AFCA Working Paper
Weakness of Current International Governance System: Viewed From the Global Outbreak
“Coronavirus may be ‘once-in-a-century pathogen we’ve been worried about.,” Bill Gates wrote op-ed on February 29th, 2020 for the New England Journal of Medicine. "There is no time to waste," he was sounding the alarm to world leaders to try to help slow the spread of the virus.
With the current development of COVID-19 epidemic, according to Cannikin Law which means that a bucket's capacity is determined by its shortest stave, if globe cannot quickly band together to support each other to prevent and control epidemic, the epidemic will be prolonged and its impact will be amplified. So, eventually 60 to 70 percent of the population could be infected, and Bill Gates' prediction that an epidemic would kill millions of people could come true. They are real lives, not just cold numbers!
However, the defects of the current international governance system are not only reflected in the lack of sufficient leadership of WHO itself in the handling of major international public health emergency, but also the lack of adequate coordination at the international level for the package of epidemic response policies, which are mainly based on public health policies and supplemented by economic hedging policies. The post-war system of global governance may not be up to the task.
On the one hand, the WHO and the International Monetary Fund (IMF), the World Bank, the World Trade Organization (WTO) and the Bank for International Settlements (BIS) are independent and professional international institutions. There is no doubt that the WHO has a central role to play in the response to this outbreak, but it is difficult for the WHO either to exert decisive influence on member governments or to coordinate the support of other specialized international institutions for public health emergencies. Each institution acts on their own with the conscience, it is difficult to form a quick response and policy synergy.
On the other hand, the United Nations, the G7 and the G20 are comprehensive international organizations or platforms that could have played a more active role in the global response to control the spread of the epidemic. But so far, they have done little.
Because the United Nations has too many members and carry on the one-country, one-vote mechanism, it is difficult to coordinate policy stances. Therefore, it is generally silent on similar occasions, and mainly participates in related activities through its specialized agencies.
G7 has the meeting of Finance Ministers and Central Bank Governors, as well as Leaders’ Summit. It has already made or will make further statements on the response to the COVID-19 epidemic. However, as G7 has lacked representativeness with the changing economic strength of countries, it is also inadequate to contain the global spread of the epidemic by them. The G7 Finance Minister and Central Bank Governor's joint statement on March 3 was considered to be vague and perfunctory, putting the stock market under pressure for a time.
Founded in 1999, the G20 emerged from the 2008 global financial crisis as an important platform for international policy coordination. With the meetings of Finance Ministers and Central Bank Governors and Leader’s Summit, G20 gathers developed countries, major emerging markets economies and developing countries. It has broader representativeness and authority. However, the G20 has been rapidly marginalized in recent years due to the divergence of economic trends and policy orientations, especially the serious damage to strategic mutual trust caused by trade disputes among major members. Moreover, the G20 has not developed an institutionalization, but instead the presidency of the G20 rotates between member countries every year. This year coincides with Saudi Arabia holding rotating presidency, it is reasonable that it is hard to lead the way in the face of the outbreak. As, the Saudi oil market suffered an historic collapse, triggered by the it's surprise announcement of raising production following the breakdown of price-fixing talks, which was also a major factor of global stock markets plunge in last week.
As for the Asia-Pacific Economic Cooperation (APEC), it is a regional international economic organization with the lack of regional representativeness and it has many members. The organization for Economic Co-operation and Development (OECD) is a cross-regional international economic organization with 36 members, but as a "rich man's club", the G7 is actually its ambassador and spokesman.
To be frank, this article only raised the questions, not the answers. But it is believed that the outbreak will not be the last pandemic to hit humans. The “shortest stave” and the shortcomings of the global governance system exposed in response to this outbreak should arouse people's attention and consideration. Given that the outbreak is not going to end soon and time is life, perhaps we can learn by doing and begin immediately to improve the global emergency response management system. Of course, even if it may be too late to catch up the “train” to respond to this outbreak, it will not prevent us from carrying out further research afterwards to catch another one.
【This article is AFTT Working paper No. 2020-09/75】
Expert Biography:
Guan Tao, Fellow of Asian Financial Think Tank, was director general of the department of balance of payments at the State Administration of Foreign Exchange (SAFE) during 2009-2015 and press spokesperson of the SAFE during 2014-2015. Prior to that, Dr. Guan functioned as deputy director general of the general affairs department of the SAFE. He is also member of the G50 Economists and Dong Fureng Chair Professor of Wuhan University. Dr. Guan participated in a series of foreign exchange reform projects during 1994-2014. His major research areas include exchange rate policies, international capital flows, currency convertibility and balance of payments. He received a Ph.D. in economics from Beijing Normal University in 2004, a master’s degree in development economics from Australian National University in 1998 and a bachelor’s degree in world economics from Wuhan University in 1992.
AFCA was founded in May 2017. It is the first international financial social organization initiated by China, comprising financial institutions, financial industry associations, relevant professional service agencies from Asian countries and regions on a voluntary basis. At present, there are over 120 members from 31 countries and regions in five continents, covering various fields, including banks, securities companies, insurance companies, fund management companies, asset management companies, futures, international financial centers, industry associations, fintech and financial services companies.