THE NEW GLOBAL ORDER:THE ECONOMIC FOUNDATIONS FOR MULTILATERALISM
Keywords:
China, U.S., Russia, Yuan, Dollar, The Global EconomyAbstract
For the past 25 years America has dominated great-power politics. The new game with Russia and China that is unfolding in Syria and the South China Sea is a taste of the struggle ahead. Even today, America remains the only country able to project power right across the globe and its sway over the financial system is still growing.
To make more balanced monetary order China has built a network for Yuan-trading around the world. In November 2015 the International Monetary Fund has included China's yuan in an exclusive group of currencies that make up the basket of the IMF's Special Drawing Rights, which represents public acknowledgement of China's heft in the global economy. The share of Chinese cross-border trade settled in Yuan rose from practicaly nothing in 2008 to 25% 2015, and it is now the fifth-most-used currency for international payments. Yuan emergence as a global reserve currency would undermine a cornerstone of American power. To make Yuan credible alternative to the dollar the key, beside sustainable strong economic growth, is to make China’s financial system as deep, open and trusted as America’s.
The new economic world order is connected with the upcoming demographic supremacy of developing countries. The establishment of BRICS’s New Development Bank and the Asia Infrastructure Investment Bank (both in China) in 2015 is a turning point: until now the world has been dominated by the World Bank and the IMF. Given the changing population proportions, the balance will continue to shift in favour of the “less developed” world and especially BRICS countries (Brazil, Russia, India, China and South Africa).
Generally, relations between China and America are crucial and for the sake of peace and prosperity, the two must be able to work together, especially in economic domain. American foreign policy has not yet adjusted to this contested world. Policy which has chiefly involved the export of American values today is hard to manage. The economic foundations for multilateralism, that is the new global order, are emerging.
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