The Star: September 15, 2016

12 Thursday September 15 2016
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G20 Hangzhou Summit Giving Prescriptions
for World Economic Governance
The Star
The 11th summit of the Group of 20 (G20) major economies was held in Hangzhou, China from September 4 to 5. Leaders of G20 members, guest countries and international
organizations gathered together to discuss ways of advancing global economic cooperation and development, and reached extensive consensus on pursuing innovative,
invigorated, interconnected and inclusive economic growth, a vision proposed by the host country of China. The world once again turned its eyes to the G20.
G20 as the premier forum for economic governance
Eight years ago when the world was ravaged by the 2008 financial crisis, G20 summit was launched
for member cooperation on international economic and financial issues. The then plummeting world
economy was stabilized and brought onto the track of recovery.
The G20 is widely recognized as the premier forum for global economic governance. This can be well
illustrated by the following figures: The G20 accounts for two thirds of the world population, 60% of total
land mass, 85% of global GDP and 80% of international trade. Hence, it is fair to say that the performance
of G20 economies has a direct bearing on the well-being of the world economy and that cooperation
among G20 members decides the future of international economic cooperation.
The G20 is different from previous cooperation mechanisms. Here, developed countries and developing
countries sit at the same table as equal partners, and discuss and decide on international economic
matters on an equal footing. This reflects a major change in the world economic pattern and represents
historical progress in keeping with the trend of our times.
In the face of the international financial crisis, G20 members have coordinated monetary and fiscal
policies, pushed ahead reform of international financial institutions, and brought the world economy
from the brink of precipice. This spirit of partnership and solidarity in times of difficulty is the most
valued asset of the G20.
World Economy at Crucial Juncture
Right now, the world economy and economic cooperation have reached another crucial turning point.
The momentum for global recovery remains weak. A lack of internal dynamism and a strong economic
foundation further prolongs the restructuring and adjustment process. The global economy is yet to fully
stabilize and bottom out from the crisis. Weak demand in advanced economies further moderates the
pace of recovery. Restructuring difficulties in the developing world add to downward pressure. Recently,
the International Monetary Fund (IMF) once again lowered its growth forecast for the global economy.
The world economy is therefore in a crucial transition period with both opportunities and challenges.
First, the old approach of stimulating growth merely through fiscal and monetary policies has become
less and less effective. Second, policies of the world’s major economies have clearly diverged, making it
harder to form synergy. Third, trade and investment protectionism is rearing its head, and the building of
an open economy remains a long and daunting task. And fourth, the world economy, though recovered
somewhat from the crisis, is still weak in growth and under constant downward pressure. At this crucial
juncture, the international community is full of expectations of this year’s G20 Summit, hoping that
outcomes from the Hangzhou Summit will reenergize the world economy.
China’s G20 Presidency This Year
China chose “Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy” as the
theme of the Hangzhou Summit and identified four key priorities, namely, “breaking a new path for
growth”, “more effective and efficient global economic and financial governance”, “robust international
trade and investment” and “inclusive and interconnected development”. The theme and topics proposed
by China have received strong endorsement and support from other G20 members.
Since the beginning of this year, China has been engaged in preparation for the Hangzhou summit.
China adheres to an open and inclusive working style, and always attaches importance to all sorts of
views and respects all sorts of voices. China has been working closely with other G20 members, guest
countries and international organizations, which has deepened mutual understanding and enhanced
the ground for co-operation. China has also held outreach dialogue with almost all United Nations
member states, in particular the developing countries. China has strengthened communications with
the UN General Assembly, the African Union Headquarters, the G77, the Least Developed Countries,
landlocked countries and small island states, and listened widely to other parties and absorbed their
views and suggestions.
G20 activities run through the whole year of China’s presidency, with the culmination in the summit.
More than 60 events have been held in 20 Chinese cities, including 23 ministerial-level meetings. So far,
China has convened several rounds of sherpa meetings, finance ministerial and central bank governors’
meetings and finance and central bank deputies’ meetings, and ministerial meetings on trade, energy,
employment and agriculture, respectively. Major side events, such as the Labor 20, the Think Tank 20,
the Youth 20, the Women 20 and the Civil 20, were also held successfully. This series of intense and
productive works has synergized consensus to the greatest extent and paved the way for the convening
of the Hangzhou summit.
