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Ke Chengxing | Strengthen Global Cooperation to Address Global Challenges in the Context of Internat

May 24, 2024Tsinghua PBC School of Finance Global Green Finance ForumThe forum was held at Tsinghua University's PBC School of Finance. It was jointly hosted by the NGFS Research Experts Network (ENR) and Tsinghua University's PBC School of Finance, and organized by the Tsinghua University PBC School of Finance Green Finance Research Center (CGFR). The forum combined online and offline participation, with live streaming in both Chinese and English.Professor Danny Quah, Dean of the Lee Kuan Yew School of Public Policy, National University of SingaporeHe attended the meeting and delivered a keynote speech.

Danny QuahHe shared his views on the theme "Addressing Global Challenges When Nations Won't Cooperate: Gridlock, Nudging, and Inadvertent Cooperation." He pointed out...，To address the global climate crisis, we should strengthen global cooperation and create more opportunities for green finance development, thereby achieving a low-carbon transformation of development models. He suggested that multilateral institutions should establish sound cooperation mechanisms, define which issues can be resolved through cooperation, and provide more opportunities for cooperation to promote multilateralism and encourage cooperation among countries.

Danny Quah

Speech Shorthand

Tsinghua PBC School of Finance Global Green Finance Forum

Danny Quah, Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore:

Distinguished guests, Mr. Benoît Mohon, co-chair of the NGFS Research Experts Network (ENR), and Professor Tian Xuan, vice dean of Tsinghua University PBC School of Finance, thank you very much for giving me this opportunity to share with you.

I live and work in Singapore, and the Monetary Authority of Singapore, our central bank, is also a network member of the NGFS. Doing a good job in green finance is of great importance globally, and it is even more important for Singapore.

Green finance is an area of particular interest to us, and we conduct extensive research in this field. I have also personally done a great deal of work on another topic, “Global Cooperation,” which is relevant to today’s theme. Globally, public goods and the governance of the global climate crisis are becoming increasingly important.

Next, I would like to share with you in three parts.

The first part discusses how we can promote energy transition at the macroeconomic level and how to negotiate in the context of the global climate crisis. From the demand side, we have a need for global cooperation.

The second part, from the supply-side perspective, shows a relatively low willingness for global cooperation, which is regrettable. Currently, there is a mismatch between the demand and supply for cooperation. How do we negotiate? In today's world order, how do we reconcile this mismatch? NGFS promotes international cooperation to address the global climate crisis, but we can see that a mismatch between supply and demand still exists at the national and individual levels.

Part Three offers some suggestions for your reference: we should consider the current global landscape in the process of carbon emission reduction.

First, let's look at the challenges. We know the global climate crisis requires a transformation, a shift away from past development models. These past models were high-carbon, and we need to transition to a renewable energy-based model. However, this transition involves many unfair elements. Looking back, developed countries have used vast amounts of fossil fuels, causing enormous environmental damage. Emerging countries need to accelerate their development, but they cannot follow the same high-carbon development path, making current development even more difficult. Some have told me that wealthy countries became wealthy at the cost of global pollution. Now, wealthy countries are demanding that poor countries pay the price, which is unfair.

When negotiating against unfairness, all parties must work together in a cooperative manner, making cooperation essential. However, this need for cooperation faces other challenges, namely, the requirement for new technology development in renewable energy. This includes electric vehicles, batteries, and new methods of renewable energy production, such as solar and wind power. In past development models, we focused less on new energy technology development and more on fossil fuel-based energy production. Now, requiring poor countries to develop new energy technologies is another element of unfairness, potentially creating another obstacle to global transformation. Poor countries lack sufficient financial resources, while wealthy countries have greater financial strength and resources. Therefore, the only way to negotiate transformation is through greater cooperation. Without cooperation, poor countries cannot achieve transformation, and global transformation is impossible; hence, the need for cooperation is extremely high.

Secondly, let's look at the supply side. Why does the supply side seem somewhat deviated? Why is the cooperative supply deviating from our goals? I consulted with professors at our university's School of International Relations on this matter. I asked them why the global economy exhibits fragmentation. Historically, in the mid-19th century, the United States was the global hegemon. Currently, the distribution of power has shifted from a unipolar world to a world with multiple power centers, i.e., multipolarity. Initially, this shift from unipolar to multipolar seems like a good thing; the world becomes more equitable, and income can be distributed more fairly globally, rather than being concentrated in a single geographical region. However, multipolarity presents a challenge. The IMF and other international organizations have clearly stated that with multipolarity, the advantage of unipolar hegemony in providing public goods diminishes, leading to a decrease in cooperative supply.

If we want to make improvements, we can introduce a multilateral system. Multilateralism means creating a level playing field where all countries can cooperate based on rules and consensus. But what are the challenges? Multilateralism is becoming increasingly important, but some major powers believe the current environment is unfair, so they are withdrawing from cooperation. I'll give you a minute to explain.

Previously, this was the prevailing view, echoed by the IMF and other institutions: the global trading system connects the world, benefiting each nation through its own trade system—this was correct. Economics tells us this is comparative advantage; the global trading system can improve everyone's situation. However, the problem lies in the early 21st century. Some countries no longer felt this way. Trade increases national profits, but it also alters prices. If prices remained constant, there might be no trade. But with price changes, some economies felt better off, while others felt disadvantaged. For example, some lost their jobs, and some industries had to close. These industries are integral parts of the economy, and trade prices were detrimental to their development. This gradually evolved into populism in some economies, leading to global economic fragmentation.

Finally, I offer three suggestions, which will serve as my conclusion.

The first is multilateral institutions, such as the NGFS and the World Bank. We need to create mechanisms that incentivize countries to cooperate. If geopolitical differences prevent cooperation, we can attract them and foster cooperation intentions or possibilities through these mechanisms. I'd like to give some examples during the Q&A session.

Secondly, it is important to clearly define which problems can be solved through the aforementioned collaborative approach, and which cannot.

Third, I suggest that multilateral institutions and policymakers increase the supply of cooperation and promote multilateralism. For example, the supply of cooperation in transportation infrastructure under the Belt and Road Initiative is a good example, and we should increase cooperation in this area.

If we can refer to the above suggestions, despite the many geopolitical fragmentations in the world, we can still maintain global cooperation and create more constructive opportunities for green finance development.Thanks!

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