Opinion | When will the Western-led global order catch up with the world and include Asia?

The world order has not kept pace with the shifting economic dynamics. The US and EU retain control of the IMF and World Bank despite Asia’s economic might, and the US dollar remains predominant despite Trump’s weaponisation of it

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Then International Monetary Fund managing director Christine Lagarde (right) waves from her office in Washington on September 20 after meeting her successor Kristalina Georgieva. The anachronistic “gentlemen’s agreement” that has kept an American in charge of the World Bank and a European in charge of the IMF has proved resilient. Photo: AFP

Published: 10:30am, 27 Dec 2019Updated: 11:33am, 27 Dec 2019

The world turned a corner in 2019. The problem is that the world order didn’t turn with it. This disconnect could have disastrous consequences.

The biggest global change has been the start of the “Asian century”. Today, Asia is home to three of the world’s top four economic powers (in purchasing power parity terms): China, India and Japan. The region’s combined gross domestic product exceeds that of the United States and of the European Union.

The US is no longer even the most globalised power; that title now goes to China. Already a larger trading partner to more countries than the US, China is signing on to more free-trade agreements as well, including potentially the largest in history, the Regional Comprehensive Economic Partnership.

The US, by contrast, is abandoning FTAs such as the Trans-Pacific Partnership, which Japanese Prime Minister Shinzo Abe has kept alive without the Americans. The US share of global trade continues to shrink.

The world order has not kept pace with these shifting economic dynamics. On the contrary, the US dollar remains the predominant currency for settling international trade. The US and Europe retain control of the two leading global economic organisations: the International Monetary Fund and the World Bank. And the United Nations Security Council – the only body that can issue binding decisions for the UN’s 193 member states – is dominated by just a few, largely declining, powers.

In theory, the easiest of these incongruities to address should be the inadequate influence of emerging powers like China in the IMF and World Bank. After all, the US and Europe have already acknowledged – including in the 2006 and 2007 G20 communiqués – that “the selection of senior management of the IMF and World Bank should be based on merit”, ensuring “broad representation of all member countries”.