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At G20 summit, China helped shape consensus to eschew trade barriers and generate quality jobs

Leaders, from left, Indonesian President Joko Widodo, French President Francois Hollande, China’s President Xi Jinping, Russian President Vladimir Putin, German Chancellor Angela Merkel and South African President Jacob Zuma arrive for the opening ceremony of the G20 Summit in Hangzhou in eastern China’s Zhejiang province, Sunday, Sept. 4, 2016.REUTERS/Mark Schiefelbein/Pool

By KARL WILSON in Sydney
karlwilson@chinadailyapac.com

Despite all the global economic uncertainty, Asia is still seen as one of the few bright spots and could be a significant beneficiary from environmental initiatives outlined in the final communique from the G20 summit in Hangzhou on Sept 4-5.

The G20 leaders, representing 85 percent of global GDP, agreed to “reject protectionism” and “promote global trade”.

At the same time, the leaders admitted the global trade system has failed many of their citizens, an issue highlighted recently when Britain voted to leave the European Union.

In their consensus statement, the G20 leaders pledged to ensure that growth “serves the needs of everyone and benefits all countries and all people”.

They added that it should generate “more quality jobs”, address inequalities and eradicate poverty “so that no one is left behind”.

“We agreed to improve G20 trade and investment mechanisms, endorse the G20 strategy for global trade growth and move toward inclusive and coordinated global value chains,” Chinese President Xi Jinping said.

“We support the multilateral trading regime and oppose protectionism, so as to release the potential of global business cooperation and reverse the decline of global trade growth.”

United States President Barack Obama aptly summed it up when he said “these are turbulent times” and that all world leaders need to make sure “the international economy is working for everybody”.

Tim Harcourt, JW Nevile Fellow of Economics at the University of New South Wales Australia Business School, said: “Everyone knows the problem … but no one knows the answer (to the question): How do you stimulate growth?”

In Asia’s case, the region has prospered on the back of China’s growth.

In Asia’s case, the region has prospered on the back of China’s growth.

“Japan has invested heavily in the region, intra-Asian trade has grown and poverty greatly reduced,” Harcourt told China Daily Asia Weekly.

He said the G20 summit may not have provided the answers to stimulate global growth or reduce people’s fears about globalization but it “did give China its place in the sun”.

“I think the summit that has just ended has shown the world that economic decisions are no longer just made in Washington and Brussels. They are also made in China.”

The Asian Infrastructure Investment Bank and moves toward new trade talks at the World Trade Organization (WTO) are among the other initiatives pushed by China, Harcourt added.

“China has pulled itself out of poverty and is saying: ‘We have a seat at the table when it comes to economic leadership’.”

Associate Professor Mark Melatos from the School of Economics at the University of Sydney said the global economy is in a “strange situation”.

“There are no clear answers,” he said.

“Even economists can’t agree on how to solve the problem. Negative interest rates, for example, are not meant to be part of a functioning capitalist economy. But we now have them.”

The world is waiting for a new impetus for growth, but “no one knows what that will be”, Melatos noted.

“There is a major wealth gap and companies are sitting on vast amounts of money but don’t want to invest.”

“There is a major wealth gap and companies are sitting on vast amounts of money but don’t want to invest.”

He said Asia has been the major beneficiary of China’s growth over the last 20 years or so but “that can’t last forever”.

Hidetoshi Nishimura, president of the Economic Research Institute for ASEAN and East Asia (ERIA), said the G20 leaders have seen the “urgency for firm and coordinated policies for global economic growth and social development”.

“The post-2008 slowdown in growth across the world, however, is now interspersed with recovery and uncertainties in equal measures,” he said.

“Adding the need for development and transformation to this scenario, the world needed strong indications from the leaders that they are on the same page,” Nishimura said.

The special focus on taking measures to create the momentum in international trade and investment is very important, he said.

“Trade as part of global GDP is declining and the leaders’ commitment to oppose protectionism in trade and investment in all its forms is welcome.”

He said ERIA supports the G20’s initiative to lower trade costs, and create coherence in trade and investment policies.

“Innovation and quality infrastructure are two important areas of growth for our region and the G20 leaders have recognized this in appropriate measure.”

Rajiv Biswas, Asia-Pacific chief economist at consultancy IHS Markit, said the fact that China and the US agreed to ratify the Paris Agreement on climate change was a “significant step in the right direction”.

The Paris Agreement is a major step forward to reducing global greenhouse gas emissions, the main contributor to climate change. But, before it can come into force, it needs to be ratified by 55 nations representing 55 percent of emissions.

