Is a new world economic order emerging? | Counting the Cost

[Music] [Music] hello I'm Adrian finigan and this is counting the cost on aler your weekly look at the world of business and economics this week the US has dominated the global economy for decades but the world is fractured by geopolitical tensions and globalization is facing a backlash is the economic order changing is it the US versus China the trade war between the two Nations is heating up the competition between Washington and Beijing could accelerate the collapse of the old system so what's the alternative developing nations have formed economic alliances like bricks to counter the dominance

of the west but will it work economic integration and globalization the free flow of trade with the us at the helm that's the economic order the world has known for decades today though the disintegration of the rules-based world order is evident for all to see countries are becoming more inward-looking regulatory fences have been erected the World Trade Organization is in limbo nations are racing to build the industries of the future and trade restrictions are increasingly being imposed now the system that's governed the the global economy since the second world war is at a Tipping Point

now more than ever so is a new world order emerging we'll discuss that with our guests shortly but first let's listen to what some leaders had to say about the old one the poor countries have been and are being oppressed and terrorized by the rich countries naturally the poor are bitter and angry and have lost faith in Justice and honor Global political and economic governance created more than six decades ago have not kept PA with the changing realities of the world bricks Remains the one Dynamic element in the global economy and as such they will

account for a significant share of trade the development of the emerging market and developing countries is not intended to move the cheese but to make the pie of the global economy bigger we should push forward the establishment of governing models and rules which are more balanced and inclusive we should push forward the reform of the global economic governance system to reflect the current structure and realities each night I ask myself why should every country have to be tied to the dollar for trade why can't we trade in our own currency and why don't we have

the commitment to innovate we are against any kind of hegemony or exclusivity propagated by some countries and the new policy of ongoing colonialism neocolonialism based upon this assumption we have to reform global economic financial and political as well as the multilateral Trad system so that we can create a conducive environment for fair trade let's introduce you to our panel of experts and get a quick reaction from them from Singapore we're joined by Danny qua who's Dean and Lee K Shing professor in economics at the National University of Singapore from Johannesburg we're joined by Arena murisan

who's a senior researcher at The Institute for Global dialogue and a specialist on the bricks block and finally in London Philip lron who's a political economist and former special adviser to the director general of the World Trade Organization Danny is the world order uh the Old World Order close to collapse I don't think it's so much as close to collapse but it's certainly being questioned from all sides the clips that you showed the clips that we heard uh a few minutes ago were ones that were from what sometimes we think of as the global self

and they were critical of the international economic order one of the interesting turnarounds is that today the advanced economies the rich economies are also critical of the international economic order and how this comes out is going to be really interesting going forwards I don't think that we're going to have to be thinking about how we rethink categories it might no longer be bricks or Global south or west versus East but more groups of countries that have an adherance to economic performance that's Dynamic and forward-looking Keen to emphasize trade Keen to think about building out economic

fundamentals Keen to continue to work with a Level Playing Field and on the other side a group of no Nations that might have historically had the upper hand but for whom Now growth is anemic and so that it seems to me is the increasing confrontation there will be a challenge to the international economic order Arena would you agree with that if the old world order is is not collapsing right now the economic center of gravity is Shifting isn't it absolutely and I mean part of the bricks Jo strategic intention is to use their partnership to

create Windows where they can also change the world and whether the suits everyone should not be the focus because countries are pragmatic for the forces themselves but if we look at the institutions specifically from the post World War II order that we you know characterize the world order by multilateralism is and has been under attack and if you look at the bricks and their values and the sense that they advocate for a rules-based order governed by international law and celebration of multilateralism many take for granted that this may be interpreted for one's own value systems

and so the criticism is that the world is in a constant state of stable Anarchy and the institutions like your WTO should be instilling these relevant boundaries to mitigate GE strategic interests and it's really the rest the smaller countries the emerging and middle powers that need to uphold institutional values to build this kind of critical mass that is needed to create a culture of accountability that people that they all want to see Philip what's going wrong with the institutions that were designed to safeguard the the old world order are they now defunct I think what's

