Li Yong and UNIDO: The Career of a Mainland Chinese in a Multilateral Organization

In June 2013, Li Yong was elected as the new Director-General of the United Nations Industrial Development Organization (UNIDO) for a four-year term.

Of the six candidates competing for the post, Li emerged as the clear winner. He received an astonishing 37 out of 53 votes cast by UNIDO member states in the first round of voting.

Li, who at that time was Deputy Minister of Finance of China, became the first mainland Chinese government official to be elected to head a major multilateral organization.

Already at this point, it would become apparent, by this and other measures, that the People's Republic of China was in the process of developing the ambition to play a larger role in the world, both by expanding its involvement in international development issues and by imposing its own national development goals. 

The huge demand for raw materials of all kinds, especially for rare non-ferrous metals for the telecommunications technology, automotive- and environmental technology industries, which had to be satisfied partly domestically but also, due to the immense demand, in certain emerging and developing countries, primarily in Africa and South America, was already evident.

Professor Zhou Yongsheng, an international relations expert at China Foreign Affairs University, said at that time, that Li's new post meant that China was making an increased contribution to international organisations.

Li Yong, who became a member of the Communist Party of China as early as 1973 at the age of 22, has had a "typical" local mainland Chinese career in the Beijing environment of the Ministry of Finance.

Born in Shandong Province, he belongs to the ethnic group of Han Chinese, who make up more than 90% of the total population in China, and thus fulfilled the first and essential requirement for a career in the Chinese civil service.

Virtually his entire career has been under the wing of the Ministry of Finance.

This includes his master's degree at the Research Institute for Fiscal Science of the Ministry of Finance, then his first job as a researcher at the finance ministry's Research Institute for Fiscal Science in 1984, and his 9-year long tenure at the World Bank's Beijing branch (1989-1998). In 1999, he moved directly into the Ministry of Finance and became its vice finance minister in 2003, a position he held until 2013. During the same period, he was also a member of the People's Bank of China's monetary policy committee.

Apart from a stint at the Permanent Mission of the People's Republic of China to the UN (1985 to 1988) at the beginning of his professional career, he had no overseas experience when he took up his post in Vienna.

However, as an avid golfer, he was able to raise his golf handicap to the excellent score of 17 during his two subsequent terms in office until his retirement in Vienna.

This would not have been possible so easily in China. Golf had been banned by the Chinese Communist Party as too bourgeois until the mid-1980s. In the years after the opening, several new tolerated clubs were established, mainly for expats. For the general public, golf was prohibitively expensive anyway and therefore not the focus of interest.

It was not until October 2015 that the Chinese Communist Party banned all its members from joining "golf clubs and other forms of extravagance" as part of its anti-corruption campaign. However, the party quickly corrected itself, clarifying its position a few months later in an editorial in the China Daily, stating that party members should not accept "free memberships or rounds."

In the run-up to the election as director general, China campaigned for him in a systematic manner reminiscent of large-scale political campaigns.

Li was quoted by CCTV as saying that UNIDO faces many challenges, including the provision of better services for member states, which would be a top priority when he took office. He added that his winning the post showed China's strong support for UNIDO.

Li proposed a strategy for the organization that included expanding partnerships, aligning UNIDO's agenda with the Millennium Development Goals, strengthening management and motivating staff.

Li managed to run a well-organized campaign with the support of the party and the government, convincing his voters through active engagement and outbidding his competitors. In addition, the Chinese government promised to provide considerable financial resources for UNIDO.

At his inauguration, Li said: "It is my honour to be elected. The Chinese Government has recommended me and that shows its strong support for industrial development. The organization faces many challenges. We are going to provide more effective services to support the different needs of different regions and countries. The most disadvantaged areas need to boost their industrial sectors, while middle-income countries need to improve their level of industrial development. China is today one of the world’s largest manufacturing economies and its economic transformation has lifted hundreds of millions of people out of poverty. This experience could be shared with other developing countries fighting to eradicate poverty."

As goals during his term of office, he determined that UNIDO's efforts must focus on the following 5 pillars:

1. Further clarify the strategy and direction of UNIDO.
2. Meet the diversified demands of Member States at different stages of development.
3. Strengthen and expand partnerships.
4. Enhance the efficiency and cost-effectiveness.
5. Motivate the staff to their full potential.

