G20 Summit reaffirms countries’ commitment for confronting global economic challenges Analytic

14 September 2016. PenzaNews. The participants of G20 Summit agreed to improve global economic governance system and financial management, and vowed to streamline innovation and formulate new strategy for global trade growth, said President of China Xi Jinping commenting on the results of the 11th meeting of G20 leaders in Chinese Hangzhou on 5 September 2016.

Photo: Kremlin.ru

“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. 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,” Xi Jinping said at a press-conference.

According to him, G20 leaders highlighted the importance of the transition from the mechanism of crisis response to long-term governance.

“These measures will open up greater market, increase the efficiency of resource allocation, production factors and services,” Chinese President added.

Meanwhile, Russian President Vladimir Putin stated that the work at the G20 Summit in China was fruitful.

“As far as the work is concerned, it was rather serious and substantial. It really reflected the interests of all countries of the 20, including Russia. This year, we focused on key issues of today, at the proposal of the Chinese side,” Russian leader told reporters.

In addition to the official events of the summit, Vladimir Putin took part in an informal meeting with BRICS leaders and held a series of bilateral negotiations, in particular, with US President Barack Obama, German Chancellor Angela Merkel, French President Francois Hollande, British Prime Minister Theresa May, Turkish President Recep Tayyip Erdogan, Egypt’s leader Abdel Fattah al-Sisi, and President of Argentina Mauricio Macri.

Analyzing the results of the Summit, Zhixiao Chang, Associate Dean School of Government, Peking University, said that G20 in Hangzhou was the first time for China to host this broad international conference.

“The Summit is held during the period of weak, unstable and unbalanced recovery growth of world economy. So, it is natural for the whole world to put strong expectations on the conference this year and hope it can come up with constructive measures to foster and accelerate growth,” the analyst told PenzaNews.

He also stressed that in 2016 G20 was widely represented by not only the traditional developed economies but also by significant emerging economies and growing economies from developing world, as China also invited some non-members from Africa and Asia to attend the event.

“Beyond the general principles and declarations of economic growth, G20 came up with very significant measures to G20 Blueprint on Innovation Growth and related G20 2016 Innovation Action Plan,” Zhixiao Chang said.

According to him, innovation and the utilization of new science and technology, new infrastructures and new trade platforms will be the core of the new round of world growth.

“Traditionally, innovation and high-tech is dominated by developed countries. However, G20 in Hangzhou also urged and encouraged the developing economies to innovate, update and restructure economic system,” the Chinese expert said.

First of all, G20 is a multilateral mechanism by focusing on economic issues particularly growth policy; however, the collaboration of different types of countries will definitely affect and form a new structure of global economic, financial and trade governance, he said.

“The institutionalization of G20 decision and policy initiatives will be the key to guarantee the solid performance and constructive outcomes. Otherwise, those declarations, communiqués and policy options will flow in the wind. Therefore, the internal governance mechanism of G20 will be crucial to make its policy initiatives more accountable, feasible and checkable. In other words, G20 needs a set of rules, charters and performance monitoring mechanism to form a credible structure and accountable organization,” the expert said.

In turn, Amitendu Palit, Economist, the Institute of South Asian Studies in the National University of Singapore, stressed that the meeting took place in the backdrop of a number of difficult issues.

“Over the years, the G20 has become one of the most important global summits. It was not an exception this time. The most important background for the Summit was the internal problems that many of the members were facing. The relationships between members were also difficult, such as between China and the US,” the expert said.

The decision to activate global trade and take the pledge to stay away from protectionism for the next couple of years is an important move for the world economy, he said.

“Free trade is experiencing a lot of resistance, particularly in the US and Europe. To that extent, efforts to push trade are important. Along with trade, the commitment to the Paris Climate Decision and controlling black money are also important steps. Finally, the decision to expand trade with Africa and LDCs is also important as it is the first time the G20 has taken such a step,” Amitendu Palit added.

According to him, the Summit was important in sending a signal to the rest of the world about the seriousness of the world’s major economies in addressing global concerns.

“However, the Summit itself is not capable of directly addressing many serious problems, such as refugee crisis in the Europe or terrorism. So to that extent, the political effect of the G20 is likely to remain limited to efforts of individual economies,” the economist said.

In his opinion, the success of the Summit will be in its ability to deliver results on key global concerns.

“It was relatively successful in handling financial issues, such as greater financial coordination after the financial crisis. But whether it can handle major political issues is difficult to say. The effectiveness of the Summit as a political forum is limited due to lack of political consensus on many issues among members,” the analyst said.

Meanwhile, Philip Hanson, Associate Fellow, Russia and Eurasia Program, Chatham House, drew attention to the special significance of the Summit as a platform for the talks between the countries’ leaders.

“The G20 Summit has been important to Moscow chiefly as a setting for informal bilateral meetings with foreign leaders. The Russian leadership maintains that the G20 is a more relevant grouping for Russia than the Western-dominated G8 forum used to be. Given the present state of relations between Russia and the West, this is undoubtedly the case,” the British expert said.

According to him, one of the important outcomes of the Summit was the statement by Russia that it is open for business cooperation with all states.

“Russia has declared its interest in strengthening both political and commercial ties with other BRICS countries and with Asia in particular. Above all, Moscow seeks to establish to the wider world – including the West – that it is open for business,” Philip Hanson said.

In turn, Stefano Maullu, member of the European Parliament from Italy, Group of the European People’s Party member, called the Summit’s format the most effective.

“In a multilateral world, meetings, to be successful, must be as open and inclusive as possible. On this regard the Summit was very well done. Having all the major players sat at the same table discussing important themes, as world economic growth, is a vital step toward peace,” the European politician said.

He also reminded that in his opening speech, Xi Jinping stated there are five priorities.

“All of them are centered on the global growth. This is not business as usual. This is a road to success, because commit us all to remove the obstacles to achieve this goal. Sanctions against Russia, imposed by EU, arise as an example. Removing them should be listed as a priority, to ensure prosperity and peace globally,” Stefano Maullu said.

According to him, these summits should not be judged on a short term base.

“They inform the action of governments and international agencies on the long run. On this regard, we can safely affirm the meeting was a steady success. The coordination of macroeconomic interventions, for example, is something we cannot overlook. A mere two years ago we were in a long and tiring currency war, we all hope it never repeats, for example,” the MEP said.

From his point of view, China hosted this Summit in an unparalleled way, showing the world its maturity and readiness to sit at the decisions table.

“We should keep in mind the statement of the French economist Frederic Bastiat: when goods don’t pass borders, soldiers will. Economic peace anticipates world peace, this Summit was a good step toward both goals,” Stefano Maullu concluded.

The Group of Twenty (G20) is the leading international forum on the most important aspects of the global economic and financial agenda.

The Group of Twenty brings together the world’s leading industrialized and emerging economies which make almost two-thirds of the world’s population. The group accounts for 85 percent of world GDP and 75 percent of all trade in the world.

G20 consists of 19 states and the European Union. Its permanent members in addition to Russia and the EU, include Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Saudi Arabia, South Africa, South Korea, Turkey and the US.

The Summit of G20 leaders held in Hangzhou, China, from 4–5 September 2016, became the 11th meeting of the Group of Twenty and the first one held in China.

The next G20 Summit will be held under the German Presidency; it is expected to take place in Hamburg on 7–8 July 2017.