Tackle 'gray rhinos' before it's too late

CAI MENG/CHINA DAILY

The term "gray rhino" has been frequently cropping up in international discussions. Gray rhinos are crises that develop slowly and are usually ignored until it is too late. Examples include accumulating financial risks from rising debt levels, wild fluctuations in the exchange rates of major currencies (like the US dollar), increasing tensions between major powers (such as the United States and Russia), and rising tensions in regional hot spots (such as the Korean Peninsula and the Middle East).

Gray rhinos pose serious risks to global governance, and to counter them, the international community must take concerted actions. Yet the lukewarm global economic recovery and some half-hearted cross-border regulations have lulled the world into complacency on financial stability. But alarm bells have kept ringing as the US debt level continues to rise, Europe's debt crisis remains unresolved, and the risk of deteriorating and emerging economies' high domestic and foreign debt levels threaten to disrupt their growth. The large amount of quantitative easing and extremely low interest rates in advanced countries have left many bombs ticking in the form of asset bubbles in the bond, stocks and property markets.

Since 2009, key central banks have bought $11 trillion worth of government bonds and other assets, and have only now started to shrink their balance sheets following moves by the US Federal Reserve, and the European Central Bank last October. The inevitable rate increases and shrinking of balance sheets have already caused drastic fluctuations in capital movement in many countries, which could lead to financial crises.

Geo-political tensions and entanglements are rising as major countries grapple with the changing balance of power and the rising tides of anti-globalization that have resulted mostly from the widening gap between the rich and the poor. And the Ukraine crisis triggered by NATO's eastward expansion offers a bleak picture of European security and US-Russia relations.

The troubles in China's neighborhood from the Korean Peninsula to the South China Sea, exacerbated by Washington's "off-shore balancing" in the region, keep intensifying despite strenuous efforts by Beijing to seek political solutions. The Middle East remains embroiled in bloody wars. And the Arab Spring, and Western countries' intervention and inaction have provided fertile ground for terrorist activities.

Anti-globalization and populism have fed into each other, and that has driven political radicalization in the US and many European countries, making the former more inward-looking and less willing to continue providing necessary global goods, and the latter struggling to ensure the survival of the "European Project". The United Nations-centered multilateralism that was the bedrock of world peace and economic growth for seven decades is now at great risk, because the US doesn't seem to support globalization any more and, instead, is trying to change its rules. Even if trade and commerce are not easily swayed by shifting politics, world economic growth will definitely meet strong headwinds should the anti-globalization trend continue.

With gray rhinos gathering speed, the world looks to China and other emerging economies for new and creative ideas to tackle the challenges ahead, and to push forward globalization and global governance.

It will not be disappointed. The 19th National Congress of the Communist Party of China enshrined in the amended Party Constitution China's innovative ideas on global governance over the past five years. These include peaceful development, the Belt and Road Initiative, promoting a new type of international relations, and building a community of shared future for humankind, and show that China intends to contribute new ideas for better global governance to fulfill its role as a global power.

A common thread weaving through these ideas is the core value of "seeking harmony while keeping differences" in Chinese civilization. The world today is so complex and challenges are so daunting that there is an urgent need for joint efforts by all countries, both developed and developing. A good place to start would be the Belt and Road Initiative, because it will benefit many countries by improving infrastructure, and increasing trade and investment, as well as exchanges between peoples. Globalization should not leave any country behind. China has taken a big step toward improving global governance and can be counted upon to continue playing such a constructive role.

The author is former vice-minister of the Ministry of Foreign Affairs of China. Source: chinausfocus.com