changed is the old order which is the one that prevailed since the end of the Cold War uh in the early 90s was based on four pillars four pillars that have now crumbled the first uh is Western economic dominance and as Danny has said um the West has declined and the rest um have risen uh the second was an exceptional period of us GE political Agony and and we now live in an increasingly multi-polar World which is characterized between by geopolitical conflict between a still dominant us and a rising uh China thirdly as Danny also

noted um before there was a belief in open markets which Trump pretty much everything and now increasingly that is usurped um by National Security concerns and indeed industrial policy uh priorities not just in the west also in China indeed has always been the case and last but not least um a US willingness to support uh International uh rules and to abide by them most of the time and that's exceptional for he hegemonic power and now now that is no longer the case it's no longer the case in the United States it's not the case uh

in China neither of them are willing to accept uh significant constraints on their economic uh policymaking and the upshot is in the old IC order the big question policy makers asked was is it going to make us richer and now the key priority is is it going to make us more secure okay before we go any further trade and investment flows are settling into new patterns built around the top two economies the US and China who are racing to shape the norms and rules of the world's economic and political order Washington is raising the heat

on Beijing with investment curs and trade restrictions and China is redirecting large parts of its economy away from the West toward the developing World Kya Lopez hodayan reports the world is changing fast and so is the global economic order trade Wars between the US and China are fueling much of the shift forging new alliances and fracturing old ones US President Joe Biden recently issued a new round of tariffs on Beijing affecting about 18 billion dollar worth of Chinese products including electric vehicles batteries and semiconductors bottom line I want Fair competition with China not conflict and

we're in a stronger position to win that economic competition the 21st century against China than anyone else China has repeatedly accused the US of bullying and of Market protectionism if the United States persists China will take Resolute and forceful measures to firmly defend its sovereignty security and development interests Rising tensions between the US and China are not new I heard it was going to be terrible they first escalated during Trump's presidency and have continued since much of the focus now turns to the European Union and who it will choose to do business with in the

long term China's industrial policy may seem remote As we sit here in this room but if we do not respond strategically and in a United Way the viability of businesses in both our countries and around the world could be at risk China is capitalizing on divisions in a recent visit to Serbia president Chi Jinping established stronger ties with the Eastern European country which has been waiting for EU membership for over a decade with the joint efforts of both countries the China Serbia free Trade Agreement formally begins in July Beijing is also building stronger ties with

Iran a longtime rival of Western governments the war in Ukraine is another factor it's disrupted energy supplies across Europe and it's also weakened ties between Russia and the west but is strengthened them elsewhere including parts of Africa Zimbabwe is open for business and and welcomes and welcomes Investments Partnerships and collaboration it's a battle between two superpowers with the US and China looking to dominate one economic order while the race for artificial intelligence digital Technologies and geopolitical influence plays out on the world stage Kia Lopez the Yan Al jazer for counting the cost new alliances are

part of the changing world countries with similar agendas and priorities have clustered into clubs among them the brics Nations let's take a closer look at the Block the leaders of Brazil Russia India and China founded the group in 2009 South Africa joined a year later bricks is designed to be a new global voice opposing what it sees as a unilateral approach to geopolitics bricks nations want to change the imbalance by creating an alternative to us-led financial institutions in 2015 they founded the new development Bank to counter organizations such as the World Bank and the international

monetary fund they also aimed to reduce their Alliance on the US dollar bricks represent nearly a third of the global economy and nearly half of its population their total GDP in purchasing power parity terms is actually bigger than that of the GC 7 The Block is growing too the UAE Iran and Ethiopia and Egypt joined this year Saudi Arabia was invited to join its membership is pending but its addition will only amplify the bricks ambition to become the champion of the global South Arena uh to what extent are uh the brics Nations countries like India

and Brazil who are trading their way to Prosperity right now um Reliant upon the Old World Order remaining intact or is it holding them back so what's interesting about these two countries is that Brazil and India are able to leverage their relationship with the old world order and they've also proven to be more flexible and adaptable powers in the International System so with bricks coming into play the success of bricks is really dependent on the strength of bilateral relationships as well as the the country as an individual power of course but as we've seen bricks

