THE emergence of a China-initiated infrastructure development bank and the yuan’s rise as a world currency mark a shift from a post-World War II global order to an Asia-centred one that promises peace and prosperity over the next 10 years, say experts.
During a panel discussion at The Straits Times Global Outlook Forum, Professor Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy, said there is a need “to restructure the world order to accommodate the new Asian powers”.
The institutions that emerged from World War II – including the United Nations, the World Bank and the International Monetary Fund (IMF) – “have to change”, he said.
“For example, you need to reform the UN Security Council. You cannot have five permanent members who are permanent members because they won World War II in 1945,” he said.
He said it is time for Britain and France to “gracefully” leave the Security Council, to make room for emerging economic powers such as India.
As for the World Bank and the IMF, he found it “absurd” that small states such as Belgiumhave greater voting power than China, the world’s No. 2 economy.
Economists feel initiatives such as the Asian Infrastructure Investment Bank (AIIB) are a way for emerging economies to gain greater influence in the global arena. Prof Mahbubani said Asia “badly needs” such an institution.
Also heralding a new order is the growth in trading hubs for the yuan. There are now 13 such hubs, including Singapore and Sydney, which became one just last week.
The yuan last year surpassed the euro to become the world’s second most used currency in trade finance, ranking behind only the United States dollar.