The European Union and the China-led transformation of global economic governance.

The Royal Institute for International Relations is an independent think-tank based in Brussels. Its interdisciplinary research is conducted in a spirit of total academic freedom. Drawing on the expertise of its own research fellows, as well as that of external specialists, both Belgian and foreign, it provides analysis and policy options that are meant to be as operational as possible.After the inception of the Bretton Woods system in 1945, major fields of global economic governance were essentially associated with a single international organisation or arrangement. Trade was governed by the General Agreement on Tariffs and Trade and later the World Trade Organisation, whereas the International Monetary Fund was a key point of reference in finance and monetary issues and the World Bank played a similar role in development policy. A common characteristic of these institutions is that they were set up in the wake of World War II, and the distribution of influence among their members was, for the most part, reflective of mid-twentieth-century balance-of-power considerations.

Yet in the two decades leading to 2016, the structure of the global economy was rapidly changing. Global governance structures were, however, failing to mirror such developments. Despite a handful of institutional reforms implemented in favour of emerging powers after the 2008/2009 financial crisis, international financial institutions (IFIs) remained overall dominated by the United States, Europe and Japan. The resulting disillusionment of key emerging powers and notably China translated into several concrete actions, and an unfolding transformation in global economic governance after decades of inaction. In its quest for increased influence in the international – economic – system, China pursued a multipronged approach, often in conjunction with its BRICS partners. Its strategy rested on four key pillars: integration, creation, reinvigoration and innovation.

This Egmont Paper is part of a double volume focusing on the rise of parallel structures in global economic governance. The set of papers aimed at comparing the newly created China and BRICS-backed bodies to the established institutions they seeked to mirror while also discovering various paths the EU may follow in its policy towards them.

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