Towards Global Leadership? China’s Roles in Provision of Goods and Institutions for Global Economic Governance

Abstract

Being the second largest economy in the world, China is in a good position to exercise world leadership through provision of more resources for global economic governance as far as its growing economic strength is concerned. This paper examines China’s engagement in global economic governance through her participation in the affairs of the existing institutions of global governance – the Bretton institutions, provision of global economic goods through outward foreign direct investment (OFDI) and her position in the Belt and Road Initiative (BRI) and the newly established multilateral bank, the Asia Infrastructure Investment Bank (AIIB). From this analysis, two findings are evident. First, although China is the second largest economy and source of outward OFDI in the world, its role in the existing global economic governance architecture is minimal compared to her economic strength. Second, constraints within the existing global economic governance system have compelled China to create new economic institutions, something that has sparked resistance from other economic powers, particularly the US and Japan. Therefore, since the economic measures that China has taken in order to ascertain her position in the globe are resisted, the paper recommends that the major actors in the global economy have to find an amicable way forward by working together to avoid friction and rivalry and bring about better global economic governance.

Keywords

• global economic governance
• economic diplomacy
• inward foreign direct investments (ifdi)
• outward foreign direct investments (ofdi)
• perceptions
• legitimacy