The financial crisis was unique in its breadth and depth. It is too early to say that the patient is back on his feet, but he is out of intensive care. China played a critical role, domestically and internationally, in helping to avert a deeper, longer recession. My focus now is on how the politics of cooperation and multilateralism on which globalisation is based can win out over the zero-sum politics of protectionism and nationalism.
First, we need openness to trade, ideas, people and investment. The cumulative and unintended consequence of protective measures can result in an unravelling of the economic interconnectedness on which our countries’ prosperity is founded. If markets begin to close, the new jobs we need to create to absorb the millions of people coming into the job markets in Europe, the US, India and China, will not materialise. Our shared interest must be in creating a reverse dynamic towards greater openness.
There is a clear case for partnership here between the world’s fastest growing economy, China, and its largest single market, the European Union. A world trade deal could be worth up to $170billion annually, Regional Trade Agreements can play a vital role in building momentum, and concrete steps towards a climate change deal will be critical in delivering the carbon price necessary to achieve more sustainable growth.
Second, low-carbon energy offers a particular opportunity. The EU and China have a clear shared interest in working together on energy and resource efficiency. We both want to reduce our dependence on imports of oil and gas. We both recognise not just the economic dangers, but also the commercial potential.
The key to delivering energy and climate security will be to push down the costs of low-carbon choices. The best way to do this is to accelerate market growth by integrating markets. Building on the ground-breaking low-carbon economic zones which our two countries have established over the last few years, we should explore the potential for rapid removal of tariffs and harmonisation of standards on low-carbon goods, broadly defined, across the major economies.
Third, we need to reform our international financial architecture. The shift from the G8 to the G20 as the main forum for global economic governance was long overdue and we need more macroeconomic cooperation between nations. If we are to forge new forms of global economic cooperation we need to go further and faster in reforming the key international financial institutions, strengthening their relevance, legitimacy and effectiveness.
Our fourth priority is developing a social market economy that treats individuals as citizens, not merely as units of production. Premier Wen said yesterday “social equality and justice form the basis of stability.” The next phase will be to build the social systems, the legal infrastructure and the framework of rights and responsibilities that will make China’s economy not just more productive and more efficient, but more just, more stable, more innovative, more entrepreneurial and more attractive to high quality investment.
In Europe the development of the social market economy has involved not just government and private business but the voices of civil society, notably in trade unions. The challenge of renewing the collaboration of employees to promote productive business and strong societies remains pressing today, to engage the willpower and ideas of the workforce in public, private and voluntary sectors. Chinese systems of law, business, and association are different. But the contribution of its people, in the workplace, in communities, will be vital to the human values that need to be asserted to make a market economy work.
This raises hard questions about the responsibilities of states to their own citizens, and the extent to which the international system has sway, but international markets will support this evolution. Foreign investors seek transparency and fair competition so that they can be confident in their investment. International consumers are not just concerned about the price they pay but the social impact of the goods they buy.
As we emerge from 18 months of crisis, we must acknowledge the problems we face and begin to tackle them. But we must also acknowledge the economic and demographic possibilities on the horizon – the age of opportunity that is ours to seize.
Extract of speech by Rt Hon David Miliband MP, Foreign Secretary, to the Shanghai Institute for International Studies
Photo: Slimmer Jimmer 2008
Very insightful speech with a clear and optimistic vision. I just have one question: How can we make a convincing ‘public’ argument that openess and free-trade hold the key to our economy? Without a doubt, free trade has enormous wealth creation powers, but its global forces have the power to radically alter and change social and economic relations. How can we make a compelling case to people and communities substansially affected by freeer and more open markets, i.e poorer areas that exeperience downward wage pressure due to the impact of immigration.
well we could start by learning to spell.Then we can read and think and care and do,and try not to be greedy,inappropriately nationalistic….. and enormous wealth? well for people who rip off Russian oil or live in Belize and so on yes but I think the rest of us should be able to arrange something civilized . We can send a rig to photograph Mars for example but then those kinds of projects do not meet with the kind of opposition creating a fairer society does,its not just a question of brains then but heart too I guess.