“The G7 is no longer a match for the BRICS,” declared Mahbubani.

Earlier, Indian Foreign Minister Subrahmanyam Jaishankar revealed that China and India had reached an agreement regarding border issues. Mahbubani described this as a significant breakthrough in China-India relations.

He then mentioned that unprecedented changes are taking place in the world, moving towards a new order: a multipolar, multilateral world with multiple civilizations.

“The world is no longer dominated by Western civilization; in fact, the West is losing the world,” said Mahbubani. He noted that the BRICS, which includes China and India, is seen as a “Sunrise Club” that everyone wants to join. In contrast, the once-dominant G7 has become a “Sunset Club,” with diminishing power and influence, and its share of global GNP is also declining.

“At the beginning of this century, the economic size of the G7 was much larger than that of the BRICS. Now, it is clear that this is no longer the case,” he said.

It’s worth noting that on the 18th, Russian President Vladimir Putin, while speaking at the BRICS Business Forum, also mentioned the changing economic scales between the BRICS and the G7.

Putin pointed out that in 1992, the G7 accounted for 45.5% of global GDP while the five countries that later formed the BRICS (China, Russia, India, Brazil, South Africa) accounted for 16.7%. By 2023, the BRICS had reached a share of 37.4%, with the G7 at only 29.3%. This gap is widening and will continue to do so.

“This trend is inevitable and completely logical,” stated Putin, noting that over the past decade, the GDP growth of the BRICS accounted for more than 40% of the global total. By the end of 2024, the BRICS are expected to grow by an average of 4%, surpassing the G7’s 1.7% and the projected global average of 3.2%.

“If India wants to integrate into the global supply chain, it must integrate with China,” Mahbubani emphasized the rise of Global South countries, particularly in Asia. He stated that the rise of China and India is part of a broader Asian ascent.

“In 2000, Japan’s economy was eight times that of ASEAN; now it is only 1.3 times larger. By 2030, ASEAN’s economy will surpass Japan, which at the beginning of this century was the world’s second-largest economy,” he said. “Thus, the world is undergoing structural changes. China and India both seek to work closely with ASEAN, which is part of the broader rise of Asia.”

Mahbubani believes that India needs to further open its economy and integrate into global supply chains. However, to integrate into the global manufacturing supply chain, it still needs to some extent to integrate with China, as many components still come from China.

“Most manufacturing comes from East Asian countries like China and ASEAN. India must join initiatives such as the Regional Comprehensive Economic Partnership (RCEP) and other trade mechanisms to integrate into the supply chain. Connections with China will continue to exist.”

Mahbubani also reiterated the issue of UN Security Council reform.

He said that the veto power of the permanent members of the Security Council should be in the hands of “today’s strong countries,” not “yesterday’s strong countries,” which is why Germany and Japan have not received veto power.

“Similarly, it is now time to change the composition of ‘today’s strong countries,’ and India is undoubtedly one of the strong countries of the world, ranking fifth in economic size.”

“In contrast, the economic strength of the United Kingdom is declining, and it is likely to fall out of the top ten global economies. Clearly, the UK has lost its ability to exert influence on the world stage,” he said.

In an interview with Singapore’s The Straits Times last month, Mahbubani also stated that the world order is undergoing structural adjustments, and Europe should accept the reality of its declining economic status and learn to share power with Asian countries. He suggested that it is time for the UK to give up its permanent seat on the Security Council to India, as the veto power is not meant for “yesterday’s strong countries,” and the UK can no longer establish an “empire where the sun never sets,” with an economy that will “never” rank among the world’s top five again.

Mahbubani is a well-known scholar-diplomat from Singapore, having served as Singapore’s Permanent Representative to the United Nations and as the founding dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. As a scholar who has long focused on researching the social development of the Asia-Pacific and China, Mahbubani has been impressed by China’s achievements in poverty alleviation, pandemic response, and climate change. He has praised China for setting a “positive example” for the world in addressing global challenges.

Mahbubani has also repeatedly called on the United States to strengthen its engagement with China, as efforts to contain China are ineffective.

In a speech at the Emirates Center for Strategic Studies and Research (ECSSR) in June this year, he stated that the biggest strategic mistake the United States has made is to initiate competition with China without a clear strategy. He said that the United States thinks it has about ten years to prevent China from becoming a world leader, so it will undoubtedly use this time to increase pressure on China, but the United States still cannot contain China.

