World needs China to take leadership role

Many hope it will energize G20 summit after recent meetings failed to deliver

The world's system of "global governance" badly needs China to deliver - and it needs it to deliver this year.

Everyone has thought for a while that it would only be a matter of time before China began to take on more of a leadership role within the global economy. With a population of 1.3 billion people and an economy recently deemed by the World Bank to have become the world's second-largest, this has long seemed inevitable.

Yet China's political leadership has hitherto been decidedly cautious about asserting its country's true weight within global economic governance. Yes, China has increasingly defended its corner, especially in relation to its currency, but it has not sought to seize the reins.

But now it can no longer hide. China assumed the presidency of the G20 last December and it will therefore convene the next G20 summit of world leaders. This will take place in Hangzhou, East China's Zhejiang province, in September.

The G20 unquestionably matters within the framework of global governance. It was set up amid global financial crisis in November 2008 and responded creatively and effectively to the immediate challenges of that time. Since then, it has met at intervals of approximately a year. At one of its early meetings, the leaders were also bold enough to declare that the G20 should henceforth be understood as the "premier forum for our international economic cooperation". This means that the stakes attaching to any G20 summit are always high.

This is truer than ever with the forthcoming Hangzhou summit. Partly, this is because it is being held in China for the first time and the world wants to see how China will handle the responsibility; partly it is because the global economy is still struggling to emerge from recession into reliable new growth, with some commentators fearing the prospect of a further financial crisis; and partly it is because the G20 as a mode of global economic governance is itself increasingly being questioned. The conventional wisdom is that the organization has lost its way and is failing to show the leadership that it displayed at the beginning of the crisis. Here lies China's great opportunity, but also, of course, the risk.

For the truth is that the G20 does suffer from a fundamental flaw in its structural design. This is not actually the matter of its membership. This will always be a matter of debate and will thus generate a genuine issue of legitimacy around any given choice.

The deeper problem is that the G20 is, at heart, only a vessel, largely empty of political direction until and unless it is regularly refueled with new initiatives and priorities. It has no permanent secretariat and no real executive (although attempts have been made to institutionalize better cooperation between past, present and future hosts).

In this respect, the G20 has certainly experienced bad luck of late, although some would say that this was actually bad management. The last three presidencies fell in turn to Russia (2013), Australia (2014) and Turkey (2015), all of them, although for different reasons, countries with leaders who were not likely to be at the top of anyone's list of people best placed to revive a key agency of global economic cooperation. The summits also found themselves overtaken by events in the security sphere, most notably the Turkish summit which took place just after the awful Paris terrorist attacks. As a result, the supposed special focus of the G20 on global economic issues was lost.

This is the awkward background to the China summit. Many are desperate for China to ride to the rescue of the G20 and refocus its agenda firmly on the goal of rebuilding the macroeconomic cooperation needed to revive economic growth around the world.

China has published its key document setting out its main themes for Hangzhou and has followed the recent trend of phrasing these in an easy sound bite. It has thus talked of addressing four 'I' themes; namely, innovation, invigoration, interconnectivity and inclusion.

This certainly sounds good and is arguably a bit different, notably in the implication that globalization, as we have experienced it thus far, has not spread itself widely enough to satisfy a sufficient number of people. But, as always with words, the issue is what actions follow. China knows that the world is watching and that many are hoping.

The author is director of the Sheffield Political Economy Research Institute.