin America.
- [14:58]
B
Yeah, I, I was going to, I was, I'm conserving a question for that because this is actually where I have interest. I mean, in the book you didn't dwell so much about, you guys didn't dwell so much about factors that enabled China to negotiate its way. But you sort of hinted that some of the policies that applies to other global south regions was not applicable to China. China was able to negotiate some of its ways. So, but I was, I'm interested in understanding factors that, you know, enabled China to negotiate its way and why Africa and other regions sort of adopted maybe structural adjustment policies and other conditionalities. But it was a different case for China, if you could.
- [15:52]
C
Yeah, so I think from the beginning, it's very interesting from the 1980s and the 1990s, after China joined the World bank, for example, China was selective in taking on the advice of the World bank and the World Bank. I think because the World bank recognized the potential importance of China, its weight within the global economy, like 1.3 billion people, that the World bank was willing to be more flexible in dealing with China too in ways that they were not willing be flexible with the African countries and the Latin American countries. Right. Smaller countries and maybe where the state was not as well coordinated. And this is where China is kind of unique. You know, a lot of people say a lot of stuff about the Communist Party in China, but one thing about the having a 90 million, you know, member party that is fairly well coordinated internally is that they come to the negotiating table quite prepared, you know, with an idea to make sure that China's national interests are taken into account, seriously protected, advanced, you know, and I'm not saying, I'm not just, I'm not blaming African leaders or. But you understand what I'm saying, like this is where there are differences, right. And I worked, I used to work in the international, you know, development world for the Canadian government. And one thing I can say is whenever the Chinese came to the negotiating table and development projects, they came well prepared. You know, they knew what they wanted, they knew what they could bring to the negotiation. Like they were not just coming empty handed, if they were coming with in kind contributions, they knew what they were bringing to the table too. You know, so this is where they knew how to negotiate. And I think that this is where the World bank also, unlike with Russia for example, where they pushed rapid privatization and if you, you want, you know, political changes, you know, in Russia, shock therapy, that didn't happen with China. Right. And I think that that's where the World bank was willing when it came up and faced, you know, a part Chinese party state where they had an idea of what they were willing to take on with economic reforms and you know, to create a market economy. But some areas where they were not willing, they were not willing to give up all their state owned enterprises, they were not willing to just you completely relinquish state control over large sectors of society and economy and they had the weight to be able to push back. And I think that that's something that is part of our story, you know, then. But then how does China evolve out of that? Because it doesn't just like stay state planning, right? Ch. It's that, that integration of state and market and you know, how did the public and the private sector and you know, things changed a lot. I think that's one of the real challenges for China scholars is actually making sense of those changes. We still don't have all the answers. The Chinese scholars, if they're honest, we don't have all the answers.
- [19:06]
B
Yeah, but it's interesting and I'm taking away. What you said about being well prepared when you're coming to the negotiation table, I hope that African policymakers who would get the opportunity of listening to this interview would have that at the back of mind. And probably they interrogate what it is to be well prepared because that is a word that can just be said, but in essence, what it is to be well prepared is something that they should also be they should interrogate.
- [19:45]
C
Yeah, I totally agree with you. And I think that this is where one day we can have a longer conversation about this because I think China the way, I mean, obviously every situation isn't the exact same, but the basic general approach that China takes to its dealings, I think with African governments is that China's approach is generally, okay, this is about an opportunity for both of us. Let's try to find a mutual opportunity. This is not about one side saving the other one side. And I think that is a major difference in approach which then allows enables a different set of negotiations to happen.
- [20:30]
B
Right.
- [20:31]
C
Then it's up to the African leaders, as you say, the governor, to make the most of it. Right. So I agree with you. Thank you. K. Thank you.
- [20:39]
B
Prof. So there is also this, I would say, strand of scholarship that tend to talk about China in a form of grand strategy, like so talking about this approach to its engagements with Bretton Wood Institution. Would you regard China's approach a deliberate strategy or just a random sort of approach that came up as a result of available opportunities that how would you describe China?
