Editorials

Reform agenda

(China Daily)
Updated: 2010-06-05 07:12

If officials of G20 cannot come up with a consensus on the broad reform of the global financial and economic systems as soon as possible, the G20 countries may fail to provide the badly needed leadership to steer the world economy out of the worst recession since the Great Depression.

After evolving into a leading global crisis management forum with the 2008 collapse of Lehman Brothers, the Group of 20 (G20) has never been short of challenges for each of its headline-grabbing meetings.

The latest case is the meeting of G20 financial ministers and central bank chiefs in Busan, South Korea, which comes right after a sovereign debt crisis has stymied European growth and threatened to hinder global recovery.

Related readings:  G20 joint communique calls for continued efforts for financial reform  G20 communique rules out global bank tax  G20 financial meeting unlikely to reach deal in bank levy  G20 to back euro zone on debt, sidestep bank levy

It is no surprise that G20 officials have made the recent crisis a top priority of their meeting.

But as a meeting to clear the ground for a G20 summit in Toronto later this month, financial and central bank chiefs should not keep trading the urgency to deal with an ongoing crisis in order to set a reform agenda to promote sustainable long-term global growth.

If their officials cannot come up with a consensus on the broad reform of the global financial and economic systems as soon as possible, the G20 countries, which collectively account for about 85 percent of the world's GDP, may fail to provide the badly needed leadership to steer the world economy out of the worst recession since the Great Depression.

Fixing a global reform agenda does not mean imposing a one-size-fits-all policy for all countries. Yet to find a global solution does mean that every country needs to observe the same principles that support sustainable long-term growth for itself as well as the world economy.

One such principle is that every country should pursue balanced growth. The debt-laden rich countries should set a credible timetable for unwinding the super-loose monetary and fiscal policies they launched to tackle the crisis. It is fiscal austerity not more stimulus that can eventually cure their underlying economic illnesses, given their growth trend.

And countries with big surplus current accounts should not wait to expand domestic consumption with, say, generous tax cuts for consumers.

(China Daily 06/05/2010 page5)