Consensus Reached at the G20 Hangzhou Summit
Leaders attending the Hangzhou summit reached extensive consensus on seeking workable solutions to
global growth and development. The summit attempted to provide a therapy that can bring the world
economy back on to a healthy growth trajectory.
Charting a New Course
Leaders decided to point out the way and set the course for the world economy. They are committed
to reinforce macro-policy dialogue and coordination, work in the spirit of partnership to promote
mutual help and win-win cooperation, and focus their minds and energy to pursue strong, sustainable,
balanced and inclusive growth. They agreed that a mix of effective tools, including fiscal, monetary and
structural ones, must be implemented to buffer against short-term risks and unleash medium to long
term potential. This will send a strong signal of G20’s commitment to promoting global growth, and help
shore up market confidence and ensure stability of global financial markets.
Blueprint on Innovative Growth
The leaders were determined to break a new path for growth to inject new dynamism into the world
economy. They envisioned that the world should pursue innovation-driven economy and create a new
round of growth and prosperity. The leaders unanimously adopted the G20 Blueprint on Innovative
Growth, which reflects their desire to find the right path toward sustainable and healthy growth. The
G20 members will capitalize on the new opportunities brought about by innovation, new industrial
revolution, digital economy and other new factors and business types, and make a series of action plans.
The blueprint provides the consensus, action plan and the overall framework to open up a new path for
global growth and increase long term potential of the world economy.
Better Governance
The leaders were also determined to improve global economic and financial governance to enhance the
resilience of the world economy. They agreed to advance the quota and governance reform of international
financial institutions, broaden the use of Special Drawing Rights(SDR), strengthen the global financial
safety net and make the international monetary system more stable and resilient. They will also enhance
international tax cooperation, and join efforts of anti-corruption to deprive all corrupt persons of any
safe haven in G20 countries and beyond.
Boost key engines
The leaders were committed to revitalize international trade and investment as the key engines of growth
and build an open world economy. G20 members reiterated their stance to oppose trade protectionism
and support multilateral trading mechanisms in pursuit of trade growth, and formulated guiding
principles for investment policymaking to facilitate investment around the world.
Inclusive Growth
Consensus was also made to promote inclusive and interconnected development, so that G20 cooperation
will deliver benefits to the whole world. The leaders agreed to deepen cooperation on financial inclusion,
green finance and climate funds, and formulated an action plan on energy access, renewable energy
and energy efficiency. The summit featured the participation of the largest ever number of developing
economies. And for the first time, the summit put development at the center of global macro policy
framework and made a groundbreaking action plan implementing the 2030 Agenda for Sustainable
Development.
Significance of G20 for Sino-New Zealand Cooperation
China and New Zealand have both benefited from the strengthening of international economic
cooperation and have been actively engaged in the process of global governance. Bilateral cooperation
between China and New Zealand has deepened rapidly due to the joint commitments to free trade and
investment especially during the past few years.
In terms of the economic cooperation, New Zealand was the first among developed countries to
recognize China’s full Market Economy Status (MES) and sign free trade agreement (FTA) with China.
New Zealand’s export to China grew 33 per cent, far greater than the average export increase of less than
6 per cent with its other trading partners since it signed FTA with China in 2008. New Zealand’s exports
to China increased from less than 6 per cent of the overall exports seven years ago to nearly 20 per cent in
2014. At the same time, China remains New Zealand’s biggest import country. The bilateral trade volume
between New Zealand and China is expected to reach 30billion NZ dollars by 2020.
It is worth noting that New Zealand also became the first western country to join the Asian Infrastructure
Investment Bank initiated by China in 2015. Interconnectivity and inconclusiveness are key factors for
a vigorous world economic and trade system. Such a decision would consolidate the economic and
political links between New Zealand and Asian countries and bring about more opportunities for the
future development of New Zealand.
The G20 summit has substantial implication for New Zealand and Sino-New Zealand relations.
Maintaining a stable world economy and achieving its recovery is a matter of concern for all countries
including New Zealand. Though not a member of G20, New Zealand was invited to attend the G20 Trade
Ministers Meeting. And the development for a strategy of global trade growth was discussed during
the meeting. New Zealand would benefit from the decisions and commitments made at G20 summit to
reenergize international trade and investment. Moreover, economic growth requires innovation. New
Zealand and China have also deepened cooperation in promoting innovation in areas like agricultural
technology, environment, and medicine. The outcomes of the G20 Hangzhou summit for promoting
better international economic governance would boost the potential of Sino-New Zealand cooperation
in the future.