Business / Economy

China can show leadership at G20 summit to resist protectionism, boost confidence in global economy: US expert

(Xinhua) Updated: 2016-08-08 10:27

WASHINGTON - As the host of the Group of 20 (G20) summit in its eastern city of Hangzhou next month, China has the opportunity to show its leadership in resisting protectionism, spurring growth and boosting people's confidence in global economy, a US expert has said.

"I think on trade we're in a very important time because I think there're strong protectionist pressures in the world," said Robert Kahn, a senior fellow for international economics at the Council on Foreign Relations (CFR) in Washington, D.C.

"Here's what China can play a very important role in showing the leadership, saying (that) we need to resist these pressures and we need to do it in a way that's realistic and smart," Kahn told Xinhua in a recent interview.

Citing the dim prospects for the Trans-Pacific Partnership (TPP) trade agreement to pass the US Congress, Kahn said he was "quite worried" that it would offer a window of opportunity and an excuse for increasing protectionism globally if the 12-national trade deal is rejected by the US Congress.

"That would be bad for the entire G20," Kahn said. "I think what we have to be doing now is talking very honestly about how we can show leadership in this very difficult environment when people don't feel like trade is helping them, how we can convince people again that the fair deal is for everybody."

Kahn believed that China could play an important leadership role as chair of the G20 summit this year to help find good ways to resolve these disagreements on trade. "I think within the G20 we need to find ways to give people confidence that it's really an honest dialogue and concerns are being addressed in a pragmatic fashion," he said.

Acknowledging rising voices of protectionism around the world, China has initiated the G20 trade and investment working group and institutionalized the G20 trade ministers meeting to promote international trade and investment, which would also contribute to much-needed global growth.

At the G20 trade ministers meeting in Shanghai, China last month, the ministers endorsed a broad strategy for promoting global trade growth, in which G20 members will lead by example to lower trade costs, harness trade and investment policy coherence, boost trade in services, enhance trade finance, promote e-commerce development and address trade and development.

"Trade and investment should continue to be important engines of global economic growth and development, generating employment, encouraging innovation and contributing to welfare and inclusive growth," the ministers said in a joint statement.

In terms of macroeconomic policy, Kahn said G20 finance ministers and central bank governors have repeatedly made strong statements of using all policy tools - monetary, fiscal and structural - to promote growth, but "the question is how we go beyond these statements to actual action" .

It's politically and economically difficult to implement structural reforms and G20 members are also "quite divided" in expanding fiscal policy to stimulate growth, according to Kahn. He was concerned that there isn't really anything new for policymakers to be done while everyone agrees on the needs for more growth.

"That would be something for the Chinese government to try, and address, and manage," he said, adding that policymakers need to think about whether current policy measures are enough to "produce the kind of growth that will make people feel good about global economy".

"How do we get people confident that policies are not just good headlines but really changing the way of our economy that's going to work in the longer run," he asked, emphasizing that "there's a great deal of frustration and anxiety" about economic future among the population in the United States, Europe and other parts of the world.

Li Baodong, Chinese G20 Sherpa and vice foreign minister, said the G20 Hangzhou Summit next month will focus discussions on innovation, the new industrial revolution, the digital economy and structural reform under the agenda item of "breaking a new path for growth".

"This aims to break the current model of sole reliance on fiscal stimulus and easy monetary policy through innovation-driven growth strategies and structural reform, and boost the potential for mid- to long-term growth," he said.

China is working with fellow members to draw a G20 blueprint for innovation-driven growth that highlights the concept of inclusive innovation and a concrete action plan for building a new industrial revolution and the digital economy, which may help shore up people' s confidence in global economy.

As a primary platform for international economic cooperation, the G20 has also made some progress in global economic governance in past several years, including implementing the 2010 quota and governance reforms in the International Monetary Fund (IMF).

"China is much better represented in international intuitions now than used to be the case, including the IMF," Kahn said. "It continues to move in the right direction where Chinese views and voices are heard more regularly in these forums...I think that should continue to happen."

Eying China's growing influence in the world stage, Kahn welcomed the world's largest developing country to join the Paris Club, an informal group of creditors who work to help resolve countries' debt problems.

It would be "a very positive and very important statement" for China's commitment to strong rules on debt issues if China decides to join the Paris Club and becomes a member of the Club, he said.

"I think that's an example of leadership for China. Getting it done is very positive," he added, hoping that China can play a leading role in fostering better international cooperation on debt restructuring.

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