Interview with Sala Golding, former Vice President of the World Bank: China's practice of multilateralism reflects openness and inclusiveness, and the "Three Global Initiatives" are in line with the world's development

21st Century Business Herald reporter Hu Huiyin reported from Guangzhou

Last week, at the 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Dubai, United Arab Emirates, delegates reached a consensus on the first global stocktaking of the Paris Agreement, pointing out the direction for the in-depth implementation of the Paris Agreement, which is an important milestone for further consolidating the global trend of green and low-carbon transformation.

Recently, Ismael Salagordin, former vice president of the World Bank and co-chairman of the Nizami Ganjawi International Center, talked about responding to global climate change in an exclusive interview with the 21st Century Business Herald, saying that this is a problem that no country can solve alone, and it needs to practice multilateralism and build on the basis of inclusiveness, and China's actions in this regard are very fast and effective.

In the face of the current turbulent and chaotic international situation, China has always practiced true multilateralism and put forward China's proposals such as the Belt and Road Initiative and the Three Global Initiatives. Salagordin said that the Belt and Road Initiative has opened up channels for cooperation between countries and promoted friendly cooperation between people, and China's proposal is very inclusive and in line with the current development of the world. On the contrary, it is the United States that has promoted trade protectionism and triggered the spread of "de-dollarization" in many points around the world, and many countries in the world will carry out more active exploration on the path of weakening their dependence on the dollar. At the same time, the ability of cross-border RMB business to serve the real economy is constantly increasing.

Salagordin believes that although the current amount of renminbi in circulation in the international arena is not enough and it will take time to continue to develop, China is a major international trade country and has great potential in realizing the internationalization of the renminbi.

(Former World Bank Vice President and Co-Chair of the Nizami Gangawi International Center Sala Goldin, Hu Huiyin/photo)

The fight against climate change must be based on inclusion

21st Century: How do you understand multilateralism and why is it needed more than ever before?

Salagordin: Multilateralism is a recognized form of diplomacy that brings together on behalf of countries to take joint action. Thus, multilateralism strengthens all countries, especially small ones. Multilateralism is achieved through the creation of institutions, norms and rules, which will make collective action easier. This is the key to the development of human society.

For example, the fight against climate change is a problem that no one country can solve alone, and everyone must participate in it, and it knows no political boundaries. I believe that the fight against climate change should be based on inclusion. China has been quick to move on this.

Prior to this, China had demonstrated its openness and inclusiveness through the Belt and Road Initiative. As of August this year, 152 countries and 32 international organizations have signed more than 200 Belt and Road cooperation documents over the past decade. It's a win-win case where we work together to benefit everyone. I think the difference between an economic agreement and a military alliance agreement is that the former is more inclusive.

On the other hand, China's economic agreements will lead other countries to peace and prosperity, and China's "three major global initiatives", including the Global Development Initiative, the Global Civilization Initiative, and the Global Security Initiative, are very suitable for our current development, and the European Union in the past has won prosperity and friendship because of its economic cooperation.

The digital economy has transformed traditional trade

21st Century: Many of the countries participating in the Belt and Road Initiative are developing countries, and their digital infrastructure is relatively backward. What opportunities does the Belt and Road Initiative offer for the digital transformation of these countries?

Salagordin: First of all, the Belt and Road Initiative has opened up channels for cooperation between countries and promoted friendly cooperation between people, which is a very big achievement. Now I can really feel that we live in a digital world that we would never have foreseen at the beginning of the digital revolution. Under the wave of digitalization, the perspective of traditional trade has changed significantly, and artificial intelligence technology has become ubiquitous.

Although there are concerns that AI will replace a large number of laborers, and some analysts even believe that AI will be able to "replace 80% of known jobs" within 10 years, I believe the impact will not be so severe.

For example, we can adapt to this change by transitioning to having three days of weekends. In the past, when I was younger, we only had one day off a week. But with the development of technology, two-day weekends have become the norm. So, if we reduce 1 day out of 5 working days, we can still maintain a healthy work-life balance and not have to worry about the impact of AI. On the contrary, it provides an opportunity for us to enjoy life and pursue our interests. However, it is important to note that AI technology cannot be controlled by only a few people at the expense of the interests of the vast majority.

The effectiveness of IMF assistance may be limited

21st Century: In the past year, the Federal Reserve has raised interest rates several times, how do you expect the U.S. economy to go?

Salagoldin: It's good news that the U.S. has brought inflation down from more than 8% to 3.1% without causing a recession or massive unemployment. Although the slight increase in the cost of capital means that the purchasing power of money has fallen, the US economy has continued to perform well, with a good job market and a continued decline in the unemployment rate.

So I think the Fed will stabilize. Even if there is a lot of discussion among economists, whether it is because of geopolitical conflicts, supply chain disruptions, or other reasons, I believe these issues can be resolved. I believe the Fed will slowly lower interest rates, but not to almost zero.

21st Century: Do you think developing countries can meet the challenge of tightening the "headwinds" of global opening-up?

Salagordin: Most of the countries in the world are members of the International Monetary Fund (IMF), which and the World Bank hold annual consultations to discuss the economic situation, policies, debt, etc. Some of the world's top experts conduct an economic analysis of each country every year. But the question is whether the governments of these countries can respond to the analysis.

As far as the current problems encountered by the country are concerned, the country needs to spend a lot of money every year to deal with climate change, price fluctuations and other problems, but the overall aid funds approved by the IMF to the country every year are only about 200 billion US dollars. So for poorer developing countries, relying solely on the IMF for aid is not feasible, and they need to find another way.

There is great potential for the internationalization of the RMB

21st Century: Since the beginning of this year, European and American countries have adopted monetary tightening policies, triggering exchange rate fluctuations in emerging economies such as Asia and imported inflation, so some countries have proposed de-dollarization, what do you think of this wave of de-dollarization?

Salagordin: For now, I don't think de-dollarization will work for the time being. The U.S. dollar is a reserve currency and convertible currency, which means that the central banks of different countries will hold U.S. dollar reserves, and can be easily exchanged in the market; the U.S. dollar is the common currency of international trade, denominated and settled in U.S. dollars, and the current global central bank reserves account for nearly 60% of the U.S. dollar, while the euro reserves are about 20%, if you add the British pound, the overall reserves are close to 90%, and the amount of other remaining currencies accounts for about 10% to 12%. If you want to exchange in a currency other than the US dollar, you must also take into account the reserves of that currency. But at present, there is no substitute for the convenience of the dollar.

China is the world's second-largest economy and an international trading power, so internationalizing the renminbi is possible, but it won't happen overnight. The premise of internationalization is that the renminbi is widely accepted and used, and there are no restrictions on exchange between regions. At present, it is only a small part of the international community, and it will take time to continue to develop.

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