Changed and changing realities call for new international order

Comments on Robert Gottliebsen “Turning on a Chinese axis”, 19/05/2009, http://www.businessspectator.com.au/bs.nsf/Article/future-pd20090519-S6T4N?OpenDocument&src=sph&alerts&loc=center.

Dear Robert, what you said in this article is important issue that will have significant implications for many in the world, whether one is currently aware of it and is concerned with it or not.

If the trends of the international economies of the past two decades are any guide to the future, it seems that the continual shift in the economic powers among world big economies will see the rise of China as the world largest economy in the not long distant future.

I call this international geoeconomics of our time. This, coupled with the high saving rates of the Chinese, does imply that the Chinese will be a very large international banker, to underwrite many things, not to mention the huge US government debts.

It is quite likely that the international geoeconomics will also shape international geopolitics. The world has to accommodate the changing and changed reality. But that is not our focus here in this forum, so let’s focus on business and economics.

The rise of China economically and the relative decline of the US economy internationally as seen in its falling share of the world economy, will mean there is a need to reform or restructure some of the international institutions that have been built on the post-war economic reality, with the strong focus on the dominance of the US and the west Europeans in the governance of those institutions.

Reforming IMF, the world bank and WTO will not only reflect the need to accommodate the rise of the Chinese economy and its shares in international trade and capital flows, but more importantly the collective transformation of some of the big developing economies, the BRIC for example, and Russia.

Economically and politically, Japan has been underweighted internationally, due to its role in World War II. This also needs to change to be more just and more appropriate in the current world reality more than 60 years after that war. But there have been difficulties in allowing Japan to play a bigger role, because of strong reactions from some of the Asian countries that suffered in the hands of Japanese imperial army during the Second World War. Japan will need to reconcile with its near neighbors on those issues.

Elsewhere when I commented on an article, I made a proposal to introduce a new governing or final voting system (see http://mrlincolns.blogspot.com/2009/05/new-voting-mechanism.html, or http://www.eastasiaforum.org/2009/05/11/the-chiang-mai-initiative-china-japan-and-financial-regionalism/). That proposal attempts to inject new thinking in terms of the governance of international institutions.

That proposal combines the current UN senate-style voting and IMF (economically) representative voting, to give a larger role for every country irrespective its size, but at the same time recognize economic accountability. That reflects the world trends of globalization and integration, and the human nature of our current time of becoming more humanitarianism.

The international community needs to persuade big powers, old, new and emerging, to accept a new and more humanitarian approach to the governing of we human beings at this age.