JIANG Shixue:Dymisfying Three Myths of the G20

While the world is going to welcome the upcoming G20 Leaders' Summit to be held in St. Petersburg on September 5-6, 2013, there are three myths that must be dymisfied.

Myth 1: The G20 is a talkfest by the bigwigs. It is said that the G20 was a fairly impotent group only during the financial crisis when it was most needed. According to some observers, because the G20 Summit is only a talking shop, a window-dressing exercise and has achieved nothing, the important gathering of world leaders is only composed of hands-shaking, group photo, coffee, banquet and a joint communiqué with a litany of glib cliches and meaningless economic verbiage.  As a result, it is often said, the smiling faces of the leaders at the G20 Summit have provided little comfort for the world.

It was reported that, on the eve of the London G20 Summit in 2009, the leaders and their partners sat down to separate meals at No 10 and No 11 Downing Street, enjoying a menu prepared by Jamie Oliver with seasonal produce from around the UK. The banquets began with organic salmon from Shetland, followed by slow-roasted shoulder of lamb from the Elwy valley in north Wales and bakewell tart and custard. As a result, UK taxpayers were left with a bill of around ?500,000 for wining and dining the G20 leaders, their spouses and aides.

An Australian newspaper said, “[Having] Australia host the G20 Summit in 2014 is a waste of time, money and government resources. For a country that has a population of fewer than 30 million, what do they expect to achieve? One thing that is certain is that it’s going to cost a lot of money to host and will do nothing to further advance Australia’s position in the international political realm.”

I want to point out that, despite the extravagant banquets, the G20 should not be seen only as a waste of money or time.

First, in the relatively short period of time, the G20 has become the main forum for coordinated action to deal with the global financial crisis and other economic issues. Apart from effective measures to fight against the global financial crisis, the G20 summits in Washington, London, Pittsburgh, Toronto, Seoul, Cannes and Los Cabos, have pent up confidence. So, it might be logical to say that, without the G20 Summits, the world economy would have sunk deeper into the crisis.

Second, some tangible achievements have been made. For instance, ass announced in the London Summit, the Financial Stability Forum (FSF), founded in 1999 by the G7 Finance Ministers and Central Bank Governors, was re-established as the Financial Stability Board (FSB) with a broadened mandate to promote financial stability.  At almost each summit consensus was reached on several important issues such as reforming the IMF.

Third, in a sense, the G20 combines the best of the G8 and the UN.  Reputation of the IMF and the World bank is not so positive among the developing countries.  The G8 only represents the rich nations and the UN is too big to reach a consensus.  As a result, something new should be invented to undertake the responsibility of managing the world economy and the G20 is a relatively ideal arrangement. So the world should be grateful to Canadian Prime Minister Paul Martin, who proposed in 2004 to raise the G20 level from finance ministers to a summit.

Needless to say, the G20 cannot have complacency.  For instance, each member has its own different wish-list.  At each summit, the G20 leaders vow to fight protectionist measures, but don’t always keep their promise.  According to the World Bank, G20 nations have accounted for the vast majority of the more than 1,000 new protectionist measures that have been introduced between November 2008 and March 2012. And, increasing IMF quotas for the emerging economies, a key component of reforming the international body, was agreed many years ago, but the plan is yet to be materialized.

Myth 2:  The G20 is capable of accomplishing everything. It is proposed that the G20 should become an economic Security Council of the United Nations or take care of all the global issues. It is also said that the G20 should add a parallel, foreign ministers track, to complement a process that has to date been dominated by finance ministers and central bank governors.  It is even suggested that the G20 needs to deal with political matters such as upholding human rights responsibilities, counter-attacking terrorism, etc.

I would argue that the G20 is not like God capable of accomplishing everything. Indeed, the G20 has become “a premier forum” for international economic cooperation. Particularly, in the face of the international financial crisis, the G20 acted decisively and effectively to coordinate macroeconomic policies and boost confidence. But it does not mean that the G20 is a panacea of every global issue. As a matter of fact, we need to have a balanced, objective and realistic assessment of the role of the G20 because over-estimating its role would be counterproductive.

The G20’s official mandate is to promote “open and constructive discussion between industrial and emerging-market economies.”  It’s true that politics and economics are interconnected. However, including political matters into the G20 agenda, particularly with regard to such sensitive domestic issues as human rights, would cause more problems than it wishes to resolve. That is to say, political issues, particularly those of national characteristics, should not be the concern of the G20. As is widely believed, the G20 needs to follow the rule of non-interference on any country’s internal affairs. Needless to say, the UN is in a better position to discuss human rights and other political issues. And, the G20 is only a few years ago and it still needs to be “learning by doing” so as to confront the complicated global economic issues in a more effective way. The G20 can only complement, not replace, the work of other institutions such as the UN, its agencies and the international financial institutions as well as non-state actors. 

Myth 3: China had taken centre stage of the G20. On the day after the Cannes G20 Summit concluded, an article published in The Guardian (November 6, 2011) stated that Cannes “showed how power has shifted to Beijing.” It said that it should not surprise us if China asks for some changes in how the G20 approaches its core task of setting the conditions for strong, sustainable, and balanced growth. An article titled “The photograph said it all” published in Economist (April 8, 2009) said, “Leaders of the world's biggest economies lined up for the cameras before working out ways of tackling the global financial crisis. There in the middle of the front row, in what the Chinese press construed as the most honoured position to the right of the British prime minister, Gordon Brown, was President Hu Jintao of China.” At a think-tank conference on G20 held in Beijing’s Renmin University of China not long ago, a scholar from a developing country suggested that China should play a leadership role for all the emerging economies in the G20.

My view is that, although China does play an active, constructive and important role in the G20, China’s position in the G20 should be over-exaggerated. After all, China is still a developing country although it supports multilateralism.

China’s unwillingness to play a leadership role for all the emerging economies in the G20 is closely related to one of its foreign policy principles, i.e., “keeping a low profile”. But it does not mean that the second largest economy of the world is not capable of making greater contributions to the G20. The following points might be included in China’s strategy towards the G20. First of all, China needs to apply for chairing the 2016 summit after Australia in 2014 and Turkey in 2015. Second, as a developing country, China must make a louder voice in pressing the developed countries to implement the IMF reform program. Third, for the purpose of promoting growth in the less developed countries, China can propose to set up an investment fund to pool capital from the G20 members. Fourth, China is also able to engage itself with more coordination and consultations with the non-G20 nations so as to make the G20 more legitimate. Finally, China must try to gain more influence in steering the agenda-setting process of each summit.

(Contant Jiang Shixue: jiangsx@cass.org.cn

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