Beijing or Global South consensus?

IN 2004, the American vice-chairman of Henry Kissinger Associates, Joshua Cooper Ramo, coined the term “Beijing Consensus” as an alternative to the Washington Consensus, the neoliberal framework of economic policies devised in the 1980s by the International Monetary Fund (IMF), World Bank and the US Treasury.

At that time, China had just joined the World Trade Organisation and internally there was considerable scepticism that there was such a Beijing Consensus.

Come 2007, when the global financial crisis (GFC) broke out, first with the US subprime and then the European debt crisis, the world looked to China to step up, which she did with the famous 2009 four trillion yuan stimulus.

That stimulus unleashed a decade of massive investments in infrastructure, but also an ensuing decade of dealing with the real estate debacle.

From 2016, Donald Trump’s first term of presidency signalled a new era of intense geopolitical rivalry.

Since the 1997 Asian financial crisis, the Global South had growing doubts over the suitability of the Washington Consensus, which advocated free trade, free flow of capital, rule of law and democracy as a model for development.

After the 2007 GFC, even the advanced countries raised their doubts. In 2011, Germany launched its Industry 4.0 strategy to fulfil the German government’s High Tech 2020 Strategy.

The Chinese followed with their Made in China 2025 strategy in 2015, sparking off the global race in industrial policy to match China’s growing prowess.

With mounting signs of protectionism, Chinese discourse on industrial policy shifted towards “dual circulation” and “high-quality development,” including focusing on artificial intelligence (AI), robotics and advanced manufacturing, especially alternative energy, batteries and electric vehicles (EVs).

At the same time, over four decades, China lifted 800 million out of poverty and her green and net zero efforts are beginning to pay off, with carbon emissions levelling off and possibly even declining.

Meanwhile, the Global South has struggled since 2007 to find a self-reliant new development model because they cannot raise enough global funding for long-term infrastructure and even less official aid for tackling climate warming.

The carbon market, long touted by economists as the market solution to pricing carbon emissions, remained largely in Europe and America, with developing countries struggling to access carbon credits.

As Make America Great Again (Maga) tariffs, sanctions and weaponisation of dollars became evident by the day, the Global South woke up to the reality that China may have a realistic, pragmatic alternative development model to fit their aspirations.

Of course, technology may be one way out of poverty. But even technology has been weaponised.

With the IMF continuing to warn against debt distress and for more fiscal discipline, developing countries need a new way out of their development trap.

The United Nations Sustainable Development Goals (SDGs), launched in 2015 to achieve 17 sustainability, inclusivity and human well-being objectives by 2030, seemed the right path forward in terms of inclusive green growth, but only 18% of the goals are on track for achievement, mainly because of scarcity in resources and implementation capacity.

As Trump’s tariffs hurt export markets, the Global South became more receptive to China’s call for a new development paradigm and international order.

Attending an international conference in Hong Kong, it became clear that China’s development model is entering a new phase.

The focus is on an electricity-driven economy, powered by AI and robotics.

This shift aims to address an ageing labour force and achieve high-quality development.

China is also adopting a self-reliant stance against external threats. A green-energy-powered industrial base, connected globally through the Belt and Road Initiative, is central to this vision.

China remains open to global trade and investments, since the new phase of going out will be less driven by state-owned enterprises, but mostly by the Chinese private sector.

Mainland experts on the 15th Plan remain pretty confident that China will be able to achieve roughly 4% to 4.5% gross domestic product growth in the period to 2035, given the fact that AI is only just spreading throughout the economy and that urbanisation is still 68%, considerably lower than advanced economies’ urbanisation levels of 80%.

China is slowing, but from a larger economic base.

Hence, being able to grow at double the speed of advanced economies means that she will become not just a formidable economic giant, but also a growing financial powerhouse.

As the advanced countries ramp up their rhetoric on China as a threat, external pressures will unite Chinese domestic opinion around a new Beijing Consensus.

Consensus is formed from hard realities and experience. If the mature markets are increasingly fencing themselves in through tariffs, China must find alternative paths going forward.

Coincidentally, the Global South desperately needs new markets, sources of investments, funding and hard experience on development challenges.

This is a match made out of mutual necessity, where the Global South, with its young population, large natural resources and ambitions of moving to middle income, finds a fit in China freshly moving out of middle income into the advanced income level.

As China shifts towards higher consumption and domestic-driven growth, demand for more imports of raw materials and cheap goods from the Global South will grow.

As the Global South also needs jobs, China will be shifting her cheap-labour manufacturing into new markets, enabling everyone to move up the value chain.

This is less a Beijing Consensus and more a Global South Consensus on finding practical ways forward amidst a global order unilaterally being dismantled by the Trump administration.

The Global South wants a voice in forming the new rules for the new global order, not a law of the jungle.

The United Nations SDGs are not wrong in aspiration, but poor in execution.

Thus, the new consensus is less on ideology and theory, and more on the practicalities of how to survive and thrive in a more complex world.