- [21:15]
C
That's a great question. That's a great question. That's something that Professor Gallagher, Kevin and I grappled with. So with the concept of two way countervailing power. For example, when we presented this to leading scholars in China, for example, at the Academy of Social Sciences, they said, yeah, we think you basically, you know, this one foot inside, one foot outside, the hedging, the two way, you know, that that's basically what's happened. But they also highlighted to us and I think they're absolutely right to highlight to they said some of it was intentional on the part of China, in other words, your grand strategy point, but some of it's also you know, kind of like coincidental or situational. You know, there is some degree of randomness to it. But also the other point canal that I think very key is that some of it's also above the other actors in the system, right. Whether it's the global south actors who work with China or the BRICs who work with China to push some of these changes or even Particular governments in the G7, for example, the UK, Germany, France, Italy, at times inside the IMF. And they have a lot of voice, some say too much voice. Right. And they have, you know, in the World bank, they've anticipated at times, oh yeah, maybe it might be good to have China more involved in some of these discussions, including for pushing for change that where those G7 countries may not be in total alignment with the US or Japan on something. And they say, you know what, maybe we should be a little bit proactive and listen to what the Chinese are saying and maybe even support some of their suggestions. For example, the inclusion of the renminbi and the special drawing rights, the currency basket, reserve currency basket. That happened not just because of China's pushing but because some of the key IMF members in the G7 also supported China, particularly the Western European ones. You see. So this is where at times it's also the others within the system anticipating that maybe it might be good to have China involved in some of these things. You know, like keeping China on the outside on all, all this doesn't make sense when you think about China's significance within the world economy now. So Canal, you know, I think that's right. So we have to open up two way countervailing power and you kind of have to do almost process tracing to figure out at what point is it totally intentional and purposive on the part of the Chinese. And at other times when it's others with the Chinese or at other times it's not even the Chinese and others driving it, it's just, you know, others with influence and power in the system who act on certain things, you know, where they think, okay, this may help with some greater cooperation or alignment as far as bringing China in. Right.
- [24:24]
B
And so, yeah, yeah, just a little follow up on this. Are there other areas, for example, like in the World Trade Organization or other aspects, say United nations or Security Council, where we can look at and also highlight this type of strategy with regards to China? I know you don't, you didn't address this in the book, but just a general take on it.
- [24:52]
C
Yes. You know, I think for example, if you look at the United nations and the United Nations Development Program and the UN desa. Right. You know, Department for Economic and Social. Yeah, I think Development. I think there you can see for example the UK with DFID with their Department for International Development now of course part of the, you know, Foreign Affairs Commonwealth and Development Office, FCDO for the uk They've actually been very strategic in working with China, whether it's in global health.
- [25:30]
B
Right.
- [25:30]
C
In dealing with pandemics and communicable disease and in particular in third, third countries. For example, in, in some of the African countries, you can see where the UK China have worked together vis a vis African countries to deal with things like Ebola or malaria, you know, and various areas where you have serious still needs to deal with disease control. And I think that's one example where some of the, you know, Western countries have adopted more, might we say, forward looking, you know, kind of strategic vision rather than just confronting all the time. You know, in the United States did some of that too with China and Africa, you know, especially during the Obama period, you could see some of it. Right. And I think that that's where, that's one area where you can see, you know, where there's been cooperation. Also Germany has also been rather proactive trying to work with China, including vis a vis in the areas of development and climate change. So climate change is another area where we could see it, where the uk, where the so called leaning power in the world seems less interested in climate change and the climate agenda and environmental protection, and where some of the other Western countries, northern countries are still concerned about it and willing to work with a China, you know, and so we see it at the COP meetings and in some of the others, you know, this post parrot, post Paris climate change agenda. Right. So I think that these are areas where you can see important new cooperation, where you have this kind of two way, countervailing kind of element happening. Right. And China's done a lot in these areas, whether it's health or climate. Right. Green agenda, you know, China's done a lot. So it makes sense for others who are worried about these areas to work with China.
- [27:40]
B
All right. I like to talk a little bit about China's sort of monetary ambition and you already talked about China as a rule taker within these institutions and you sort of highlighted some of the trade offs on the part of the IMF and these institutions when it came to China, you know, compared to other global south countries. But as a rule, even as a rule shaker. Rule shaker, the way you use it in the book, China continues to rely on US dollar system and in many instances also restating its lack of intention to own on doing the status quo. Yeah. So, but how should we assess China's monetary ambition in light of this continued reliance on the US dollar system and as well the rhetoric about not intending to undo the status quo?
