The economic and social interdependencies in the world economy have reached a higher level than ever before in human history, highlighted not least by the global financial and economic crisis of 2008/2009. Financial and goods markets are intertwined today; the global economy is characterised by increasing cross-boundary trade and capital flows. The ever greater integration and internationalisation of world trade has produced riches for many, but not all countries.

The financial crisis raised unprecedented questions about the future of the global economy. Most politicians and economists were puzzled by the speed with which a sectoral crisis emanating from the USA worked itself through the international banking systems and brought havoc to many financial and commodity markets. Clearly, governments across the world took speedy action to minimise the fallout and to avoid possible collapse. But much of the funding for recovery programmes was done by borrowing money. With public debt rising strongly, a debt crisis may be looming which could deteriorate further, damaging the fragile economic recovery and leading to new tremors. Basic questions remain unanswered: Are the economic policies being applied to recover from the crisis adequate? Is the world economy recovering towards a new international economic order or reproducing the pre-crisis structure? What kind of global regulatory regime is needed to make sure that a repetition of the Global Financial Crisis is no longer possible?

Asia has done better than other regions in coping with the recent crisis. But a lasting recovery is in doubt for Asia, too. Imbalances in the world economy go deeper than the need to regulate the financial system and adjust currency policies and may be linked to the dislocation of production and demand from growing income inequality between countries and within societies.

Reports and studies on income distribution in many countries point to stagnating or declining wages, growing rural–urban income differentials, increasing Gini coefficients and other indicators of worsening income disparities. The time may be right for justice-based criticisms of widening income disparities to be joined by macroeconomic arguments calling for a new growth model. Do countries need a more balanced system of income distribution to maintain economic growth?

The current debate in China carries similar connotations. Income inequality should be reduced; the wage share in GDP raised; rural income should grow faster than urban income; and, above all, progress should be made in establishing a general social security system (for example, health insurance and pension insurance). All these interventions, it is hoped, may help to move the Chinese economy from an export and infrastructure-oriented model to a more inward-looking, domestic demand based growth model.

In organising international conferences with various partners in China on the different facets and dimensions of the world economy, we have a clear message: national solutions are a thing of the past. The big economies in particular need to harmonise their economic policies if we are to strive for a long-term prosperous future.