With its agenda constantly expanding, the G20 summit has become a primary platform for international economic governance. As the world’s largest and second-largest economies, the US and China need to cooperate closely to guarantee success of the Hangzhou summit, and show the rest of the world their common political will to jointly promote a new-type of globalization.
Since the financial crisis that began in the US, the world economy has recovered slowly; globalization has thus suffered the biggest setback since the end of the Cold War.
Former US President Bill Clinton made promoting globalization one of America’s national strategies, in the firm belief that globalization will not only bring free trade and economic growth, but also promote “democratization” globally. Thomas Friedman, veteran journalist of The New York Times and a key proponent of globalization, once argued that globalization is an international system that has taken the place of the Cold War regime, within which the US, as the advocate of free-market economy, will assume unchallengeable global leadership.
In the first decade of the 21st century, globalization kept extending. Such emerging economic entities as China, Russia and Brazil grew rapidly and became another source of motivation for globalization. China, in particular, has become the world’s. 1 commodity trader, currently the largest trading partner of more than 120 countries.
Yet everything has changed dramatically. The US is increasingly worried about the “double-edged effects” of globalization, believing globalization, which has led to drain of American jobs and weakened American technological advantages, is a significant cause of American economic difficulties. At this point, both US presidential candidates, Hillary Clinton and Donald Trump, have doubted free trade, and accused China of unfair competition, vowing to help steel workers in Pittsburgh win back their jobs.
The European public is more concerned about immigrants. Free flow of people had once been a key symbol and achievement of globalization. With the recent immigrant crisis, however, European sense of insecurity has worsened substantially, and European integration has taken a heavy blow.
The UK’s “Brexit” vote illustrates the severity of the problem. In France, Germany and Denmark, political parties and groups opposing immigration, free trade, and European integration have gain increasing traction.
Emerging economies, on the other hand, have found it difficult to retain titles as “growth champions”. Their economic and social challenges brook no underestimation. Growth has been slowing in China, with the IMF forecasting 6.6 percent GDP growth for 2016. China also faces such challenging tasks as reforming its financial system, state firms, and job market. Meanwhile, Russia and Brazil, which have long depended on energy and resource exports, will have to experience more difficult transitions.
To sum it up, globalization, oriented at “Westernization” over the past 20-plus years, is in serious crisis. The roles of “the West”, “capital” and “the State” need recalibration. Such negative effects of globalization as environmental pollution, social inequality, and imbalance in development call for effective governance.
China and the US need to promote a new-type of globalization
Globalization is an essential condition for building an open world economy. That is of key significance to the rise of late-developing countries like China.
Globalization is also essential for the US, because it is a fundamental basis for Washington to preserve its global leadership. The US has long advocated free trade, and deserves recognition for contributing to the formulation of international regimes. From the United Nations to the “Bretton Woods system”, from the World Trade Organization to the Global Nuclear Summit, the US has left its marks. Looking on while the world drifts toward isolation, conflicts and turbulence is not in American national interest.
China and the US should join hands and promote a new type of globalization that is more open, inclusive, and balanced.
First, make efforts to strengthen the vitality of the world economy, which is the basis for sustaining globalization. The world has been struggling in the shadow of the financial crisis for eight years. Heavy debts and a related sense of economic insecurity have resulted in plummeting consumer demands, withering cross-border investments, and rising trade protectionism, and global economic activity has slowed down considerably. In the 20 years prior to the crisis, the speed of global trade growth was twice that of production growth. In 2015, however, when the world economy grew 3.1 percent, the figure was 2.8 percent for global trade. Cross-border capital flow also saw serious recession, reportedly dropping to that of the early 1980s. The Hangzhou summit will put forward a series of measures for promoting world economic growth, including an action plan for innovative growth.
Second, encourage emerging and developing countries to play more proactive roles, correct the misperception that “globalization equals Westernization”, facilitate coordinated reforms and “common evolution” of all countries. In the past, it was always Western countries that wrote “prescriptions”, believing the biggest problems of developing countries were “big government” and immature “free market”, under the banner of “neo-liberalism”, and with the “Washington consensus”, which is aimed at reducing government control, in dominant position. The new type of globalization needs to reconsider the role of national governments in economic development, placing due emphasis on the combination of “government that works” and “effective market”.
Developing countries should especially avoid being taken away by globalization driven completely by capital. One of the achievements of the Hangzhou summit will be the proposal of nine priority areas and 48 guiding principles, as well as indices for measuring progress of structural reforms. Which means both developed and developing countries should engage in “real reforms”, instead of supporting their economies through printing more money, or strong stimuli.
Third, the new type of globalization needs to further accentuate “development”, placing more emphasis on “the politics of distribution”, rather than on “the politics of production”. Previously, globalization set eyes on growth, profits and capital, resulting in the poor getting poorer, making it difficult for developing countries to get their due share from the process of globalization.
Development” as a topic will be given more prominence at the Hangzhou summit, participating parties will make systematic action plans surrounding implementation of the Sustainable Development Agenda 2030. Climate change, a key topic concerning sustainable development, will be one of the highlights at the summit, China and the US are reportedly to issue a joint communiqué before the summit to announce their respective support for the “Paris Climate Agreement”, promoting it to become an international treaty of truly binding effects.
The Hangzhou summit will be an important opportunity for China and the US to join hands and promote a new type of globalization. Both countries should be aware that stagnation of globalization will have tremendous negative effects on them.It is thus imperative to lead globalization onto a track of fast progress. The G20, therefore, should be a venue for actions, instead of empty talk. China and the US should cooperate closely and make the Hangzhou summit a successful episode in the history of the G20.