Xu Mingqi, Senior research fellow and Deputy Director of Institute of World Economy at ShanghaiAcademy of Social Sciences, asserts that the economic shift towards the global South is inevitable, as emerging markets continue to strengthen. Despite global economic growth remaining subdued in 2024, with a forecast of 2.6%, it is unlikely to return to pre-pandemic levels of 3.1% in the short term. Geopolitical tensions are exacerbating the negative economic effects, further deepening the imbalance in global economic growth. In this context, emerging markets and developing countries, particularly India and China, are performing relatively well. Developing Asian economies grew by an average of 5.2%, whereas the G7 nations, with the exception of the U.S., saw growth rates in the low 1% range. This indicates a clear and irreversible trend of economic power shifting towards the global South.
Global economic downturn
The declining governance responsibility and willingness of developed countries, particularly those led by the United States, to address global issues has led to a rising global governance deficit. In international trade and investment, the U.S. has introduced geopolitical competition and ideological security concerns, which have reshaped global supply chains and disrupted the efficiency-driven system. This shift has weakened the global free trade framework, with the World Trade Organization losing its influence. If protectionist policies, such as high tariffs proposed by President-elect Trump, are implemented, the global free trade system would face even more significant harm, and trade wars would disproportionately affect smaller countries.
In the financial sector, the U.S.’s monetary policy adjustments have caused market shocks, currency depreciation, and debt crises in many developing countries. Many U.S. and European banks have collapsed, unable to stabilize themselves or provide sufficient resources to rescue distressed countries. The lack of international coordination in monetary and financial policies has resulted in nations prioritizing their own interests at the expense of others. The comprehensive sanctions imposed by the U.S. and Europe on Russia in response to the Ukraine crisis have also caused ripple effects, with many businesses involved in trade and investment with Russia facing extended sanctions. As a result, developing countries are increasingly seeking alternatives to the U.S. dollar and launching more bilateral and regional monetary and financial cooperation, challenging the existing international financial system and contributing to its fragmentation.
China’s prominent role
Amid increasing global governance deficits, China has actively stepped forward to provide more resources and support to developing countries. Through the “Belt and Road” initiative, China has offered development resources, financing, and project construction, assisting developing countries in fostering economic growth. For example, at the 2024 Forum on China-Africa Cooperation (FOCAC), President Xi Jinping pledged RMB 360 billion in financial aid to African nations over the next three years, underscoring China’s commitment to supporting Africa’s development. Additionally, China has provided debt relief and preferential loans to underdeveloped countries, particularly in Africa.
China has also made significant strides in opening its economy, unilaterally expanding market access for foreign investors. This has contributed to the maintenance of the global free trade system. China has supported the G20’s initiatives to improve financial risk monitoring and early warning systems and has been a vocal advocate for strengthening international cooperation in areas such as the digital economy and taxation. The country has also pushed for the acceleration of the G20 Roadmap for Sustainable Finance.
In 2024, China became the world’s largest investor in green and renewable energy, with investments reaching $675 billion. Furthermore, Chinese Premier Li Qiang’s “1+10” dialogue in December emphasized China’s unwavering support for economic globalization and multilateralism. The dialogue also highlighted China’s determination to continue enhancing its openness, introducing policies to foster a favorable business environment based on market principles, the rule of law, and internationalization. Through these efforts, China aims to make a sustained contribution to global economic growth and governance.
Source: xinmin, China Daily
