The 8th G20 Summit, with a theme of growth and employment, was held in St. Petersburg, Russia, on the 5th and 6th of September, highlighting a key moment of complex new challenges confronting the world economy. Chinese President Xi Jinping participated for the first time in the meeting to talk about the Chinese economy, cheer up emerging economies and stress the positive factors in the world economy with a focus on winning strategic initiatives in the game of global economic governance.
The timing of this summit is quite special and its background complex. Five years after the outbreak of international financial crisis, the general trend of new powers rising and old powers on relative decline has been temporarily reversed. Continuous blood transfusion to their sick economies by Western developed countries through quantitative easing (QE) has produced effects. They have also worked hard to seize the high ground in the new technical and industrial revolution, sped up their own reform and strengthened their unity. With the US taking the lead in trans-Pacific and trans-Atlantic economic and trade development strategies, the historic decline of Western developed countries has somehow been halted. On the other hand, many emerging economies have been seriously dragged down by the US Federal Reserve’s upcoming QE exit. This, plus lagging economic reforms and single-product structures, has caused capital flight, currency depreciation, financial market fluctuation, markedly slower growth and rising inflation. The momentum of emerging economies advancing triumphantly has been lost, whereas developed countries have rocked the bottom and rebounded.
At this historic moment, Xi delivered a speech to urge G20 members to jointly maintain and promote the openness of the world economy. He explained “Chinese propositions”, advocated “Chinese experiences” and shared “Chinese opportunities”. A series of new ideas and measures were proposed to lead a wave of world development in the post financial crisis era.
First, Xi pointed out the three key requirements to achieve a sound economic growth in the world. He stressed the need to create “a world economy in which countries develop and innovate together with their growths interlinked and interests converged” and “to firmly maintain and develop an open world economy”. He argued that “development and innovation” are required by “sustainable growth” of the world economy. To improve the quality and performance of economic growth and avoid excessive focus on GDP, countries need to have active structural reforms to arouse the vitality of the market and enhance economic competitiveness. Furthermore, “interlinked growth” is required to achieve “robust growth” of the world economy. Countries must realize that they have a common destiny, which binds them together for good or ill. Therefore, they need to cooperate with each other in competition and seek win-win through cooperation. Additionally, “interest convergence” is required to realize “balance growth” of the world economy. Countries should construct and cultivate a global value chain and a global market that benefits all.
Second, Xi put forward “three propositions” and “three pathways” to facilitate sound world economic development. He stressed that G20 members should “construct an even closer economic partnership and undertake their due responsibilities.” This first means responsible macro policies. Major economies need to handle their own businesses well by improving macro coordination and supporting their economic policies with sound social policies. Then they should jointly maintain and develop an open world economy by opposing protectionism, safeguarding a free, open and non-discriminative multilateral trade regime and staying away from making exclusive trade standards, rules or mechanisms so as to avoid segmentation of global market or global trade regime. Such a statement is well targeted against the US attempt to start anew outside of the WTO with the trans-Pacific and trans-Atlantic strategies. The third component is to improve global economic governance and make it more just and equitable. The IMF’s quota and governance reform should be carried out by formulating a new quota formula that reflects the weights of different economies in the world, and thus strengthening regulation of the international financial market and reforming the Special Drawing Rights basket.
Third, in light of questions and misinterpretations about the slowing down of the Chinese economy, Xi gave an objective and comprehensive review of the overall situation and reform prospect. He stressed that “Chinese economic policies are responsible not only to its own economy but also to the world economy”. The economic fundamentals are sound. Questions such as local government debts and excess production capacities are under control. China is firm to promote structural reforms, even at the cost of slower growth. China is having an overarching research into deepened comprehensive reforms. He vowed that China has the conditions and ability to achieve sustained and sound economic development, creating an even broader market and development space for other countries and producing more positive spillover effects for the world economy.
At the informal meeting of BRICS leaders, President Xi has also urged the emerging powers to unite for greater strength. In his view, emerging countries should promote their economic cooperation and strategic coordination so as to jointly deal with new challenges in the world economy and international security and jointly overcome their “growing pain” and “rising bottleneck”.
Xi’s debut at G20 has been quite productive. Looking into the future, in face of profound readjustment of the global economic growth pattern, China will take stock of domestic and international situation, speed up reform at appropriate times and cooperate with both emerging and Western powers to hold the initiative in international competition.
Chen Xiangyang is the Deputy Director of the Institute of World Political Studies at CICIR.