host something like 200 meetings a year and so you have an accelerated growth in political and economic cooperation this constant meeting which is definitely contributing to their success Danny with with more Nations uh joining clubs clubbing together uh to to to make the most of their economic clout what's the future for the US dollar do you think will it remain the dominant currency the the future of the the world Reserve currency uh the US dollar in this case is going to depend on a whole range of factors but likely high on that list is sentiment

and confidence and often that does not run parallel with or hand inand with you know facts on the ground who's got the greatest Coalition so that is definitely a space to watch but I would also be maybe a little bit averse to suggesting that the whole world wants to uh dive into an alternative World Order headed by uh you know the bricks Nations or whichever Other Nation 80% of the world lives in countries that are not a great power and for many of us outside of that Circle what we want to see are principles that

go into thinking about how World Order can be constructed rather than simply who is where in that Coalition on this front I think that we should be not so uh anxious to so quickly uh ditch the Old World Order of globalization and capitalism there were Grand ideas there that arguably the most successful of the brics Nations China leveraged and leveraged successfully the grand ideas included uh the notion of how you wanted to organize things in an economically efficient way you needed to leverage comparative advantage and countries like China and smaller Nations uh leverage these ideas

powerfully in the process lifting hundreds of millions of their citizens out of poverty I don't think that the world needs to so quickly rush into an alternative World Order until we've really thought through how we can save the current rules-based one I suspect that many of the brics Nations when they come down to think about it are not averse to actually holding on to this old world order but there are many who are who are trying to pull away from it Philip I'll come to you just a moment but Arena I see you're nodding there

absolutely I mean the bricks definitely do not want to throw everything out the window but in terms of pushing for more especially in terms of trade you see this this big conflict between you know the inertia that the world finds self in and when you look at the WTO going with this moment you have moments of Promise uh especially and how countries want to work together for Progressive causes and how momentum sometimes for broader reform seems just to fizzle out but countries are still trying to understand how to understand Global Supply chains China's major has

a major role in this and how it's going to be reconfigured and how the future of global Commerce is also going to settle especially in the context of environmental concerns and uh sporadic geopolitical changes and challenges and all while being faced with the failure for of development amongst you know the WTO discussions and the system is clearly not working for everyone especially because the system suffers from this trust deficit we've been talking about but this really drives home the desire for Global reform while trying to really hang on to institutions that mitigate existing formats and

existing platforms phip who brings about this this Global reform then I mean how how will it be done do you see the future being dealt increasingly by by clubs like like bricks like-minded or geographically grouped Nations instead of instead of This Global rules-based Order I wanted to ask you about about the IMF with um alternative creditors like India and China available right now what does the IMF have a future I think it's important to make a distinction between a desire for a fairer Global Order which is what many of the interviewees at the start of

this program Express and indeed um our other panelists have also expressed and whether that's likely to happen as a result of the breakdown of the existing order and I'm all in favor of a greater fairness I'm skeptical that the moves currently in play towards geopolitical conflict between and the US CH us and China and the breakdown of international institutions like the WTO is going to lead to that fairer World um you know the bricks remember started off as a Goldman Sachs marketing slogan it was then adopted by the leaders of those countries it's not clear

to me that they have a hell of a lot in common um you know India and China are geopolitical Rivals um some are commodity exporters and some a commodity importers some as Arena said um uh have closer ties to the West as well as ties to China others are are clearly in an anti-western Camp economically the ties between them aren't that significant and in any case they're only um you know a small number of countries uh in a very large world so I'm skeptical of the bricks itself okay um in terms of Reform of the

international institutions um we I think the WTO um is probably the was the most successful institution of um the old world order it was created on a wave of multilateral liberalization there was the huge success of bringing China in in 2001 and since then basically its ground to a standstill it's increasingly ignored by um the US and China who go their own way the dispute settlement mechanism uh which resolved international disputes is largely uh in abeyance and I think that's a tragedy I don't think that's leading to a fairer world I think that you know

the WTO rules which were not perfect but which were applied largely impartially guaranteed uh equal voice uh to small players they guaranteed fairness for pretty much everybody okay and going to a world of might might makes right and small clubs isn't going to make things better Philip how a brief answer if you can please How likely is a full-blown economic War uh as you say that with the WTO being toothless right now How likely is a full-blown economic war between the US and or the west and China well there a possibility of a full-blow um