- [28:43]
C
Right. So this is a very interesting question about that also relates to China and the IMF and the monetary and the reserve system for the world. And China's own efforts to gradually increase the use of its national currency globally, along with advancing the role of the sdr. Right. Their multilateral reserve asset that the IMF champions. And I think very interesting for China, China is very careful with whatever changes it's advancing in the international monetary and reserve system. As you say, part of the reason is because China is a holder of a massive amount of foreign currency reserves, of which at least a third are in US Dollars. And so China has enormous leverage and capability, capacity, weight within the existing international monetary system. At the same time, China knows that when it has conducted so much of its trade and investment in US Dollars, there's an inherent vulnerability for China in so doing, because it's a currency where it does not ultimately control the supply of that currency, the printing of that currency. That's the United States, of course, that controls it, and also where the United States has control over the global payment system, which is, you know, for the dollar payment system globally. And so there's a certain vulnerability for China there. And I think. So what we've noticed is in the last 20 years, China's been gradually advancing or, you know, encouraging increased use of its own currency. And I think China will continue to do so. Part of it is because in addition to the inherent vulnerabilities for China in a world of growing weaponization of financial systems and where the west or the northern countries are increasingly, in the last 20 years, more and more putting financial sanctions on countries, you know, for China today it's them tomorrow could be us. Right. And so I think you can see there's real reason for China and others to ask some questions about whether they need to have alternative options now this, these types of changes, unless something cataclysmic happens in the world economy or in the, like world war or something along those lines, short of those types of apocalyptic scenarios, we're talking about gradual change. And it's not so easy to gradually shift, you know, to, to shift away from the US Dollar because everyone's gotten so used to using it. Yeah. But I think we are seeing an effort of many countries around the, not just China in East Asia, the ASEAN countries, Japan, but also the European Union. Right. In African countries, Latin America, they all realize there's a certain vulnerability for all of them right now, especially when you see weaponized trade as well as weaponized finance, weaponized investment. Right. So. But there's one other element to all of this. Kadayo that is really hard to understand. But I think important move is fintech, you know, the finance, the digitalization of money and digitalization of finance moving forward. A lot of stuff is happening and happening and very quickly. And I think China also realizes that, you know, it wants to make sure that in those changes in the world, it also wants to advance its options, right. The digital renminbi. And I think that, you know, China's not comfortable with crypto. Right. And we can understand probably why. Right. There's kind of some reason why criminals want to be paid in crypto. Right. So I think, you know, the lack of the tracking capacities perhaps. Right. So this is where one can understand why not only China, but central banks in East Asia and Europe, you know, not so comfortable with crypto. And so, but so China's been advancing central bank digital currency. And of course, China also has Alibaba and WeChat pay, right. So it's only massive digital platforms inside China. So these are all part of the story moving forward. Canal. Right. I think that the IMF also has to grapple with all of this too. So I think that there will be changes coming in the world and it may, you know, and it depends on how the United States really, really did like this story. Often we talk about China this, China that. A large part of the story about the change in global order is, of course, the United States. Definitely. Yeah. Yeah.
- [33:54]
B
Well, it sounds, though, Prof. Like you are on the way for a new book and I'm looking forward to it.
- [34:04]
C
You're right. I'm actually right now working on finishing the revisions to book on the global expanding use of the Ribbon B Global. Yeah. Thank you for the advanced promotion.
- [34:17]
B
Yeah, well, I'm looking forward to it. Hopefully you'll be my guest again on this channel. Can we can talk about it?
- [34:26]
C
Thank you. I'd be honored.
- [34:29]
B
Thank you.
- [34:29]
C
Prof.
- [34:30]
B
So, talking about rule, rulemaking, China's portfolio as a rule maker, most of these have been outside the Bretton Wood Institution. And in the book you framed China's pioneered institution, aiib, the New Development Bank, China Development bank. And these alternative. You frame them as alternative. Reading the book, my understanding is that they are so they are alternative because they share some features of the Bretton Wood Institution, but we know that they also differ in some of the principles, rules and norms. Okay, help us. In your view, what is the most distinguishing element of these China pioneered institutions with compared to that of the Britain woods in terms of norms and general governance principles?