He emphasized that China has learned from the dissolution of the Soviet Union. Unlike the United States, which cannot accept a peer competitor, China has no ambition to confront other major powers like the United States. China focuses on strengthening its domestic economic and social development and improving relations with neighboring countries.

He proposed that the United States abandon its containment strategy and cooperate with China to create a world that can accommodate two major powers.

The post India Should Take UK’s Place on UN Security Council, Said Kishore Mahbubani first appeared on China Academy.

Yanis Varoufakis:
Both, because if a philosophical statement is not backed by concrete analysis, then it’s not worth anything. If the concrete analysis makes sense, there has to be a philosophical overarching argument. Look, capitalism would have died a long time ago, in 1929, if it wasn’t for the Second World War. The Second World War essentially saved capitalism by saving American capital, in combination with Roosevelt’s New Deal. Essentially, what happened was that central planning saved capitalism. The war allowed politics to coalesce around the settlement plan. Then, after the war, capitalism was given another lease on life by extending the American central plan, as I described during my lecture, in Europe and in Japan. That extension prolonged the life of capitalism all the way to the 1970s.

That system died when America lost its surpluses. Capitalism was then given another major boost by completely reversing the surplus recycling mechanism that the Americans had created between 1944 and 1971. Remember, between 1944 and 1971, the Americans had a surplus. The money they were making from this surplus was given to Europe and Japan. That was what was happening until 1971. After that, the Americans had a deficit, which they used to draw in the surpluses of Germany, France, Japan, and then China. This is what kept capitalism alive: Chinese savings, Japanese savings, and profits created in this country, Japan, and Germany. It was a kind of symbiosis because your factories could work fast and efficiently, as you had demand from the Americans, who didn’t have money. So, they printed the money and gave it to the German capitalists, Japanese capitalists, Italian capitalists, and Chinese capitalists. What did they do with the money? They took it to Wall Street.

So, the recycling gave capitalism its most exorbitant, exuberant, dynamic phase—that’s what we call globalization. It was all globalization, because Bretton Woods was global too. But this was globalization with financialization and complete anarchy, because it was the bankers who were doing the recycling, and the governments did not have the control they used to—at least not the American or German governments. You remember, in the International Monetary Fund, there were serious discussions happening up until 1974, where they would get together in Washington and decide amongst themselves the exchange rates. They weren’t leaving it to the markets. After that, it was not anarchic but an interesting recycling mechanism, which was based on a really anti-neoliberal and anti-capitalist notion: the idea that the whole system is run on the basis of the American deficit. Without the American deficit, global capitalism would die. This is what I was saying in my book The Global Minotaur. The Minotaur is the American deficit, which needs to be fed by everyone else to keep the world capitalist economy in a kind of unbalanced equilibrium. 2008 was a new 1929. In 1991, the Soviet Union collapsed, and that simply accelerated this recycling mechanism, which I call the Minotaur.

So, 1991 was the end of Soviet communism and Eastern European communism. 2008, the new 1929, I believe, killed capitalism. The American political system, which gave capitalism an extended life during the war in 1945 and in the 1970s, I don’t believe can do it anymore. I do not believe that capitalism can be given another new lease on life by the American political establishment. You can see they are dysfunctional. They cannot build nuclear submarines. You take a train from New York to Washington, and it doesn’t work—it breaks down, and you have to get out and walk. America has lost its capacity. The American state has been hollowed out. They cannot build bridges, something they used to do really well. The American state can no longer manage world capitalism.

In addition to that, going deeper into the roots of the capital accumulation process, this is the topic of my last book, which you kindly mentioned: Technofeudalism. Totally spontaneously, completely unplanned, a new form of capital has been born with the Googles, the Metas, the Apples, and so on. You have it too. The only two countries that have it are the United States and China, with Bilibili, WeChat, Baidu, and so on. But in the West, this capital is completely without control, without political supervision. It has a fantastic capacity to create new fiefdoms, a new form of feudalism—digital feudalism. I call it technofeudalism. Even though capital has triumphed, capitalism—that is the main hypothesis of my book—has already been transformed, without us even realizing it, into a fiefdom of technofeudalism. In that sense, I’m saying that 2008 was to capitalism what 1991 was to Soviet communism: its end.