UNIDO was established in 1966 as a program of the United Nations and became an independent specialized agency of the UN in 1985.

UNIDO finances and implements projects and provides technical training for developing countries on the path to middle-income status, while acting as a forum for the discussion and formulation of new development strategies and goals.

The organization has 170 member states. UNIDO maintains 47 regional and country offices and employs a total of about 650 staff.

In addition, more than 1800 international and national experts work on UNIDO projects each year.

Most recently, UNIDO implemented projects with a total value of 155 million euros.

According to its updated Lima Declaration, the UNIDO's main aim is to eradicate poverty through "inclusive and sustainable industrial development (ISID)".

As Director General of such a powerful organization, Li provided extensive services and funding during his two 4-year terms respectively 8 years in office, exerting significant influence in shaping global economic development priorities.

This could be observed against the background that in roughly the same period, China's development financing for Africa has gained incredible momentum.

It is estimated that China provided $75 billion in development assistance to Africa in 2013 (about $25 billion came additionally from the EU, and about $4.5 billion from the World Bank). Multiannual Chinese loans for infrastructure projects backed by natural resources and carried out by Chinese construction companies were lent to Angola at US$14.5 billion, Ghana at US$13 billion, Nigeria at US$8.4 billion, the Democratic Republic of Congo at US$6.5 billion, and Ethiopia at US$3 billion. China's share of total African trade grew from three percent to nearly 20 percent within ten years. With a trade volume of over 200 billion U.S. dollars per year, China has become Africa's largest trading partner. As early as 2011, China displaced the United States as the African continent's largest trading partner. By mid-2012, China had already placed more than 45 billion U.S. dollars in foreign direct investment in Africa.

Asked in an interview by the African Business Magazine in 2018, what African countries can learn from China’s approach, Li replied: "China plays a major role in supporting Africa on its path to inclusive and sustainable industrialisation. UNIDO has put the 47 least developed countries, 33 of which are in sub-Saharan Africa, at the heart of its agenda for inclusive and sustainable industrial development. Manufacturing and industrial development were core to the “miracle” of the southeast Asian countries – countries like Japan and the Republic of Korea, who moved very fast after the Second World War. Those “tigers” and “dragons” moved quickly up to the middle and high-income country level. China learned from them in the 1980s, and we opened up a very, very poor country, with a big population, to the world. China transformed from an agricultural-based to a more industrialised country in 30 years. I would say that African countries can learn a lot from China’s experience. Africa can draw inspiration from China but must not aim to be China. Each continent should bear in mind its own local context when industrialising and look to international partners for inspiration. Ultimately though, they must take ownership of their industrial development efforts. For the same reason, the PCP - UNIDO Programme for Country Partnership model is a country-owned process, with a strong focus on the host country and ensuring that efforts are aligned with existing and emerging national and regional priorities."

It is also interesting to note that Xi Jinping launched the Belt and Road Initiative (BRI) in 2013, the year of Li's inauguration.

Based on the historic Silk Road, this project to build and expand intercontinental trade and infrastructure networks between the People's Republic of China and over 60 other countries in Africa, Asia and Europe is arguably the most ambitious "infrastructure project" the world has ever seen.

It is estimated that a total of $1.1 trillion will be needed for the initiative. Funding is being provided by the Silk Road Fund, and since 2016 also by the AIIB Asian Infrastructure Investment Bank, and the newly established New Development Bank of the BRICS countries. The three institutions have so far been allocated funds ranging from $40 billion to $100 billion each.

Critics claim that it is not a project of cooperation and equal collaboration, but a major project that serves China's economic and geopolitical goals, a "geostrategic idea of the century with which Xi is determined to impose his ideas of order and power projection."