- [35:30]
C
So, thank you. So this is an area where Professor Gallagher Kevin and I have done a lot of work and we only were able to use a part of it for this book. I think some of the biggest changes are different rules and norms that the Asian Infrastructure Investment bank and the New Development bank of the BRICS that they champion. The most significant, for example, one infrastructure, a focus on infrastructure and energy projects. These are what we used to call the fundamentals of the economy. And this is where the World bank and some of the other regional development banks kind of got away from this with their focus on proper growth, focus on social policy, basic health, basic education, gender policy. Of course these are all important areas of work. But the fundamentals of the economy, industry, jobs, infrastructure, power. It's as if somehow the fundamentals were somewhat forgotten in the 1980s and the 1990s. And I think that these two banks represent a response from the developing world and the major emerging economies of hey, don't forget those fundamentals. Without those fundamentals, we're going to be locked in under development forever. So I think that's one thing as far as the substance. Also in the area of energy, both banks, AIB and NDB are very self conscious that they are what you might call the babies of the Paris Climate Change Agreement in the sense that they were the first new multilateral development banks that were created after the Paris Climate Change Agreement. And they self consciously understand that part of their mission is to advance the climate agenda, renewables, green, so green industrialization, green finance, clean technology, climate damage reversal. I think that this is where they are and to some degree they still were providing some funding and are providing some funding in some of the more traditional fossil areas. But they've also tried to make commitments to target the increase in a larger amount for renewables, especially moving forward already and moving forward now. They've been around for a decade now. So this is, I think also quite important is the degree of commitment that they're trying to, you know, support the climate agenda and green agenda. So those are some of the areas of substance right now we can get into some of the more fine, finer, you know, like the new development bank of the BRICS probably is more comfortable than other multilateral development banks with working with state companies, for example. Right. That's a whole new area of research that needs to be done. Because the World bank likes private, they don't like state. Right. And so I think that's also very interesting, you know, what's the role of the public sector? Don't forget the public sector, don't forget the role of the state or government in things.
- [39:09]
B
Right.
- [39:10]
C
And so, you know, in protecting the public good, not everything can be privatized. Right. So I think that's important. But then also as you mentioned in the governance arrangements of these banks, especially with the new Development bank, there you see the brics trying to offer equal voice, equal contribution, equal contribution, equal voice, at least for the five original founding members of the new Development Bank. Now new members join with less voice and less contribution. But it's a very interesting ongoing evolving story there. And I think eventually the BRICs will also have to rethink the stakeholder arrangements in that ndb, right? Because otherwise you'll have permanent second class citizens in those banks. It can become a source of tension for the new members. AIB is closer to the IMF and the World bank model of weighted representation, weighted contribution. China has a de facto veto on that aib, but China's very careful about not using it. Right. And so the first president of that bank from China, Jin Lichen, was very, put a lot of effort into building the multilateral culture of that institution. Right. And trying to manage and avoid this idea of the bank being China dominated. Right. And the Europeans have actually a very large voice in that aiib, right. Not only the south. In fact, the Europeans have, one could argue, outsized voice and representation that big because they have two groups in that bank, one is the Euro countries and one is the non euro countries. And so they have a lot of voice on the boards of that bank. So this is very interesting. These, these institutions, I think, you know, have some very interesting innovations that they are championing. Right. And so I think those are some of the rules at the multilateral level, the new rules and new ways of doing things. You know, they're very conscious, they have to introduce some new ways of doing things, otherwise what's the point?
- [41:31]
B
It's actually interesting, I was listening carefully that you, you didn't mention conditionalities because this is something that is like most very common in the argument. The distinguishing based on China's prioritization of non conditional in quote, I actually prepared a question of regards to that and would just address the usual conditions. Usually the IMF and the Bretton Wood institutions are framed as putting conditions on their partner or member countries while China is not doing the same. But what about the clause of the One China policy, you know, One China policy and as well as the contracting mostly, I mean there are some literatures that highlight how most times the contracting is a closed, you know, that is not open for, for the non Chinese companies to buy. How would you sort of address this kind of critics when it comes to.