Zhang Weiwei:
I think it’s a very philosophical as well as a down-to-earth approach to this analysis. Now, I’m thinking about this very issue you mentioned—specifically, the recycling of U.S. money by Germany, Japan, and later China, which had to do with the way China embraced globalization. Here, I can add a footnote because, at that time, I was working in the Chinese government and had the chance to meet with many Chinese leaders. Actually, within the Chinese leadership, there was also debate about how to face this globalization. Basically, at that time, Chinese leader Deng Xiaoping had a line of thinking more or less like this: We cannot continue with the Soviet model. Within the Soviet socialist camp, you traded with each other, but that would not be internationally competitive. So, we essentially have to establish relations with capitalism and engage with this globalization, pushed forward by the United States.

At that time, he famously said a phrase in Chinese called 趋利避害, which literally means to “maximize the advantages and minimize or ward off the disadvantages.” More specifically, the United States was pushing what we called comprehensive globalization—it encompassed economic, political, financial, and social aspects, including privatization, democratization, and liberalization, among others. Deng Xiaoping argued for economic liberalization, yes, but political liberalization, no. Gorbachev embraced both, and he failed.

Even for economic globalization, we should also adopt the same approach—a critical approach—in the areas where China has more confidence. So, we have a relatively low labor cost, and other favorable conditions. We are more open in certain areas. But in other domains, for instance the capital market, we have been very cautious because we’re not sure that will work. Even up to today, most Chinese, both at the grassroots and top leadership levels, still think globalization is, on the whole, a positive thing—we are beneficiaries of the process. As a result, China has become better, richer, and more prosperous than before.

China has managed to be one of the winners of globalization.

Yet, there is a downside to it as well. Look at China today. When we talk about the 2008 crisis, some people say that in 1989, China saved socialism, and in 2008, China saved capitalism. And now, again, the West is in crisis, the United States is in crisis. Many of us have written about this argument: we cannot save the United States again. We will not do that. This is the same stance with the central government, as U.S. senior officials have come to China wanting China to buy their cherries. We actually sell more and more, obviously.

Yanis Varoufakis:
Don’t think in terms of black and white about globalization, as if it’s simply a good thing or a bad thing. Before you go anywhere near globalization, you first need to define what it is. Do you mean intensified international trade? That’s always a good thing—it’s always good to trade more—but that’s not what globalization is. Globalization, the way I understand it, which comes out of the 1970s, is the total unhinging of financial power, allowing money to rule the world. That’s what globalization was. Essentially, power shifted. If you want to think of it in terms of the transformation from feudalism to capitalism, power shifted from landowners to the owners of factories—to put it bluntly, from the owners of land to the owners of capital. That was the great transformation from feudalism to capitalism.

Then, with financialization, you have another transition—from the owners of capital to the bankers. The bankers were supposed to be the servants of capital, but with globalization, they became the masters of the universe. With one press of a button, they could destroy two countries at once by taking billions from the United States, hollowing out entire manufacturing areas, destroying the working class there, and throwing the money into Korea. Then, when the bubble burst in Korea, with the press of the same button, the money would leave Korea, and the country was destroyed in 1998. That exorbitant power of the money men—that’s a terrible thing. But we must not conflate that with trade.

Zhang Weiwei:
On this point, China is fortunate.

Yanis Varoufakis:
That’s why people said to me, people from the right-wing in New York and USA asked: Yanis, why are you so against globalization? It has lifted so many billions of people out of poverty.

I said it lifted the Chinese out of poverty because they did not globalize in the way you describe—because of capital controls, because they didn’t listen to you. If they had listened to you, if China had listened to the International Monetary Fund and the World Bank, and if you had liberalized your capital markets, China would be a desert now. In 1998, it would have been destroyed. China would not be what it is today.

The post China Will Not Save the US Again first appeared on China Academy.

Once you adopt the position of political nationalism, then names like cooperation in global institutions become almost a sign of weakness: When you start talking about “buy America” and “bringing jobs back to America”, in the context that globalization has disadvantaged America, such arguments imply the economic agenda is being replaced by the political agenda.

