Hangzhou G20 Summit:
CHINA hosted the 11th G20 summit from September 4-5, 2016 at Hangzhou for the first time since the group formally started holding summits when the world economy slipped into deep recession in 2008. The theme for the summit was “Towards an innovative, invigorated, interconnected and inclusive world economy”. China also invited leaders of eight developing countries and chiefs of international organisations to participate at the conference.
The summit came at a time when the world is facing sluggish economic growth and geopolitical challenges. Ideological differences among member states coupled with individual monetary and fiscal policies, which are at variance with others, are the main reasons for poor economic performance. However, despite political antagonism, these summits offer convenient opportunities to leaders to exchange notes.
China’s relation with the US is currently under strain because of China’s assertive policy on South China Sea and rejection of the verdict of the Permanent Court of Arbitration, which seems to have jeopardised President Obama’s “Pivot to Asia” policy. The “candid” talks between President Obama and President Xi Jinping revealed that the two largest economies of the world have major discords over trade and security issues. Despite all the courtesies and politeness, Xi Jinping appeared in no mood to give any leeway to Obama, who has only a few weeks left in the White House. However, before the meeting, US and China — which together account for 40 percent of the world’s carbon emission – announced ratification of the Paris Climate Agreement adopted in December 2015.
President Obama also had a “blunt” 90-minute meeting with President Putin, discussing a ceasefire in Syria. The talks were described as “constructive but not conclusive”. Tension is also high between China and Japan – second and third largest economies of the world – related to the unmanned Senkakus Islands in East China Sea. While meeting Prime Minister Shinzo Abe, the Chinese president suggested that Japan should “put aside disruptions” for normal development of relations.
Prime Minister Modi, during his talks with President Xi, raised thorny issues like terrorism, China’s economic corridor that runs through Pakistan and India’s membership in the Nuclear Suppliers Group, which Beijing opposed recently. While India is apprehensive about China’s militarisation of South China Sea, China is also concerned over the recently signed Logistics Exchange Memorandum of Agreement (LEMOA) signed between US and India. Xi Jinping said, “China is willing to work with India to maintain their hard-won sound relations and further advance their cooperation”.
Britain’s decision to quit the European Union has put it in an economically uncertain position and Theresa May is looking for economic partners beyond Europe. At the bilateral meeting, Xi Jinping assured Theresa May that China would be willing to have closer economic and trading relations with Britain. Other leaders, however, told Theresa May that Brexit would be damaging for the global economy.
Brazil is in double trouble because of the impeachment of President Dilma Rouseff and negative economic growth (-3.8 percent in 2015). Turkey, host of the 10th G20 summit, is still reeling from the recent coup attempt on President Erdogan’s presidency. Germany’s Angela Merkel is facing political challenges at home because of her liberal immigration policy.
The two-day summit ended issuing a 48-paragraph Communiqué, which drew liberally from the decisions taken by the G20 finance ministers and central bank governors meeting held in July 2016 at Chengdu, China. The Communiqué covers four major areas – strengthening G20 growth agenda; pursuing innovative growth concepts and policies; building an open world economy; and ensuring that economic growth benefits all countries and people.
On the world economic situation, the leaders were concerned that “Downside risks remain due to potential volatility in the financial markets, fluctuations of commodity prices, sluggish trade and investment, and slow productivity and employment growth in some countries”. The summit decided to “use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth”. Actually, implementing a harmonised monetary and fiscal policy by all stakeholders is the key to quicker growth of the global economy.
As a protectionist tendency is raising its head around the world, G20 leaders were determined to ensure globalisation through “open and inclusive multilateral trading system”. The communiqué strongly condemned terrorism and were committed to strengthening the Sustainable Development Goals set by the UN.
China has been asserting its economic prowess through the Asian Infrastructure and Investment Bank (AIIB) and its $1.4 trillion “One Belt One Road” (OBOR) plan. Recognising China’s strong macroeconomic indicators, the World Bank has sold 500 million SDR Bonds on August 31, 2016. IMF has decided to add Chinese Renminbi (RMB) for the first time to the SDR basket from October 1, 2016, which will make it easily convertible and boost Chinese capital market. These developments will give China a bigger say in the global market.
For Xi Jinping, the biggest worry was that the summit may descend into a forum of acrimonious geopolitical debate, particularly over the South China Sea. The agenda for the summit was therefore kept focused on global growth, green financing, sustainable infrastructure, development of poorest countries, etc. Contentious geopolitical issues were left to the leaders meeting on the sidelines of the summit. The media focused more on these bilateral meetings and less on the substantive discussions that went inside the conference room.
However, President Xi Jinping has demonstrated his skilfulness in handling so many world leaders simultaneously. The summit concluded without any major faux pas, though some Western media termed it inconclusive. As the leader of G20, China has rightfully taken its place on the international stage.
[The writer is former Ambassador and Secretary]