China and the US account for 38 percent of emissions. So far, 180 countries have signed the agreement but only 26 have formally ratified it, accounting for 39.02 percent of emissions.

Even so, Biswas said, it is “an important outcome from the G20 summit” and one that should not be overlooked.

Another environmental outcome from the G20 was the priority given to strengthening “green finance” to support environmentally sustainable growth, and the role of the Green Climate Fund in helping developing countries to adapt to climate change and mitigate its effects.

“As many Asian developing countries are estimated to be highly vulnerable to the impact of climate change and global warming, notably the Pacific island states, this will improve their access to financing to assist them in tackling climate change,” said Biswas.

He said environmental protection is one area in which America and China are in agreement.

He said environmental protection is one area in which America and China are in agreement.

But a Donald Trump victory in November in the US presidential election would be bad news for Beijing, as the Republican candidate would “likely take a much harder line on most issues with China”, he warned.

Another initiative taken by the G20 which will impact the region is the creation of a global forum on excess steel capacity to be facilitated by the Organisation for Economic Co-operation and Development.

This new forum may help to improve communication and reduce misunderstandings among G20 members and other major steel-producing countries, particularly in relation to progress by China in reducing excess capacity in its steel sector.

China’s State Council, or cabinet, announced in January that Chinese steel production would be cut by 100-150 million metric tons.

“There has been considerable trade friction among global steel producers during 2015-16, with many countries invoking WTO anti-dumping procedures in relation to steel exports by other countries,” Biswas said.

“This new initiative will be of high relevance for the Asia-Pacific G20 members, including for China, Japan, South Korea, India, Indonesia and Australia.”

The G20 summit also launched a new initiative to support industrialization in Africa and the least-developed countries (LDCs). This could be a potentially important source of policy support for the Asian LDCs.

Assistance from the G20 bloc to these countries to develop their industrial sectors can generate employment growth and diversify their economies away from subsistence agriculture.

Bangladesh, Cambodia and Myanmar have already made significant progress in developing some segments of their industrial sector, notably in the low-cost garments industry.

Hence, this new G20 initiative could be an important further boost to Asian LDCs and accelerate their industrial development.

The G20 also made a commitment to ratify the WTO’s Trade Facilitation Agreement (TFA) by the end of 2016, which could help to speed up its ratification process among other WTO members.

The G20 also made a commitment to ratify the WTO’s Trade Facilitation Agreement (TFA) by the end of 2016, which could help to speed up its ratification process among other WTO members.

The TFA was agreed at the WTO’s Ministerial Conference in Bali in December 2013. But it has not yet been ratified by enough WTO members to be implemented.

When implemented, the TFA is expected to deliver significant cuts to trade costs. The potential reduction in the cost of world trade is estimated to be in the range of 12-18 percent.

Due to the importance of trade in the overall GDP structure of many Asian developing countries, implementation of the TFA is expected to deliver significant economic benefits to the region.

Overall, two-thirds of the gains from the TFA implementation are expected to accrue to developing countries, not only in Asia but worldwide.

Pursuing growth with new vigor President’s remarks that action matters more than words will serve as inspiration for implementing Hangzhou consensus

G20 leaders and their spouses pose for a group photo before their dinner banquet at the G20 Summit in Hangzhou on September 4, 2016. World leaders are gathering in Hangzhou for the 11th G20 Leaders Summit from September 4 to 5.
Johannes EISELE / AFP

By LI XIANG in Hangzhou
lixiang@chinadaily.com.cn

The G20 Leaders Summit in Hangzhou has injected fresh spirit into the effort to address the challenges of the global economy, and the next task for the leaders is to ensure the implementation of the Hangzhou consensus, economic leaders and experts said.

The summit, which concluded on Sept 5, released a statement in which the leaders agreed on a series of action plans to implement their growth strategies covering a wide range of policy areas.

In the statement, the leaders pledged to work together to pursue innovation-driven growth, to improve productivity, trade and investment, and to reduce overcapacity in the steel sector, which is a global problem requiring an effort by all.

The leaders also promised to unleash the growth potential by supporting a digital economy, enhancing structural reforms, improving the resilience of the global financial system and promoting inclusive growth on the basis of mutual benefit.

The leaders also promised to unleash the growth potential by supporting a digital economy, enhancing structural reforms, improving the resilience of the global financial system and promoting inclusive growth on the basis of mutual benefit.

Christine Lagarde, the managing director of the International Monetary Fund (IMF), urged the leaders to take action, saying that President Xi Jinping’s remarks that action matters more than declaration served as an inspiration at the summit.