- [42:46]
C
So if you want I can talk to the conditionality part more broadly. But for your specific question about the One China policy, I think that's less about the AIB and the ndb, those multilateral dynamic. Taiwan is not a member of those banks. It would have been interest interesting if the authorities in Taipei had asked to join the aib, right? I mean Taiwan is a member of apec, right? Beijing and Taiwan, you know, the authorities in Taipei agreed that Taipei could be a participant in apec and that's very unique. So that's an area where they've actually worked together to reach a consensus. Part of the challenge is the current authorities in Taipei are not interested in that type of working arrangement with Beijing. So I think the, the issue for the about One China policy is more, I would say a bilateral, you know, so when China's working, you know, China Development bank or Ex IM bank, that's really more the question. That's where the implicit political conditionality of One China policy would be, you know, split. I, I think, you know, a fair point, I think for AIB and ndb the conditionality point is more as you raised that of they in both, both institutions say they don't, you know, they don't use traditional MDB style conditionality and they prefer to. And they work according to so called local standards, local regulatory rules on the environmental, social impact, governance impact, esg. And some people have criticized and said well, you know, that's not strong enough. You know, you should be going in with the, you know, global best practices like the World bank. And the World bank has improved in these areas over time. Their conditionality, I think at least on the environment, you know, they've gotten better at some of what they do. But I think the basic positioning for NDB and AIB and ndb, it's the BRICS countries, but AIB also the partners of the members of the AIB have taken the position, especially in that NDB is that they're uncomfortable with the idea that there are some universal norms that come out of a particular place and then impose on the rest of the world. I think that's fair, you know, to be somewhat uncomfortable about that. And this idea of one size fits all kind of approach, right, that the IMF and World bank have their model and they basically, you know, make it the condition for the, their borrowers. I think this idea, the idea, I think of the NDB and the idea's preference is to work with the local countries and to ensure that that implementation when the projects are implemented, that they actually abide by local standards and local regulatory standards. Now that then requires that the local regulatory standards or national are actually strong. And so that may also explain why at times it takes some time to get those projects going for the AIB and the ndb, because if the local standards are not strong enough, then they have to work with the locals to strengthen the standards. And they're dealing with large scale, like where the time period for large scale infrastructure projects, they are quick projects, they take many years and they involve large amounts of financing. And where you have to, if you're going to be serious about post Paris climate change and you know, managing environmental impact and you have to make sure the local government, the national government has the proper environmental standards. Right. So I think it's not conditionality but it's, you know, that. So then it becomes the dialogue between the AIBNDB and the national government and local authorities. Right. And I think that that's, but I think what they're trying to do, the spirit or the intention is to not be colonial powers. The intention is to not be one size fits all, imposing a so called universal standard from the outside.
- [47:19]
B
Thank you.
- [47:19]
C
Prof.
- [47:20]
B
Thank you for that clarification. So I would just move faster to the conclusion. Your conclusion suggests that China now has an exit option from the Britain Wood institutions. However, this depends on the response of the west, especially the United States. What policy choices by the United States or Europe would you most likely suggest would encourage China to remain invested in these Britain Wood institutions? And also conversely, what conditions would you consider would make China just pull out?