hot War if uh uh developments in in Taiwan um uh degenerate uh I think that we are moving to a different world order it's a a second Cold War and I say a second Cold War because it's a world in which geopolitics uh Trump's uh economics and therefore while of course if you're Singapore uh you want uh a world based on open markets from which um Singapore has prospered and of course if you're in South Africa you want a fair economic system from which um uh you can benefit but if the large Powers increasingly say

well actually our industrial policies our national security concerns come first you need as a smaller power to accommodate yourself um uh to those positions and and some will choose one Camp some will choose another and some will try to straddle both and hopefully not be forced to choose Danny are we in a a new Cold War are we in an era of nationalis isolationism de globalization ISM well I I hear that language a lot and obviously Philip has made a a very compelling case for this I I happen to disagree I think that we need

to pull back from the language that says this is a cold war and maybe focus on the idea that really the the part of contention here is economic and that we conflate the issues when we talk about cold war or even indeed when we talk about security and during the the original Cold War Americans were genuinely worried that the Soviets were building a political and economic system that would undermine their American way of life destroy the American way of government now today however much one looks at The Bullying behavior of the Chinese aggressive exporting actions

in the South China Sea military buildup I don't think anyone in their right Minds would accuse China of trying to build an economic system that is a plugin replacement for western style liberal democracy truth of truth be told I don't think Xi Jinping really cares at all what kind of political system the West wants to run what he wants to do is to bring about economic prosperity in a way that hes as much as he can to the original rules-based order and right now the Nations that are Mo most pulling away from that system are

not the emerging countries are not the ones that felt previously challenged by the international economic system the the Washington consensus type of economic system but instead the rich countries and you know the language about it's being now a security competition unfortunately uh Rings a lot of early era not of competition with the Soviet Union for which the competition was not economic but of us competition with Japan a lot of the language about you know Japan's uh economic superiority threatening undermining US security uh is echoed today and the peculiar thing in all of that is that

Japan in all of that time was firmly a liberal democracy Japan in all of that time was a strong partner of America in America's uh strategic Alliance in the Pacific so my own sense is that you know when we give in to talk about security talk about the Cold War we might be taking our eye off of the real competition okay which is an economic one which is that there are some countries in the world feeling that China is um undermining dismantling their industrial structure uh stealing their jobs engaging in um in a program that

will lead to their uh taking control of Technologies of the future and in economics the right way to deal with that is not to okay shout wolf and then rattle a saber of security but to pick oneself up raise your own productivity train your people get to a point where you can compete I'm sorry to to to cut you off but but time is is against us I want to hear one last time from Arena um are you optimistic about the future uh Arena can the huge reductions in poverty brought about by globalization and imperfect

though it was the the old world order continue without it I think it's always possible to be optimistic about the future um especially it it depends who's viewing this kind of future if we look at the core for alternative anything alternative Finance sources alternative payments systems there is a demand for an economy that presents or advocates for different values and if we were just to to look at at uh Chinese loans as an example or India's loans as an example um it's it's interesting to note that in the long run maybe they're not as cheap

as as your IMF and World Bank but they're attractive because I mean especially with the Chinese lo they come with a grace period of 5 to seven years where countries can start repaying then uh politically this is where it's highly practical for a sitting government uh since repayment doesn't begin until the end of the term possibly and so here the desire to have something different to have an alternative um and leverage that in terms of who is fighting whom I think that is that is an interesting time we find ourselves in and it is more

about the smaller Powers finding a way to leverage this moment for themselves to find their agency in that and there we must leave it we're out of time many thanks indeed Danny qua Arena Miran and Philip lron and that's our show for this week if you'd like to comment on anything you heard in our discussion I'm at a finigan on X use the hash AJC TC if you remember or you can drop us a line counting the cost at al.net is our email address as always there's plenty more for you online at al.com CC that

takes you straight to our page and there you'll find individual reports links and entire episodes to catch up on but that's it for this edition of counting the cast I'm Adrien finigan from the team here in Doha thanks for being with us the news on aler is next