Daily Times

Today, the world is transforming at an unprecedented pace, whether by the virtue of the technological revolution, economic landscape, political orders and especially, the multilateral contours of the global policy-making. The powers in the East are making their mark and have secured a place on major political and economic fronts. The multilateralism emerging from new economic and political realities has given rise to the need of the “Global Green New Deal.”

According to UNCTAD 2019, “The only way to deliver the public goods needed to achieve sustainable and inclusive development is to create a well-funded, democratic and inclusive public realm at the global as well as the national level.” There is a need for a Global Green New Deal that combines environmental recovery, financial stability and economic justice through massive public investments in de-carbonising energy, transport and food systems. Meanwhile, jobs for displaced workers also need to be ensured and low carbon growth paths are to be supported in developing countries through the transfer of appropriate technologies and financial resources.

The UNCTAD 2019 report suggested a “Global Green New Deal” as the coveted policy framework to make a clean break with years of austerity and insecurity following the global financial crisis. This would help bring about a more equitable distribution of income and reverse the decades of environmental degradation. The climate change reality is already causing severe damage across the world; posing an existential threat. Decarbonising the global economy will require a significant rise in public investment especially in clean transport, energy and food systems. This will need to be supported by effective industrial policies with targeted subsidies, tax incentives, loans and guarantees, as well as accelerated investments in research, development and technology adaptation. Dedicated financial support will be required in developing countries to help them leapfrog carbon-intensive development paths.

Decarbonising the global economy will require a significant rise in public investment, especially in clean transport, energy and food systems

UNCTAD economists estimate that a net increase in global employment of at least 170 million jobs, with cleaner industrialisation in the South and an overall reduction in carbon emissions by the target year of the 2030 Agenda through additional green investments.

The growing multilateralism over the past two decades has also led to fierce competition among major trading economies. The ongoing trade wars between the US and China have cast upon fear and uncertainty on the future economic outlook for global economies, including major allies as well as developing countries.

In phase one of the sweeping trade agreement, China pledged to buy roughly $200 billion more in US’s exports over the next two years–about $100 billion each in 2020 and 2021. The additional exports constitute agriculture (example: soybeans), manufactured goods (cars), energy (oil) and service (banking). In exchange, the Trump administration cut some of its tariffs on Chinese goods; 15 per cent tariffs on about $120 billion worth of goods were reduced to 7.5 per cent. Despite this, average tariffs of 19 per cent remain on about two-thirds of Chinese exports to the US. Without economic cooperation and a credible solution to the recent stand-off between the world’s two leading economies, decades of economic development and international cooperation would be vanquished and could result in a global economic recession. Leaders of both countries should do everything in their power to find new ways to de-escalate trade conflicts and cooperate despite their political differences. The World Economic Forum (2020) reiterated: “The US and Europe must also accept the fact that the balance of economic power is shifting to the East. According to estimates, China will become the world’s biggest economy by 2030. And with the New Silk Road, the Belt and Road Initiative (BRI), China’s geopolitical influence has grown. About 126 countries have already joined the BRI, and these countries account for about 70% of the world population and more than 50% of global GDP. According to estimates, China will have initiated or completed BRI infrastructure projects worth a total of €1 trillion by 2025.”

Amidst the unfolding global realities, the CPEC holds special significance for Pakistan. Its future development prospects have crucial implications for economic growth and employment creation. The prime minister of Pakistan, Imran Khan, often emphasises learning from Chinese experience in improving its social sector, including the eradication of poverty and promotion of agriculture. The prime minister also recently ordered the CPEC Authority to accelerate the implementation pace on different projects under the second phase. In the first phase of the ongoing CPEC projects, the focus was on infrastructure projects related to energy, road and rail networks, and the Gwadar Port. The second phase seeks to incorporate industrialisation, promotion of agriculture, social and economic progress, and tourism. According to some Chinese and Pakistani officials, the economic collaboration has had up till now created more than 75,000 jobs directly for locals and contributed one to two per cent of the GDP growth in Pakistan.

Huge potential lies ahead in the shape of Gwadar. A $4.8 billion injection will expectedly upgrade the town; making it a modern port city of international standards, a vibrant metropolitan city and South Asia’s busiest trading hub by 2023, which, requires considerable cooperation. 50,000 professional jobs are expected in the future to drive the regional economy in terms of goods, services and economic development. China is also rolling out additional support for 4G mobile networking with $225 million of investment, which will, in turn, boost smartphone usage. It is, however, important to educate, train and up-skill the local population in Balochistan, particularly Gwadar, to participate in the economic opportunities arising from the development under CPEC. It will entail expanding human and social capabilities to make a valuable contribution to peace and prosperity.

Principal Deputy Assistant Secretary of State, Alice Wells, who visited Pakistan, recently expressed some concern regarding the CPEC. During a House Foreign Affairs Committee hearing in Washington, on September 19, 2019, she pointed out: “Critics in the US and elsewhere see China’s BRI program as a ‘debt trap’ for countries like Pakistan, which have struggling economies that would make it difficult for them to make Chinese loan repayments.” On the contrary, the Chinese Embassy in Islamabad underscored quite an antithesis: “The US keeps fabricating the so-called debt story, their mathematics is bad, and their intention is worse. China has never forced other countries to pay debts, and will not make unreasonable demands on Pakistan.”

There is certainly a need for rebalancing development both in the world, North and South, in terms of fair trade, climate change mitigation, decent employment at livable wages and shrinking socio-economic gaps. Global rules should be calibrated towards the overarching goals of social and economic stability, shared prosperity and environmental sustainability. They should be protected against capture by the most powerful players. States share common but differentiated responsibilities in a multilateral system built to advance global public goods and protect the global commons. The right of states to pursue national development strategies should be enshrined in global rules. Global regulations should be designed to strengthen a dynamic international division of labour as well as to prevent destructive and unilateral economic actions that prevent other nations from realising common goals. Global public institutions must be open to a diversity of viewpoints; remain cognisant of new voices and have balanced dispute-resolution systems.

The writer is a freelance writer and an Economic Analyst based in Lahore