- [48:04]
C
Right. Right. So I think in the last part of our book we talk about looking ahead, as you've nicely indicated. And I think that that raises the question of the sustainability of this approach that China's taken, this hybrid approach. You know, it's been very successful over the 40 years in doing this kind of two way countervailing power and rotating, making shaking. But it's experiencing pushback now, especially from the United States, but also some of the other Western countries and not only in the Bretton Woods Institute, but UN as well. You know, you hear about talk of from the west about China taking over, you know, these international institutions and warping the institutions to China's preferences and norms. This kind of argument, I don't think that those arguments are actually very helpful. They're not really rooted in serious research and field research. If you look at the scholarship and the scholars who've done the serious research, you can see that China's voice within the major established institutions is still in catch up mode arguably relative to its weight and influence in the system. And I think so one of the points I would raise is that, that the approach of just seeing China as a threat and as a negative force, you know, looking to, you know, as a malign actor looking to undermine what was the expectation you, if you are asking for China to be more of a quote unquote responsible stakeholder 20 years ago and then China steps up and does take on more of a role in burden sharing, you know, and especially when the western or northern countries don't want to make a lot of contributions, whether it's MDGs or whether it's, you know, other areas in global development or, you know, or UN peacekeeping and China steps up, of course China's going to want to have more voice at the table. What's the expectation? Right. And so I think the approach that needs to be taken is it is a better overall global scenario if the leading powers can learn to work together. And yes, of course there are differences of national interests and sometimes areas of national security where you, you know, they're kind of no go zones. But at the same time I think we really do need the building of new consensus, you know, and across the global architecture if you want, you know, and some people talk about the need for a new Yalta. I agree. You know, the US and China, because everyone's at the mercy of these two powers, right? How they get, whether they get along or not or how they interact affects everyone. I live in Canada, I, we're very close, you know, kind of to the United States physically, ge, geographically and you know, culturally. But also China is significant in the world and you know, you can, has felt squeezed in this scenario. And I think everyone is reliant on these two getting, you know, figuring it out somehow. So I think it's really important moving forward and I think the more that the two sides are willing to engage and figure out how to do the burden sharing but also power sharing, the better for everyone. And as you say, this is a real challenge because I think Henry Kissinger said, you know, neither the US nor China have much of a history of doing this kind of power sharing thing. And so I think it requires new, you know, really quite changed thinking. But I, I'm, I hope, I hope that this can happen. I think one of the real challenges moving forward Karao, is that what happens if China maintains the growth rate not at the astronomical rate but even at 3, 4, 5% for another decade, then China will definitely be the world's largest economy, you know, at least in aggregate per capita. Of course. Still, there's a lot, you know, because of the population size in China. What does that mean for everyone? And global public goods provision, you know, is China willing to step up and play more of a role? And for the United States, if China is the largest economy in the world. Right. And Professor Gallagher, Kevin and I have both thought about this too. You know, what does this mean as far as voice representation in the IMF and the World Bank? You know, would the United States be willing to consider a situation where it has equal voice with China in these institutions? Politically, it's hard to see that right now. When you think about how Washington frames the China issue. Right. It's all threat, but looking to the future, it would seem really important, you know, like, where's the give and take going to happen?
- [53:34]
B
Thank you for that. So one of the recent developments we've seen currently is the United States withdrawing itself from most of these legacy institutions. In your view, is there any incentive for China to remain and consolidate within these institutions despite these rhetoric, maligned, sort of in quote, maligned attitudes towards it or hostile attitude to it, are they incentive for the, for China to remain in these institutions?
- [54:14]
C
I, I think there's huge incentive for China to remain and try to maintain these institutions. Right. And especially if the United States withdraws, because I think Beijing realizes it's really expensive to create a whole new architect. And this is the whole point of why it's maintained the hybrid positioning. And I think Beijing also realizes we're in a world in flux, right. In transition from an old order, post World War II, into something new. But no one really knows what that new order looks like and what it's going to be. I think even Beijing is trying to figure out it wants China to have more voice and more influence. But it's not clear that China wants to just dominate everyone. Right. I mean, there are huge costs involved in being the number one. Right. And, you know, everyone looks to you for everything. And the United States knows that. Right. We can see Donald Trump doesn't want to play this role anymore. Right. Obama also. Right. Was raising good. Don't, don't, don't just look to us all the time. And so, right. As the consumer of last resort. And I think China knows that in the world, you don't want anarchy. You want some rules, you want some norms, you want some kind of expectations and predictability and some degree of certainty or at least, yeah, predictability. Some Rules. And so I think that that's what the multilateral institutions. This is where I think China has changed and evolved quite a bit in the last 40 years that we've been working on, that we address in our book that China has come understand where multilateralism is useful. Right. And it's learned a lot, including from the United States on this.
- [56:06]
B
Right.
- [56:06]
C
The United States understood after World War II, when it was the paramount supreme power, don't like it had a number of options. Right. John Eikenberry talked about this. Right. One is just walk away, go home. It's not. But that's. It's somewhat dangerous if you do that. Right. Another is you just outright rule everyone. But that's like colonialism, imperialism, you know, and you don't necessarily want to repeat that. So then what's the other option? The other option is you create some institutions that help set a set of rules and standards and norms that, you know, provide some predictability on things. So I think that, that China's understood that that lesson. And so I think Kaneo, going forward, China will continue. The question is, though, China is not a rich superpower per se, from a per capita standpoint, so how much can China afford? And the leaders of the party state in China, they know they have 1.4 billion people that they're principally responsible for and then the rest of the world. So it's very interesting.