“We met against the backdrop of a global landscape characterized by major economic and technological shifts, and by growth that has been too low for too long and which has benefited too few,” the IMF chief said.

“The conclusions should not only be thought about but also be implemented,” Lagarde said, adding that the Hangzhou consensus showed the G20 leaders’ determination to address the challenges they face with forceful policy actions.

Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development, said China should be congratulated for placing innovation at the heart of the G20 presidency.

“It is important to not just repair the problems of the past but to lay the foundations for future growth — growth that will to a large extent be driven by new ideas and technologies,” he said.

While the 2014 G20 commitment set the goal of raising global GDP by an additional 2 percent by 2018, Gurria said that measures implemented so far will only add around 1 percent.

“We are only halfway there,” he said, calling for full implementation of the G20 countries’ growth commitments.

During the summit, President Xi also called for transformation of the G20 from a mechanism of crisis response to one of long-term governance. Analysts said Xi’s proposals revealed China’s growing contribution to and influence on global economic governance.

Jia Jinjing, a researcher with the Chongyang Institute for Financial Studies of Renmin University of China, said the summit reflects a change of China’s role in global governance from a participator to a lead reformer.

“China has brought many new inputs to global governance, such as promoting innovation, structural reform and strengthening development and cooperation among the developed and developing countries, which breaks new ground for achieving global development goals,” Jia said.

David He, a partner of Boston Consulting Group, said Xi’s speech at the Hangzhou summit underscored China’s responsibilities in the global economy.

“President Xi has proposed innovation, openness, connectedness and inclusiveness as the key words for the global economy, hoping this Chinese wisdom could also benefit the world,”

“President Xi has proposed innovation, openness, connectedness and inclusiveness as the key words for the global economy, hoping this Chinese wisdom could also benefit the world,” he said.

“In addition, I was most impressed by his determination to deepen supply-side structural reform, to better coordinate between market and government, and to truly foster innovation,” he added.

Zhang Yunbi and Chen Yingqun contributed to this story.

Global economy needs ‘real action’ Chinese president says world leaders cannot settle for empty talk and must ‘face problems squarely’ to find solutions

LEADERS POSE for pictures on Sept 4 during the G20 Leaders Summit at the Hangzhou International Expo Center in Hangzhou, in East China’s Zhejiang province. WU ZHIYI / CHINA DAILY

By XIN ZHIMING
and WANG YIQING in Hangzhou

President Xi Jinping urged the leaders of the world’s biggest economies to deliver “real action” and “no empty talk” as they attempt to steer the global economy out of its sluggish state.

In his opening speech at the start of the two-day G20 summit on Sept 4, he said the G20 had drawn up action plans in multiple fields, including sustainable development, green finance, energy efficiency and anti-corruption, “and we should implement each of them seriously”.

The Hangzhou summit has come at a time when the world economy is plagued by problems, short and long term, such as poor growth momentum, changing demographics, rising trade protectionism and low investment, Xi said.

But he insisted that G20 members will “face the problems squarely” and collaborate in developing solutions.

World leaders vowed at the meeting to find workable solutions to restore strong growth and achieve more inclusive development that reduces inequality. They also agreed that more focus should be placed on structural reforms, innovation and high technology, as traditional growth engines have weakened.

German Chancellor Angela Merkel said leaders had agreed that they must work together to boost global economic growth, and she welcomed China’s focus on structural reform.

World leaders vowed at the meeting to find workable solutions to restore strong growth and achieve more inclusive development that reduces inequality.

She added that digital ministers from the world’s biggest economies will meet for the first time next year and that the group planned to set up a task force for innovation, Reuters reported.

Xi said in his speech that while the world needs to better coordinate monetary and fiscal policies and carry out structural reforms, priority should be given for achieving balanced growth.

He said the G20 will help less-developed countries, including those in Africa, with industrialization as well as green energy and finance to bridge the gaps in global development.

The G20 has been criticized in the past for failing to take concrete measures to coordinate the world’s economic development. While urging members to take substantial action, Xi said the group “should continue to build our mechanisms to ensure our cooperation continues and deepens”.

According to Chen Wenling, chief economist at the China Center for International Economic Exchanges, the G20 is “becoming more systematic and is changing from a short-term arrangement to handle crises to a long-term dialogue and action mechanism”.

“To make it more effective, the G20 should establish a secretariat,” Chen said.

Wang Wen, acting director of Renmin University of China’s Chongyang Institute for Financial Studies, added: “The G20 used to be driven by crises, and now it’s driven by ideas. China has provided a global consensus at the Hangzhou summit that will drive global joint action.”

Contact the writers at
xinzhiming@chinadaily.com.cn

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