A time for Eurasia

To fully cash in on opportunities, these regional economies should engage in international rule-making, develop the green and digital economies and reduce dependence on the dollar

Editor's note: The world has undergone many changes and shocks in recent years. Enhanced dialogue between scholars from China and overseas is needed to build mutual understanding on many problems the world faces. For this purpose, the China Watch Institute of China Daily and the National Institute for Global Strategy, Chinese Academy of Social Sciences, jointly present this special column: The Global Strategy Dialogue, in which experts from China and abroad will offer insightful views, analysis and fresh perspectives on long-term strategic issues of global importance.

The profound restructuring of the world economy has given rise to many new trends.

Diverse emerging markets have generally outpaced developed economies, despite the severe impact of the 2008 international financial crisis and the COVID-19 pandemic since 2020. There has been widespread efforts in countries worldwide to go digital and green. New industries, business segments and business models have arisen and are driving rapid growth of the digital economy and trade, while high on the agenda of development is to cut the consumption of high-carbon energy, such as coal and oil, and reduce greenhouse gas emissions through technological innovation, institutional reform and business transformation.

At the same time, prevalent protectionism and unilateralism has brought unprecedented challenges to economic globalization, leading to sluggish growth in global trade and investment. Some developed economies tend to view international economic and trade relations through the lens of geopolitics and national security. Their abuse of security reviews and economic sanctions have severely disrupted normal economic and trade cooperation. It's not hard to explain that an increasing number of countries are calling for de-dollarization and have initiated or planned measures to promote diversification in the international monetary system.

In this context, the Eurasian region is experiencing a deteriorating external environment. Economic growth faces strong pressures overall and shows a trend toward divergence.

According to the International Monetary Fund, growth of emerging markets and developing economies in Europe is projected to rise to 2.4 percent in 2023, which is 1.6 percentage points higher than the previous year but 0.6 percentage points lower than global growth for the same period. Growth in the Middle East and Central Asia is projected at 2 percent, 3.6 percentage points below that in the previous year. Asian emerging markets and developing economies perform relatively better, with an expected growth of 5.2 percent in 2023, up by 0.7 percentage points from the previous year.

It is noteworthy that, driven by the Belt and Road Initiative and various regional cooperation mechanisms, the Eurasian region's economic integration continues to develop positively. For example, despite multiple sanctions imposed on Russia, integration among members of the Eurasian Economic Union has continued to advance. According to the Eurasian Economic Integration report published by the Russian government in August, from 2015 to 2022, trade between the EAEU member countries grew by 87 percent, from $44.5 billion to $83.3 billion, and significant cooperation progress has been made in energy, transportation, financial markets, agriculture, healthcare, international cooperation and digitization.

Currently, the Eurasian economy still faces significant external challenges, including unresolved geopolitical hotspots, as well as economic sanctions and pressure from major developed countries. To fully leverage the opportunities presented by global economic trends and tap into the potential of the Eurasian economy, Eurasian countries should promote cooperation through the following approaches.

First, leading South-South economic cooperation through Eurasian economic collaboration. In the foreseeable future, emerging markets and developing countries will remain the main drivers of global economic growth.

On the one hand, countries in the Eurasian region should harness their economic potential, accelerate the implementation of the 2030 Sustainable Development Agenda, and promote cooperation in areas such as poverty alleviation, food security, pandemic response, vaccine distribution, development finance, climate change, green development, industrialization, digital economy and connectivity. On the other hand, Eurasian countries should strengthen cooperation with emerging markets and developing countries in other regions to share opportunities and contribute to economic globalization.

Second, actively engaging in international rule-making and enhancing institutional influence. In recent years, Eurasian countries have strengthened alignment with each other and with international standards and rules. However, it is necessary to recognize that in emerging areas such as digital and low-carbon sectors, which define the future of economic cooperation, governance rules are still in the making.

Eurasian countries should participate in the establishment of relevant rules, collectively uphold the multilateral trading system, and promote the creation of a high-standard free trade zone network accessible to all, providing more effective institutional safeguards for global economic cooperation.

Third, creating an efficient e-commerce platform to promote development of the digital economy. With continuous breakthroughs and applications of digital technology, countries in the Eurasian region have introduced new measures to promote the digital economy transformation, covering the construction of digital infrastructure, the development of digital industries, business digital transformation, digital governance and international digital cooperation.

Currently, cross-border e-commerce has become a major driver for economic and trade cooperation in Eurasian countries. To promote the development of the data economy and create a more efficient model of economic and trade cooperation, countries in Eurasia should align goals and demands for e-commerce development and work together to build an efficient e-commerce platform.

Fourth, driving green development and deepening low-carbon economic cooperation. After the pandemic, countries in Eurasia have increased efforts in environmental protection, creating new opportunities for key industries such as ecological protection and clean energy.

Eurasian countries have been deepening cooperation in new energy, energy conservation, and the new infrastructure construction, creating significant room for development in trade and investment cooperation. Low-carbon trade and green investment are becoming important avenues for Eurasian countries to tap into the potential of economic and trade cooperation and enhance its quality.

Fifth, strengthening local currency settlement cooperation to promote currency diversification in the international monetary system. The United States, driven by its own interests, has adopted a radical interest rate policy and poses huge financial risks to Eurasian countries. At the same time, it is leveraging the US dollar's dominant position to abuse financial sanctions, causing instability in the Eurasian financial markets.

To mitigate the negative spillover effects of monetary policies from developed economies and reduce reliance on the US dollar, Eurasian countries should promote the use of local currency settlement in cross-border trade and investment as a breakthrough. Monetary cooperation should be further deepened to provide more options in the international monetary system.

The views do not necessarily reflect those of China Daily.

The author is a senior research fellow of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences and the National Institute for Global Strategy at the CASS. The author contributed this article to China Watch, a think tank powered by China Daily. 

Contact the editor at editor@chinawatch.cn.