World / G20 summit

G20 leaders to spur trade growth, push globalization: Chinese

(Xinhua) Updated: 2016-08-24 20:16

BEIJING - The Group of 20 (G20) Hangzhou summit slated for Sept. 4 and 5 will address the thorny issue of the stagnation of world trade growth, and try to push forward globalization so as to benefit most people instead of a few, said a Chinese expert.

"It's indeed rare to see the current global trade growth rate lower than global gross domestic product growth," said Zhang Yuyan, director of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences.

He suggested two reasons. First, world economic growth is slowing down, resulting in trade and investment protectionism.

In difficult economic times, every country would focus more on its own economy and protect its own employment. politicians would be more inclined to protectionism, Zhang explained.

Second, from 1990 to 2005, the process of globalization had been speeding up, with value chain rapidly expanding and global trade growth two to three times of average economic growth. Yet this fast-expanding process couldn't go on forever. After 2005, when the expansion of global value chain had reached a peak, the room for growth shrank, according to the expert.

To spur economic and trade growth, Zhang thinks innovation, one of the focal points on this summit's agenda, is very important.

"When emphasizing innovation, it's not just limited to technology innovation, but also system innovation," he told Xinhua.

Zhang also discussed the fallout of this round of globalization process.

"During the process of globalization, global interests have been re-allocated," said Zhang. "Who benefited the most? Globalized corporations, senior managers, innovators. Data have shown that their profits surged rapidly."

The director took America's middle class as an example. In the early 1970s, the quantity and income of U.S. middle class accounted for more than 60 percent of the country's overall population and income, while in 2015 the rate has dropped to below 50 percent, signaling the shrinking of the size and wealth of America's middle class.

"During the process of globalization, we have so-called winners and losers," said Zhang. "With the popularization of the Internet, the general public's rights awareness has been rising, thus some of the so-called losers have become the backbone of globalization opponents."

According to the expert, to solve the global trade problem, every country still needs to find answers domestically.

"After properly solving domestic problems and let more people enjoy the benefits of globalization, then the process of globalization will move forward," Zhang said.

"That's why G20 leaders will emphasize on inclusive development when discussing global economic issues this time," he noted.

Driven by the global financial crisis in 2008, the G20 has now evolved into the world's most important economic governance and coordination platform, and is establishing a long-term mechanism tackling big economic challenges.

Zhang expressed optimism about the development of the G20 mechanism. "This platform is more than crisis management, it is also about crisis prevention," he said.

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