In 2019, Li remarked on the Belt and Road Initiative during a lecture at the Belt and Road Institute of Beijing University: "The Belt and Road Initiative has immense potential to contribute to the achievement of the Sustainable Development Goals and accelerate countries’ implementation of the 2030 Agenda. From generating economic growth to contributing to social progress and environmental benefits, it can help leverage public and private resources to fill the funding gap for the SDGs”, said Li in 2019. Li highlighted the Organization’s rich experience in supporting countries to mitigate the environmental impacts of industrial development and economic growth through the promotion of eco-industrial parks, energy efficiency, and renewable energy solutions, among others. On the sidelines of the Forum on the “Green Silk Road”, the Director General met with the Minister of Ecology and Environment (MEE) of China LI Ganjie to discuss the further strengthening of cooperation between UNIDO and MEE, particularly on the implementation of multilateral environmental agreements. Since the signing of a number of key agreements between UNIDO and the Government of China at the occasion of the first Belt and Road Forum in 2017, cooperation between UNIDO and China has further expanded through concrete projects and activities, ranging from joint research on global value chains development to international guidelines on industrial parks, and other activities within the framework of South-South and triangular industrial cooperation. Furthermore, UNIDO signed several new agreements with Chinese entities to jointly promote inclusive and sustainable industrial development in BRI participating countries. A memorandum of understanding was signed with the General Administration of Customs of China (GACC) to further cooperate on trade facilitation and within UNIDO’s flagship Programmes for Country Partnership (PCP), among others. A second agreement was signed with the Ministry of Water Resources of China (MWR) and the Standardization Administration of China (SAC), under which the three Parties will work together to develop a series of technical guidelines in the area of small hydroelectric power plants."

Under Li, UNIDO also launched the "PCP - Programme for Country Partnership" as a new approach to accelerate inclusive and sustainable development at the country level in 2014.

This approach aims to align with the national development agenda and rest on a multi-stakeholder partner-ship led by the national government. Its intent is to build synergies between government and partner interventions relevant to industrial development and to leverage additional resources. Institutionally, the PCP approach is an important attempt to bring together interventions conceived and managed across several HQ units of UNIDO and to make them relevant and trackable at country level. UNIDO PCP managers collate a monitoring report of all UNIDO projects in the country and report these to the national steering committee against the country PCP framework. PCPs account for about 5-6% of UNIDO’s technical co-operation delivery. They have been rolled out in Cambodia, Ethiopia, Kyrgyzstan, Morocco, Peru and Senegal. They are under development with Côte d’Ivoire, Egypt, Rwanda and Zambia. Initial feedback on this pilot PCP approach is promising. It has the potential to overcome significant shortcomings with regards to the planning and reporting of results in relation to strategic impacts. At this stage the PCP approach is in development. Currently, UNIDO PCP reporting is not linked to results frameworks for relevant SDGs or the IRPF but is based on each project’s (potentially different) results framework. It does, however, make a step towards bringing UNIDO reporting into a single country-wide process related to national priorities.

The relationship between UNIDO and some former and current member states, has long been challenging and strained.

Key member states withdrew from UNIDO in the years before Li took office, such as Canada in 1993, the United States (which accounted for a quarter of the organization's annual budget) and Australia in 1996, and the U.K. in 2012.

The U.K. withdrew from the organization after the U.K.'s Multilateral Aid Review concluded that there was no evidence of UNIDO having a significant impact on global poverty.

Some states that withdrew also criticized UNIDO as inefficiently managed and saw its efforts as duplicative of those of other UN agencies. Justifications such as "the organization's irrelevance and ineffectiveness..." and "UNIDO's role in the international aid system is marginal ... and its overall performance is mediocre." were heard.

However, the series of withdrawals could not be stopped after 2013. New Zealand (2013), France (2014), Portugal (2014), Belgium (2015), Denmark (2016) and Greece (2016) followed in the following years.

The withdrawal of the above-mentioned important member states caused financial disadvantages and increased the annual dues for the remaining members.

On the other hand, the departure of the aforementioned geostrategic players has allowed Li to keep a tighter and more focused grip on the governance of the organization. Moreover, the current member states better reflect the constituency that UNIDO seeks to support.

