Macroscope | China is pushing for a better, more representative form of multilateralism, not seeking to replace it

When there was “taxation without representation”, there was a revolution. That is the story of the American Revolution in the 18th century. Today, in international relations, there is similar dismay over “contribution without representation” among China and other emerging economies: they have long represented the bulk of global economic growth, but lack a comparable position in global governance. Luckily, such a disparity is bringing evolution, rather than revolution.

The reforms of global economic governance have been trying to catch up for decades, but American hegemony is delaying the process, frustrating emerging powers. Specifically, the World Trade Organization has largely been paralysed, both in terms of negotiation and dispute settlement, the World Bank has been wrangling with capital inadequacy issues, and the International Monetary Fund lacks a credible quota formula for its members to reflect the changed landscape.

With reforms of those old institutions proving difficult, China has decided to open up a new path of multilateralism by establishing institutions that secure the voices of the majority and cater to their needs. These include the Belt and Road Initiative, Asian Infrastructure Investment Bank (AIIB), the New Development Bank and, most recently, the Multilateral Cooperation Centre for Development Finance.

Luckily, the new institutions unequivocally uphold international best practices. For example, the 2019 Belt and Road Summit vowed zero tolerance for corruption and promulgated a debt sustainability analysis framework devoted to the initiative, drawing on IMF and World Bank practice while avoiding their anti-investment bias.

The Chinese government officially prohibited overseas investments in new coal power, starting last year. The AIIB recently revised its energy policy, explicitly banning coal mining and coal power investment; in fact, it has not invested a cent in coal since day one. The China-led institutions are all determined to be clean and green.