World Economy

World Needs Better Governance to Avoid Future Financial Crisis

By sponsoring major development proposals such as the B&R Initiative and the AIIB, China has contributed to mankind’s pursuit of a better and shared future, several of the former leaders commented
Ban Ki-moon, former secretary-general of the United Nations, says globalization has slowed down due to growing nationalism.Ban Ki-moon, former secretary-general of the United Nations, says globalization has slowed down due to growing nationalism.

While the global economy is back on track, problems still remain and an improved economic and financial governance system is needed globally for preventing future crises. This was the consensus at a recent forum organized in China's southern Guangzhou city, attended by economists and politicians.

Some 20 members of the World Leadership Alliance-Club de Madrid came together at the 2017 Imperial Springs International Forum, Nov. 28-29, sharing insights and offering suggestions on global governance, Xinhua reported.

Recent reports and projections released by various international financial institutions have demonstrated a consolidated economic recovery, seemingly ending nearly a decade of a global slump triggered by the 2008 financial crisis.

The International Monetary Fund, for example, said in its World Economic Outlook in October that "the global upswing in economic activity is strengthening." Many participants, while acknowledging the positive development, stressed that it's still too early for celebrations.

Problems Still Persist

Former Greek prime minister and economist George Papandreou told Xinhua that while the global economy seemed to be doing better, the overhang of the 2008 crisis was still there. The spread of wealth is not equal, and that is causing a backlash to globalization, he said.

Romano Prodi, former Italian prime minister who headed the European Commission between 1999 and 2004, said the world still lacks a change in the international currency system that would ensure there wouldn't be another crisis.

Prodi said two problems still haunt the global economy—the sluggish development in underdeveloped regions, such as Africa, and the widening income gap. "The difference of income cannot be decreased if we don't add some sort of international cooperation in this field," he said.

Colombian economist Jose Antonio Ocampo, a former United Nations under-secretary-general for economic and social affairs, said the current global economic governance remained lackluster in some sectors, such as the global reserve system and sovereign debt management.

More multilateral financial institutions and development banks should be established to provide funds and boost cooperation in various fields, such as mitigating climate change, he said. Besides, developing countries should gain a bigger say on the international stage, Ocampo added.

China's Contribution

As the world's second largest economy, China's efforts in pulling the world economy out of the slump were lauded by the delegates, who said Beijing is set to play a larger role in global economic governance.

By sponsoring major development proposals such as the Belt and Road Initiative and the Asian Infrastructure Investment Bank, China has contributed to mankind's pursuit of a better, shared future, several of the former leaders commented.

Former Dutch prime minister Wim Kok said China has made "indelible contribution" to global recovery since 2008, and has prevented the world from falling back into trade protectionism. He mentioned the Belt and Road Initiative China proposed in 2013, lauding its contribution to establishing an inspiring new economic pattern encouraging wide consultation, joint contribution and shared benefits.

The initiative, comprising the overland Silk Road Economic Belt and the 21st-Century Maritime Silk Road, aims to build a trade, investment and infrastructure network connecting Asia with Europe and Africa along and beyond the ancient Silk Road trade routes.

To guarantee funding for the initiative, the Asian Infrastructure Investment Bank was founded in 2015. Prodi said the multilateral development bank is a project that seeks common ground among the over 70 countries involved in order to achieve common prosperity, putting aside differences in politics and ideologies.

Papandreou called it "a more proactive approach to growth". He said, "It is not simply giving aid to the poor; it is giving power, empowering poor societies so that they can grow on their own".

Ban Ki-moon, former secretary-general of the United Nations, said: "Many leaders in the world have become national leaders, not global leaders. They have been erecting walls, instead of building bridges among the people."

"Globalization has been slowed down with growing nationalism," lamented the seasoned diplomat, who headed the world body from 2007 to 2016.

A transformed global order calls for an innovative governance mechanism, in which China's perspective would be of great significance, said Vaira Vike Freiberga, president of the World Leadership Alliance-Club de Madrid and also former president of Latvia.


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