Nation can engender win-win changes

 

Bernard Yeung

The G20 Summit in Hangzhou is China's golden opportunity to take on a leadership position. China can play a critical role by nurturing the development of meaningful communication and initiating dialogue to seek win-win compromise and solutions. To restore stability, openness and economic hopefulness, China can help shape the following agenda: raise the level of understanding among nations, organize positive dialogue, push for global programs on inclusive growth and further structural reforms and market liberalization.

The dialogue needs to be based on creating understanding and seeking solutions for crucial issues such as forging international cooperation in trade, and recognizing the new global distribution of economic power by enhancing the representation of rising nations of the East in supranational organizations.

This is imperative because Asia has evolved into an interconnected system.

Intra-Asia trade stands at 56 percent of total trade, rising by 77 percent from 2007 to 2014. China is the epicenter of such trade－with 50 percent of its exports going to Asia while 60 percent of its imports are from Asia.

Intra-Asia, cross-border direct investment also has increased substantially, again due to the China factor. Driven by rising wages, China has been actively offshoring labor-intensive work to neighboring countries such as Vietnam, Malaysia and Laos.

Meanwhile, it is in-shoring high value-added skill and technology intensive work. Some 66 percent of China's outward foreign direct investment, or FDI, stays in Asia.

This transformation is further aided by the internet and digitization revolution in almost all countries. For example, the internet directly connects buyers and sellers, empowering them with information that allows for the elimination of intermediaries.

In the banking sector, mobile payments and other financial technologies reduce transaction costs and connect savers and users of funds. These developments level the playing field for a private sector driven efficiency revolution.

A pan-Asian production network that feeds fast-growing regional consumption is developing with China at the center. But other Asian countries and the West still play significant roles. It takes global sourcing of resources and capability to meet the needs of 4.4-plus billion Asians. There is business for everyone and Asia's growth benefits the whole world.

In this context, China can play a critical role in generating a vibrant and well-connected Asia for sustainable and harmonious global growth.

While China does not want to be seen as trying to be a global rule-maker, it can, and should, show poised Eastern style leadership. The approach should be friendly, not confrontational, with the objective to seek understanding and pragmatic win-win solutions. Cornering issues into an impasse will not be beneficial to all. Furthermore, by winning respect based on gentle leadership and its economic position, China can take the lead in enhancing the rising Eastern nations' representation in global affairs.

China can set a good example in the G20 of an Eastern pragmatic Confucius leadership steering G20 dialogue toward seeking balanced win-win solutions for the world.

The author is Dean and Stephen Riady Distinguished Professor of National University of Singapore Business School.