MARCO Polo described Hangzhou as “the most splendid city in the world”. Over the centuries, this city has attracted poets inspired by its natural beauty. Visitors today are lured by its position as the centre of Chinese entrepreneurship, the home, among others, of Ali Baba, the world e-commerce giant. During the last few days, this venue has played a new historic role with the leaders of the G20 gathering here for their annual summit.
The G20 is a unique forum in that it brings together the world’s richest economies from the G7 and the dynamic emerging economies represented by the BRICS members – Brazil, Russia, India, China and South Africa. It also has seven other unaffiliated members: Mexico and Argentina from Latin America, and Australia, Indonesia, Korea, Turkey and Saudi Arabia from Asia. The Kingdom is the only Arab country and the only OPEC member at this forum. G20 members account for 85 percent of the global GDP.
G20 leaders, meeting since 2008, assemble to address ways to coordinate action to strengthen the global economy, reform international economic and financial institutions and improve and standardize global regulatory mechanisms. Summit meetings are preceded by a series of preparatory meetings where the summit agenda is fine-tuned.
This year’s summit is taking place when the global economic and political scenario is particularly turbulent due to conflict and terror in West Asia, the flow of thousands of refugees to western shores, the uncertainties due to Brexit and the US presidential elections, and the ongoing global economic crisis, with low growth rates, collapse in oil prices, rising inequalities and market volatilities.
There is also increasing disenchantment with globalization, which, many believe, threatens their livelihood and living standards, while benefiting the rich and the powerful, a conviction that is turning many in the West towards populist politics.
The Hangzhou summit will not just initiate the re-definition of the global economic order; it will also announce that Saudi Arabia will be an active contributor to the shaping of the new economic era
The twin challenges: This G-20 summit thus faces the twin challenges of addressing effectively the immediate need to stimulate global growth while also putting in place long-term initiatives to reform and re-structure the global economy and promote greater cooperation among the principal global players. Both these are daunting challenges.
The first concern is to promote growth: the IMF has just downgraded its global growth forecasts by 0.1 percent to 3.1 percent for 2016 and 3.4 percent in 2017; this is the sixteenth downgrade in IMF growth projections since January 2012. Over the last three summits, G20 members have focused on coordinating fiscal and monetary policies and structural change, including tax reform and enhanced spending on infrastructure.
There has been little success, with the world experiencing a global trade slowdown, increased protectionist measures and an uninspiring investment climate. West Asian oil producers have been hurt by the massive decline in oil prices, largely due to sluggish demand in a low-growth environment.
But, it is long-term reform that is likely to be emphasised at Hangzhou. China is proposing the approach of “incremental change” which will take the G-20 from being a “crisis-management committee” to what the Chinese scholar, Ye Yu, has called a “steering committee”. It has identified four priorities for the G-20: a new path for growth; more effective economic and financial governance; robust global trade and investment, and inclusive and inter-connected development.
To achieve these goals, China has put forward a 10-point action plan that includes: innovative growth; enhanced trade; global investment policies; reform of the international financial architecture; promotion of entrepreneurship; implementation of the Paris Accord on climate change; effective anti-corruption measures, and a renewed focus on the industrialization of Africa and the least developed countries.
Every one of these proposals will find a welcome resonance in West Asia, particularly among the GCC countries. It is appropriate that Saudi Arabia will be represented at the summit by Mohammed bin Salman, the Deputy Crown Prince, who has shaped and is personally spear-heading the nation’s Vision 2030 and the National Transformation Plan, which are expected to wean away the country from dependency on oil revenues, provide a diversified economy and make it a vibrant global economic power.
At the summit, the prince will make an effective presentation of his country’s ambitious plans to reform and restructure itself, while building up the skills and capabilities of its youth so that they become stake-holders in the re-invention of their nation. Prince Mohammed will seek the partnership of the world’s major economies in the radical transformation of his country. An exciting area for him to focus on will be that of “innovative growth” that includes: pursuing innovation to achieve a digital economy and ultimately herald the fourth industrial revolution.
Thus, the Hangzhou summit will not just initiate the re-definition of the global economic order; it will also announce that Saudi Arabia will be an active contributor to the shaping of the new economic era.
[Talmiz Ahmad is the former Indian Ambassador to Saudi Arabia, Oman and the UAE].