China’s Li Yong Wins UNIDO Elections: Implications from an American Perspective

On Monday, June 24, the new director general of the United Nations Industrial Development Organization (UNIDO) was elected for a four year term. Normally, such an event would make little splash in Washington, but the circumstances of this week’s election should be met with interest by U.S. policymakers. Seven candidates vied for the position, with Li Yong from the People’s Republic of China emerging as the clear winner, receiving 37 of 53 total votes from UNIDO member states on the Development Board in the first round of voting. The General Board will approve the final decision this Friday, June 28, but the outcome is clear; Li, who has been serving as China’s vice minister of finance, has become the first Chinese government official to be elected executive of any major multilateral organization. The election of Li need not worry U.S. policymakers, but rather signifies China’s ambition to both broaden its involvement in international development and to solidify its own national development goals.

While individuals from China have held other senior (i.e., vice/deputy director) positions in major agencies before, Li’s personal and professional background sets him apart from the others, all of whom have had significant ties outside mainland China. A brief profile of three such individuals:

  • Margaret Chan, from Hong Kong, is the current director-general of the World Health Organization (WHO). Although Chan was the first Chinese citizen to occupy the top position of a UN agency, she hails from Hong Kong, possesses Canadian citizenship (from her time as a student there), and had only held Hong Kong government positions previous to her WHO appointment.
  • Justin Lin, former chief economist of the World Bank, took an unorthodox path to his position. Originally from Taiwan, he defected from the Republic of China Army to Communist China, before heading to the United States to earn his PhD from the University of Chicago.
  • Cai Jin-Yong is the executive vice president and CEO of the International Finance Corporation (IFC). However, Cai previously worked for Goldman Sachs Group and received his PhD from Boston University.

Li, in contrast, has no previous experience with a foreign company, organization, or educational institution, making him unique among Chinese multilateral leaders.

In the lead-up to the election, China promoted Li in a systematic manner reminiscent of full-scale political campaigns. Li’s official public relations video proposed a five-pillar strategy for the agency, involving expanding partnerships, aligning the UNIDO agenda with the post-2015 round of Millennium Development Goals (MDGs), strengthening management, and motivating staff. On June 14, he outlined his vision for UNIDO at the agency’s High Level Conference of Middle-Income Countries in Costa Rica. Overall, Li ran a much more organized campaign than did any of his competitors, benefiting from extensive support from the Chinese government and swaying voters through active engagement. Additionally, the Chinese government might commit a sizeable injection of funds into UNIDO.

UNIDO funds and implements projects and provides technical training to developing states transitioning to middle-income status, while also acting as a forum to discuss and formulate new development strategies and goals; it very much emphasizes two-way learning with respect to development, looking for nontraditional, often private sector led solutions to common development challenges. Therefore, the director general heads an organization that not only delivers direct services and funding, but wields substantial power in shaping global economic development priorities. Li succeeds outgoing Director General Kandeh Yumkella, whose appointment as UN special representative for sustainable development by Secretary General Ban Ki Moon speaks to UNIDO’s profile. In a keynote address at CSIS in 2011, Yumkella articulated UNIDO’s diverse portfolio of projects, including poverty reduction, energy efficiency, and public-private partnerships.

Certain Western states that have withdrawn from UNIDO in the past 15 years perceived UNIDO as inefficiently managed and saw its efforts as duplicative of those of other UN agencies. The United States withdrew from UNIDO in 1996, taking away with it a quarter of the agency’s annual budget. Canada and Australia resigned in 1993 and 1996, respectively, and the United Kingdom terminated its membership in 2011, citing the UN Development Programme and the UN Environment Programme as having greater impact on poverty reduction than does UNIDO. However, UNIDO is a specialized UN agency, focused on technical, private sector-led development—some might even call it the middle-income country UN agency.

The withdrawal of these key member states increased annual dues for remaining members, and Japan is now UNIDO’s top donor, providing 19 percent of the annual budget. While the departures of the United States, Canada, Australia, and the United Kingdom were undesirable for UNIDO financially, these countries’ absence allows Li to run an agency that is less geopolitically complicated than others. Moreover, the agency’s current membership now better reflects the very constituency it seeks to assist—with the assistance of remaining wealthy donor countries, such as Germany, South Korea, Spain, and Japan. UNIDO’s model actually matches closely with the Chinese approach to development, including a focus on the private sector through investment and trade, technology transfers, and an apolitical outlook. As a result, some of UNIDO’s most enthusiastic participants are those member states more interested in technical solutions to development problems and less concerned with other questions of development, such as governance.

UNIDO’s relevance to international development should not be underestimated; China’s fervent support of its candidate for director general is a long-sighted, strategic calculation that recognizes UNIDO’s potential for adding value. If Li is successful in further invigorating UNIDO as an effective and financially sustainable agency, then the international community might adjust its perspective on both the significance of UNIDO and Chinese global leadership. UNIDO has the potential to make a bigger impact than it has ever had, but much of that potential depends on the quality of leadership. Li’s election is China’s unique moment to take initiative in the multilateral development community and an opportunity to change Washington’s position on the significance of UNIDO. If Li proves to be a proactive director general who produces results, he could indeed pave the way for greater Chinese leadership of international institutions more broadly.

China’s economic rise over the years has generally been met with concern by Western economic powerhouses, including the United States, over Chinese adherence to global economic standards. From a U.S. perspective, it is therefore important to consider both the benefits and risks of Chinese leadership of a UN agency. On the one hand, Li’s election should be seen by the United States as an opportunity to further integrate China into the global system. On the other hand, it may be perceived as part of China’s rival offerings of alternatives to Western and U.S. global standards of economic trade, development, and multilateral partnership. China’s development assistance to Africa continues to expand; the country is obviously widening its global reach in an effort to reshape geostrategic and development realities. As China assumes this role, the United States will want to continue ensuring that China abides by global standards of free trade and partnership. The only medium term concern for the United States should be that China may come to be a global standard setter, instead of just following international standards. In any case, Li Yong’s election as director-general of UNIDO is an important step for Chinese global leadership moving forward.

Daniel F. Runde holds the Schreyer Chair in Global Analysis and is director of the Project on Prosperity and Development at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Maggie Nelson is an intern with the CSIS Project on Prosperity and Development.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2013 by the Center for Strategic and International Studies. All rights reserved.

Daniel F. Runde
Senior Vice President; William A. Schreyer Chair; Director, Project on Prosperity and Development

Maggie Nelsen