G20's role in global economy
Updated: 2013-08-29 07:27
By Zhang Jun (China Daily)
Worldwide slowdown and difficulties call for nations to take co-ordinated steps and work together for universal benefits
The 1997 Asian Financial Crisis increased the need for a more inclusive and balanced global economic architecture. The 2008 Global Financial Crisis further highlighted the flaws of the current international financial architecture, and the G20 became the premium forum for international economic cooperation with its role in crisis management and prevention strengthened. This was historic because, for the first time systemically important emerging countries were given a bigger voice at the core of global economic governance.
Although it is difficult to strike the right balance between representativeness and effectiveness, and it needs to and could be improved through better policy coordination and internal functioning, the G20 has proved to be the most effective forum for international economic cooperation. However, the G20 needs to stick to its commitment to increasing inclusiveness by opening the door to countries from under-represented regions and carrying out outreach activities.
Remedying the global economy will take time and patience, and the G20 needs to "dream small, act big". Instead of spouting slogans, the G20 members should keep their feet on the ground and avoid becoming just a talking shop. The onus is on the G20 members to deliver on its commitments. It needs to focus on building confidence in the global economic recovery and transform this confidence into concrete action.
St. Petersburg will host the Eighth G20 Leaders' Summit on Sept 5 and 6 with the theme of growth and employment, which accurately reflects the needs of the global economy. What can the G20 do to make itself an effective mechanism in response to the global financial turbulences and low economic growth? Since assuming the G20 presidency in 2013, Russia has made great efforts to prepare for the summit, with a detailed outline directing the schedule of the finance ministers' meetings and various working groups. There are great expectations that the St. Petersburg Summit will result in prescriptions that will boost the health of the global economy.
We live in a globalized world which means every country should carry out responsible economic policies that do not have negative spill-over effects on the global economy.
The G20 should seek macroeconomic cooperation and coordination that reinvigorates an open and fair global trading system. There are many claiming the World Trade Organization Doha round of negotiations are already dead. So the G20 needs to make a commitment that they will not pursue protectionism. This is of the utmost importance to boost business confidence and it is the responsibility of G20 members to make contributions to ensure the Ninth WTO Ministerial Conference bears fruit, so a revived WTO can cement together the multilateral trading system.
The G20 should reform the current international financial system, especially international financial institutions created under the old Bretton Woods system, which are suffering from the woes of the members of the "rich club". Reluctant as they may be, there is no excuse for some economies greedily enjoying the benefits when times were good, and then forcing the whole world to suffer from their greed when times are bad. In order to increase the G20's credibility, it is vital for emerging economies to get their voices heard in the international financial institutions, such as the implementation of the 2010 IMF quota reform.
The G20 should revive the global development agenda, providing political support to the United Nations discussions. When the G20 leaders shake hands and make their toasts and sit down to enjoy their banquets in St. Petersburg, they need to bear in mind that more than 1 billion people will have an empty stomach. The world expects a strong signal from St. Petersburg showing the G20 countries are willing to be partners with the least developed countries and will endeavor to promote common development for all. The G20 should continue to support infrastructure building in low-income countries, focusing on the 11 priority projects initiated by the High Level Panel.
The G20 should also rebalance global growth through structural reforms. Global rebalancing is the responsibility of both deficit and surplus countries, and the priority is to work together to promote structural reforms and make the cake bigger and sweeter.
China is committed to global rebalancing and takes an active and responsible attitude. But one blossom does not make spring, and now it is the turn for other major economies to think and behave responsibly, to create a more balanced world economy together.
China has strong confidence in the G20, as well as in itself. It has made great efforts to contribute to global economic growth, with its own dynamic economic performance. And with its bigger footprint in the global economy, China will keep on advancing the G20 process, by striving to enhance coordination and cooperation among the G20 members, and seeking a bigger voice and fair treatment for emerging economies in the global governance system.
The author is director-general of the Department of International Economic Affairs at the Ministry of Foreign Affairs and former ambassador to the Netherlands.
(China Daily 08/29/2013 page8)