In response to the question, "Should the U.S. rejoin the UNIDO?" a study by The Heritage Foundation found that "The United States withdrew from UNIDO in 1996 after concluding that the organization lacked a clear purpose and was generally ineffective. With support from the Clinton Administration, Congress refused to pay arrears that the organization claims are owed by the United States. Since this decision, UNIDO has periodically requested that the U.S. rejoin the organization, and news reports indicate that the Obama Administration has considered that possibility. This would be a mistake. In recent years, other governments have chosen to withdraw from UNIDO after concluding that the organization is of marginal importance and provides poor value for money. The evidence indicates that the U.S. was correct to withdraw from UNIDO, and there is no compelling reason to reverse that decision. Recent analyses by other governments confirm that the organization still suffers from managerial weaknesses, lacks a clear, distinct mission, remains ineffective and provides poor value for money."

"The U.S. demonstrated foresight in withdrawing the U.S. from UNIDO nearly two decades ago. The organization's performance since then provides no reason to reconsider that decision, much less reverse it."

During Li's term, however, 5 smaller countries have also joined. Remarkable are the good relations with China: Marshall Islands (2015), Kiribati (2016), State of Palestine (2018) which China recognized in 1988, Antigua and Barbuda (2019) and Micronesia (2019).

UNIDO's model is very much in line with the Chinese development model, which emphasizes the private sector through investment and trade, technology transfer, and a non-political attitude. As a result, some of the most motivated members of UNIDO are those member states that are more interested in technical solutions to development problems and less concerned with other development issues, such as governance.

During his final year as director general, Li was still working on adaptations, such as the implementation of a comprehensive overhaul of the Secretariat's governance system.

"In view of the enhancements to the UNIDO business model, we continue to reinforce and strengthen our internal governance mechanisms in support of our mandate, mission, and objectives. I am pleased to inform you that following the comprehensive overhaul of the Secretariat’s governance system, we have been giving closer attention to oversight, governance and accountability in the course of this year. The Three Lines Model has been formalized through the concurrent issuance of key policy documents, namely the enterprise risk management policy, the accountability framework, and the internal control framework. As we become more focused on the results and impact that we aim to deliver under our pioneering results-based budget, we must also be much sharper in the understanding, mitigation and overall management of the inherent risks attached to these results. In conjuncture with the establishment of a results and risk focal point network, an internal training course on results and risks will bring about the change in attitude and culture that can be expected of a risk- and results-conscious institution. It will also support the result-based management principles adopted by the Organization and its Member States. As far as the assurance providers that are located in the third line are concerned - namely, the External Auditor, the Joint Inspection Unit, and the evaluation and internal oversight functions - we appreciate the increased value they provide to the Organization.", according to Li's statement at the "Opening of the 49th Session of the Industrial Development Board" in July 2021.

The organization paid tribute to him when he handed over office to his successor Gerd Müller in December 2021 at the 19th session of the UNIDO General Conference: "During his two terms in office, Li led the Organization through an important transition as its Member States renewed UNIDO’s mandate with the adoption of the 2013 Lima Declaration. The 2013 Lima Declaration highlighted the concept and the vision of inclusive and sustainable industrial development, which was embedded in the 2030 Agenda for Sustainable Development as SDG 9, Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. Li subsequently launched the Programme for Country Partnership, an innovative development model that builds synergies with ongoing government and partner interventions supporting industrial development and that leverages investment in selected priority sectors."

Li remarked, "Reflecting on past years and looking at the current situation, I am pleased to be handing over an agile and innovative organization that is on a solid footing. In closing I just wanted to thank all member states most sincerely for the trust you placed in me!"

After eight years at the helm of UNIDO, and in accordance with the two-term limit of UNIDO’s Constitution, Li stood down as Director General during the General Conference.

Gerd Müller, formerly Germany’s Minister for Economic Cooperation and Development, was confirmed as his successor for a period of four years.

Since its founding, the organization has restructured and reformed several times. The 2013 Lima Declaration expanded its mission to include promoting "inclusive and sustainable industrial development" (ISID), defined as benefiting greater numbers of people while safeguarding the environment.

Despite the challenges and problems outlined, it should not be underestimated what immense added value such a multilateral organization can offer a member like China at the global level in realizing its geostrategic goals. The post of director-general for Li Yong was therefore a major coup for China in its global efforts to impose its form of world order.