- [57:14]
B
I would, I have a hypothetical question to speak hypothetically about the implications of this bifurcation in an instance of, say, split division, China's exit from these institutions. What would you consider to be the implication for the global economic order? Talking about, even in times of crisis, in times of crisis, is it probably going to lead to fragmentations in, you know, coordination problems, or would it bring about stability? Speaking.
- [58:01]
C
Right. And so one of the questions that Kevin Gallagher and I discussed in writing this book is looking at the emerging order. Is it post Bretton Woods, Right. Like the undoing of Bretton woods, or is it a remaking of Bretton Woods? Right. Where these outside institutions that China's helped create are supplemental. Right. They help even though they're not directly within breadth, but they're, you know, they're coordinated to kind of help in some ways to maintain IMF World Bank, a world where the IMF remade, but still, you know, at the center of everything. And I think, yes, if it's the, the scenario of China leaving the IMF and world. Because we don't believe that China wants to leave IMF for World bank, right. China wants to still be part of that. Yeah.
- [58:49]
B
And I, I, that is why I said hypothetical.
- [58:53]
C
Right. And so what would cause China to leave, probably what would cause China to leave is if the United States wants to somehow make life unbearable for China inside these institutions. The challenge right now, given the current scenario of the United States, is that it's not clear that if they ever wanted to push China out, that the Trump administration or the, you know, the US Government and the Congress would be willing, though, to increase its investment into the multilateral institutions. Right. So then you have China out and you have America not increasing its investments. Where does that leave those institutions? Basically, it's the end of those institutions. That's the end of the Bretton woods order in the end of the Bretton woods system. So my read is that that's the scenario we're talking about there, but I think that given the overall scenario right now, I think Professor Gallagher would feel similar, is that the United States, not the real question is whether the United States wants to continue to be in the Bretton woods institutions at this point.
- [60:01]
A
Right.
- [60:01]
C
Donald Trump has called for a review, the Trump administration has called for a review of America's role within the IMF and World Bank. And the question, you know, there are a lot of isolationist or protectionist forces in the United States these days. The real question is, you know, I think whether the US Will continue to be in there now, if they are, you know, are they willing to up their contributions? Right. But if they just make a power grab and try to push China out, I don't think that leaves the system in a very good scenario. I think that's where you're really talking about the end of the Bretton Woods.
- [60:38]
B
All right.
- [60:39]
C
Prof.
- [60:39]
B
Thank you so much for these interesting one hour time with you. I would if just final question. I like to pose this to all my guests. If readers, if you would suggest one of the most, the most important points readers should take away from this book, what do you think it is?
- [61:03]
C
Yeah, I think the main point is that China has been quite successful with its kind of approach, evolving approach to these institutions and that I think we should see it not only as kind of somehow just threat to everything, that the world has benefited a lot from China joining the Bretton woods institutions. If you think about the last 40 years, right. China's contributions to the world economy and not only from the growth standpoint, but overall from a security instability standpoint too. Right. China's not been the cause of financial crises, nor has it been the cause of conflict. Geostrategic conflict in this, you know, in the last fighting wars with anyone. Right? So I think that this is where I think, seeing the role of, of course, China has been, you know, pursuing its interests, but it's been doing so in these institutions in a way that's also with an eye to the global good. And at times, I would argue, even sacrificing some of its national interests at times for the global good. And I think that's a key element of global leadership is, you know, are you willing to sacrifice some of your national interests for the global good? And I think that, you know, seeing China in from that lens and, you know, that I think, you know, gives us a different way of approaching this question of China and the order. And at the same time, it's very complicated. It's not straightforward, but I think, you know, kind of this careful tracing and tracking of China's positioning relative to others within this order, it's very important. I think, research moving forward, of course, the biggest question is, where are we left at the end of all this? Moving forward? And I think that maybe, as you say, that's the start of another book.
- [63:03]
B
Well, thank you, Professor Chin, for joining me today. It was so nice speaking to you, and I look forward to your new book when it comes out. Thank you so much.
- [63:15]
C
Thank you. Canal. It's been a pleasure and an honor. And on behalf of Professor Kevin Gallagher, myself, thank you.