Director General of the International Economic Affairs Department at China‘s Foreign Ministry Zhang Jun: Enhancing G20‘s role in global economy
Director General of the International Economic Affairs Department at China‘s Foreign Ministry Zhang Jun has written an article ahead of the G20 summit in St. Petersburg in which he speaks about the future of this international forum, problems it faces and Russia‘s 2013 presidency in it. Interfax and the Rossiiskaya Gazeta daily are exclusive publishers of the article.The 1997 Asian Financial Crisis has 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 Group of Twenty (G20) was uplifted as the premium forum for international economic cooperation, with its role in crisis management and prevention strengthened. This is historic because, unlike in the G8 world, for the first time systemically important emerging countries have been given a bigger voice at the core of global economic governance.
Rome was not built in a day, and it is not like that God says "let there be G20, and there was G20". The G20 process is built gradually by the joint efforts of advanced and emerging economies. Although there are defects and deficiencies, the G20 is still the most effective forum for international economic cooperation. The G20 was not created to save the world, and as a process, it needs to and could be improved and revived, through better policy coordination and internal functioning. Since there is a trade-off between representativeness and effectiveness, it is difficult to strike the right balance. The G20 needs to stick to its commitment to increasing inclusiveness to hide its "Achilles heel", by opening door to countries fr om under-represented regions and carrying out outreach activities.
Remedying global economy takes time and patience, and the G20 needs to "dream small, act big". Instead of waving banners with ambitious slogans, the G20 countries should put their feet down to earth, and avoid becoming a "talk shop". The onus is on the G20 to deliver its commitments. It needs to have a focus on confidence building in global economic recovery, and transform this confidence into concrete action.
The 8th G20 Leaders‘ Summit is forthcoming in September, with Russian Presidency choosing its beautiful former capital – St. Petersburg as the host city. The theme of the St. Petersburg is growth and employment, which accurately meets the need of world economy to get out of recession. Since taking the G20 rotating presidency in 2013, Russia has made great efforts during the preparation process of the Summit, with a detailed outline directing the schedule of sherpas‘ meetings, finance ministers‘ meetings and various working groups. The Russian federal government as well as the local governments of Moscow and St. Petersburg are jointly contributing to the G20 summit. Under the leadership of the Chief of the Presidential Experts‘ Directorate and the Russia G20 Sherpa Ksenia Yudaeva, preparation of the summit is well-organized and efficient. For sure, the St. Petersburg summit will be a success and a milestone in the G20 process.
The recovery of the global economy is still sluggish, and there are great expectations from the world for the St. Petersburg Summit to prescribe a cardiac stimulant to boost global economic growth. What can the G20 do to make itself an effective mechanism in response to the global financial turbulences and low economic growth?
The G20 should rejuvenate macroeconomic cooperation and coordination. Like it or not, we live in a globalized world wh ere deeper interdependence has called on every country to carry out responsible economic polices, and try to bring positive spill-over effect to global economy, rather than the other way around.
The G20 should reinvigorate an open and fair global trading system. There are doubts toward current trade negotiations, especially the Doha Round, with critics mocking "Doha is already dead". The G20 standstill commitment on protectionism is of utmost importance to boost business confidence and it is the responsibility of G20 members to make contributions to reaching an early harvest agreement at MC9 and a revived WTO leading and cementing the multilateral trading system.
The G20 should reform the current international financial system, especially international financial institutions (IFIs) created under the old Bretton Woods system, which are suffering the growing pain of "rich clubs". It is difficult to give up the candy one holds tight in his hands. Global economic governance, as a public good, is just like the candy. However, reluctant as they may be, there is no excuse for some economies to enjoy the benefits during good days, and then drag the whole world to suffer during hard times. In order to increase G20‘s credibility, it is vital for emerging economies to get the proper rights and voices they deserve in IFIs, such as the implementation of the 2010 IMF quota reform.
The G20 should revive global development agenda, providing political support to the UN discussions. When G20 leaders shake hands and make toast in glorious conference halls, they need to bear in mind that there are still over one billion people with empty stomachs, and the world looks forward to the strong signal showing that G20 countries are willing to be partners with 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, among others.
The G20 should also rebalance global growth through structural reforms. Global rebalancing is the responsibility of both deficit and surplus countries, and the core is to work together to promote structural reforms, and make the cake bigger and sweeter. China has been committed to global rebalancing, with an active and responsible attitude and concrete actions. Since 2005, China‘s current account surplus to GDP ratio has dropped from 10.2% in 2007 to 2.3% in 2012. 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. China has been behaving as a responsible G20 member, and made great efforts and contribution to global economic growth, with its own dynamic economic performance. Although there is a bit slowing down of its growth rate due to domestic structural reforms and unfavorable external conditions, China maintained a 7.6% GDP growth in the first half of 2013, which is indeed a great achievement against the gloomy world economy.
With a bigger footprint in the global economy, China will keep on advancing the G20 process, along with realizing its own "China dream", using its clout to enhance coordination and cooperation among G20 members, and striving for bigger voice and fair play for emerging economies in the G20. Keeping that faith in mind, China sincerely wishes to host a G20 summit in the near future, and take the G20 process further forward.