The Fragmentation of Global Trade Rooted in the Nationalism of America

In such a process the U.S. is undergoing – and I’m not referring to a particular party, but both major parties in America are extremely negative towards globalization. They are deeply concerned and even fearful about embracing a global community, and the whole process of rebuilding globalization may take a long time.

The nationalist sentiment of certain people, parties, and states, which is essentially anti-globalization, is the fault of the U.S. I have to admit that I failed to anticipate this previously. During the peak of globalization, which was the first decade after China joined the WTO, a series of data demonstrated the positive impact of globalization from the perspective of U.S. national interests: low inflation, GDP growth, etc. indicating that globalization did not harm America’s interests. However, at that time, we did overlook the micro-level harm caused by globalization to certain communities or groups. They lost their jobs and fell into dire straits.

Former U.S. President Donald Trump seized upon and amplified this sentiment. When people talked about globalization, Trump emphasized, “Everyone else is making money, but what about us? Our factories have closed, and our towns and families have been destroyed.” Therefore, in the next wave of globalization – and I believe there will be a next time because every trend is accompanied by a counter-trend that repeats itself – when protectionism declines, many countries will follow suit. When you say “buy America” will affect global trade, other countries will not do business with America, and that creates a domino effect throughout the world.

Therefore, the first step is to commit to respecting the global system. The WTO is a crucial global institution, and leaders of all countries must recognize its importance. We need to pay more attention and provide more support to towns and communities affected by globalization than we did in the past. If competition decreases, prices will rise, and quality will decline. Many countries have chosen the right path, such as Singapore and others that have come out in support of globalization, believing it brings benefits to us.

Protectionism Itself is a Paradox

There are over 70 elections in 2024 all over the world, including the U.S. Presidential Election. This trend seems to be extremized, either to the left or the right, with insufficient participation from those in the center. I don’t want to be the bearer of bad news but in the short term, I don’t believe that there’s light at the end of the tunnel.

The emotion and the rhetoric are very easy to use. You’ve heard politicians saying “You lost your job, it’s not your fault, it’s China’s fault, or it’s Mexico’s fault and I’m going to protect you.” The reality is that protectionism doesn’t protect. We still see the same problems as we had when we were pursuing globalization, and we have to face these problems.

Countries will prioritize their domestic interests more, and this worries me. From the perspective of my own country, the U.S. should not blindly trust itself but should believe that a prosperous world is beneficial to America, and helping developing countries contributes to promoting global prosperity. Merely considering what benefits America has no benefit for America itself; it is a paradox.

Politically, it’s simple to consider only U.S. interests, but we must consider how to break free from this path dependency, which is truly in the best interest of the U.S. To pursue globalization, our leaders should change their minds first.

We have just experienced a pandemic, and people constantly blame the pandemic, always referring to data from the years of the pandemic, trying to illustrate the negative impact of globalization. But the trend of deglobalization had already begun before that. There were various tariffs and mechanisms in global trade, and they are still there after the pandemic. So, some politicians say tariffs are not good and should be reduced, but then others come out and say that person is anti-American or pro-China. Judging economic issues based on political positions is not only meaningless but also harmful. These politicized keywords divert people’s focus from the real issues.

Unfortunately, the American people have not been educated and trained to make judgments based on facts. Actually, those working in multinational corporations and trade companies are earning more than others, and the profits of export companies far exceed those of non-exporting companies. However, these facts have not been given sufficient attention. People’s knowledge is partial and superficial: “We’ve sent all our jobs to Mexico.” But this is the narrative of politicians. We need to provide better education, and the private sector should play a greater role in educating its own employees, telling them why they need training and why tariffs are not beneficial. We need more advocacy on this.

Multinational companies are facing criticism in the U.S., but they provide a significant number of job opportunities, social welfare, healthcare benefits, employee training, and contribute to innovation. They make a substantial contribution to society. Let me re-emphasize this: it’s easy for politicians to stir up nationalist sentiment, but it does not help the people understand the economic reality.

So, what is the solution? It lies in the leadership role of leaders. Specifically, we need to make people recognize the importance of global institutions and mechanisms, to realize the significance of being global citizens, which is not contradictory to their national identity.

The post Protectionism Doesn’t Protect America first appeared on China Academy.