The Valdai Club
conference hall hosted a seminar to
review the plenary session of the St. Petersburg International Economic Forum,
which featured Russian President Vladimir Putin and Chinese President Xi
Jinping for the first time in the history of the annual event.
The subject of the discussion
held by the experts who had gathered at the club was problems facing the world
economy and how it can be regulated. These issues were raised at the plenary
session of SPIEF-19, primarily in the speeches of Russian President Vladimir
Putin and Chinese President Xi Jinping.
During the expert discussion,
it was noted that tectonic changes which were taking place in the world economy
will require further analysis, and that at the moment, there is no complete clarity
on what particular consequences these changes will have. Experts noted that
special attention should be paid to the role of technological innovations,
which now serve as the main driver of economic growth, as well as the
importance of regionalism, i.e. the formation of new regional associations and
unions for the development of global governance.
It has been suggested that
regional integration may be the most important element in the transformation of
the structure of the global economy. This process can proceed through the
formation of a platform for interaction between the largest regional
integration groupings, through what can be called the «regional twenty».
The panellists agreed that the
main question was what practical steps should be taken, and which should be
taken first.
Thus, in the context of
changing the architecture of the world economy, the importance of the Russian
president’s proposals to move beyond the trade and sanction restrictions
targeting medical supplies and other goods of humanitarian importance was
noted. The importance of regional projects, such as the EAEU and the Belt and
Road Initiative, along with other regional initiatives in Eurasia noted by the
leaders of Russia and China, can give an important impetus to the processes of
openness in the global economy under the conditions of globalisation in
developed countries.
Also, experts say, new formats for addressing world economic relations will be created by regional organisations and centres of integration like the SCO, which is beginning to morph from a security organisation into an economic unit. The SCO may become a serious player in developing the rules defining international cooperation. At the same time, experts believe that regionalism provides an effective alternative to the «great game» between the United States and China, which the world economic system is in danger of becoming.
The processes accompanying the
regionalisation of the world economy were also analysed in a Valdai Club report
which was prepared for SPIEF-2019, on the role of regional integration in the
transformation of the global economic architecture. The key proposal outlined
in the Club’s report is the formation of a platform for interaction between the
largest regional integration groups: the so-called «regional twenty», or R20.
The expert panel discussion at the Valdai Club seminar confirmed the importance
of regional integration as a key factor in the transformation of the world
economic system
In his speech at the plenary
meeting, Vladimir Putin called for the world trade system to be adapted to
modern realities, as well as for an increase in the efficiency of the World
Trade Organisation. During the course of the expert discussion, difficulties
were noted that are associated with the relatively limited-in-scale reform of
existing international institutions, such as the WTO. Experts pointed to the
factual insufficiency of real attempts to change the existing structure of the
world economy. Palliative adjustments, in the form of minor changes in the
rules for the functioning of multilateral organisations, cannot by themselves
produce qualitative changes for the global trade system.
In essence, experts noted, in
the modern world there is a certain contradiction between the need to reform
the international institutions necessary for the global regulation of the
current, super-interdependent world economy, and the need, no less important,
to preserve existing organisations that continue to play an important role.
Some participants in the
discussion pointed out that major world players such as Moscow and Beijing
generally support the preservation of existing institutions of global
governance, or prefer to act within their framework and, at least, do not offer
their own models of the general world order and its financial architecture. So,
China, despite its economic strength, does not challenge the US explicitly.
However, experts noted, it is
possible that the whole question is about time, and it’s necessary that both
China and Russia carry out certain internal changes in their banking sectors,
in order to increase the stability of their own financial systems. It’s no
wonder that China sees things as proceeding according to the principle of
«drawing radii, expanding circles», which means, experts say, China’s
achievement of its peak of power by 2040. This will lead to a gradual increase
in the space of Chinese influence and a dynamic expansion of this influence,
far beyond the borders of the country.
During the discussion, an
urgent need for de-dollarization was noted, primarily due to the fact that the
current dollar has clearly become a tool for the issuer to place pressure on
the whole world. However, at the same time, the complexity of this task was
emphasised. It was said, for example, that introducing renminbi-denominated
trading to the Moscow Stock Exchange requires the creation of appropriate
conditions. So, we need a «swap pool» capable of buying and selling a certain
supply of renminbi, and we need to allow exporters to China to use renminbi and
exchange them for other currencies. The experts concluded that the renminbi
could soon become an alternative to the dollar.
Experts were cautious about
China’s credit policy. Borrowing in RMB is much more expensive than in dollars
or even rubles, since Chinese banks are not ready to lend to Russian
organisations at internal rates, the experts said. Since Russia has shown that
it can withstand the pressure of sanctions on its own funds without Chinese
financing, a certain degree of parity appears in relations between the two
countries, the expert added.
At the same time, the
aforementioned difficulties can be resolved sufficiently through the
establishment of regional processes. A worldwide network of economic regulation
can therefore be gradually created using regional unions. It was opined during
the discussion that perhaps there is no need to immediately look for any global
solutions, as they will emerge through the interaction of regional associations
and unions.
Another topic of discussion
was technological development. This topic was clearly voiced in the Russian
President’s speech at the plenary session of the SPIEF, where Putin spoke about
the technological development agenda. An attempt was made to assess the fact
that the driver of progress is changing, experts noted. Whereas previously,
trade drove progress, now this role is played by technology. However, a series
of confrontations is unfolding in both trade and technology. In one of his
speeches for the domestic audience, Xi Jinping said that trade disputes with
the United States and the impact on Huawei could force China to take a
«great march», the panellists noted. At international forums, the
Chinese leaders speak carefully; the Chinese president’s recent speech
confirmed this rule of thumb. However, this does not mean that China has gone
soft, they say. China is attempting a strategic manoeuvre, which begins with a
retreat. According to experts, this contains a message regarding a strategic
partnership with Russia, which would allow it to survive and win this
technological war.
