U.S. President Obama's recent visit to China once more generates discussion about the changing role of China. Actually, he broke tradition and was the first U.S. President to visit China within the first year of taking office. One reason behind this is the rise of China as a world power.
China is transitioning from being the manufacturing arm for the world to one of the key drivers for the global economic recovery. According to the World Bank’s recent report “Transforming the Rebound into Recovery,” developing countries in East Asia and the Pacific have rebounded surprisingly quickly from the financial crisis and global recession, but the regional economic picture isn’t as rosy when China is taken out of the equation. Clearly, many countries are benefiting at the moment from strong demand and growth from China.
Though many countries are benefiting economically from the rise of China, some governments and people have raised concerns about China’s environmental and social impacts. One view is that the development needs to satisfy the aspirations of its population of 1.3 billion pose a serious threat to energy resources and to the environment. Also, civil society organizations and others have questioned China’s environmental and social standards, the quality of its exported goods, and its lack of transparency.
Is China’s rise a threat or opportunity? My own view is that China’s development is good for the world and good for China. With the economic development of China, its environmental, social, and governance (ESG) standards have kept rising and are of growing importance. From China’s labor law (promulgated in 1995), to the recently-updated labor contract law, to the elevation of the Ministry of Environmental Protection, to the increasing transparency of corporate governance, the trend is absolutely clear. Working for BSR in China also gives me opportunities to observe the growing number of Chinese companies integrating ESG standards into management systems. As revealed by BSR’s recent report, sustainable investment in China is rapidly emerging and has proved a powerful lever for influencing corporate ESG behavior. All of these positive developments will create opportunities for China to be a part of solutions to global challenges, and continue its growth as a world power.