The G20 Summit in Osaka marked a point of uncertainty about the China-US trade war, the growing complexity of international economic prospects, and the new challenges facing reform efforts in the global governance system. Although the summit declaration stopped short of directly denouncing protectionism and unilateralism, it did reflect demands voiced by emerging economies, including China, and reached a fairly objective, equitable and balanced consensus. At its conclusion, the summit set the tone for heterogeneous countries to explore effective cooperation moving forward.
First, the Osaka declaration was a continuation of the basic economic conclusions reached at the G20 Hangzhou Summit, serving as an important political signal for boosting confidence in the global economy. In 2016, the world economy was still grappling with the aftershocks of the 2008 global financial crisis, as reflected by the rise of populism in the American presidential elections and Brexit. President Xi Jinping pointed out at the G20 Hangzhou Summit that the main drivers for economic growth in the past decades were shifting, and that the world economy was still making a difficult recovery amid deep adjustments. The Osaka declaration stated that though the world economy faces downside risks, global growth appears to be stabilizing and is generally projected to pick up moderately later this year and into 2020.
Second, the Osaka summit’s judgement on global economic imbalances notably reflected the voices of emerging economies. The Osaka declaration stated that global trade is still highly imbalanced, and that other components such as service trade should also be taken into wider consideration. The G20 FWG Summary Document on Global Imbalances, which was adopted at the G20 Finance Ministers and Central Bank Governors Meeting in June, focused not only on trade imbalances reflected in trade deficits, but also assessed the impact of the structure and services of the financial industry.
Third, the Osaka summit adopted the G20 Principles for Quality Infrastructure Investment, which clearly define infrastructure as the driving force for economic growth and prosperity. This, in fact, squares well with China’s Belt and Road Initiative as well as China’s new requirements for high-quality economic growth. At the Osaka summit, President Xi Jinping made a speech titled “Working Together to Build a High-Quality World Economy”, which reiterated these requirements. The G20 Principles for Quality Infrastructure Investment, approved by the G20 Finance Ministers and Central Bank Governors Meeting in Fukuoka, reflected the important principles China has been preaching, such as wide consultation, joint contribution, shared benefits, and connectivity.
Fourth, the Osaka summit helped both in expanding the new agenda for the G20 framework and offering a new way for emerging economies and developed nations to identify their common concerns and policy priorities. In addition to the traditional economic topics, this year’s Osaka summit included coverage of sustainable development issues relating to public health, women, aging populations, the disabled, and marine waste. This coverage highlighted how problems facing emerging economies tend to converge with those of developed nations, meaning that both parties will have cause for concern and will need to act together.
Fifth, the Osaka summit conveyed a clear message about the reform of the World Trade Organization. The Osaka declaration reiterated the G20 trade ministers’ consensus, including the need to construct a favorable trade and investment environment, to promote reforms to the World Trade Organization, to strengthen trade and digital economy interconnection, and to promote sustainable and inclusive growth.
The global economy from the end of World War II to the 1970s was predominantly governed through cooperation among Western economies under US hegemony. When the Group of Seven emerged in the 1970s, international economic governance diversified, but all were military allies of the United States, shared similar domestic economic governance systems and levels of development, and easily reached consensus. In other words, it was a form of cooperation between homogeneous countries. Given the recent and rapid rise of emerging economies, and the inability of the Group of Seven to solve problems relating to the world economic governance after 2008, the G20 was born at the right moment. The G20 members have different political systems, different economic structures, and diverse development modes. The core challenge today has become the achievement of cooperation among heterogeneous countries. President Xi Jinping offered China’s solution at the Osaka summit: Given the different development stages of G20 members, it is only natural that they may have diverging interests and views on some issues. The important thing is always to promote partnership and treat each other with respect and trust. In that spirit, diverse members can engage in consultation as equals, manage differences while seeking common ground, and build greater consensus.
From a long-term perspective, the significance of the G20 lies in whether it could, by means of cooperation among heterogeneous countries and multilateralism, push forward the next round of globalization. The prior round of globalization led to fast economic growth and improvement in the living standards, but an unequal and unfair distribution of globalization’s dividends. Moving forward, emerging economies need to shift from a quantity-focused growth to a quality-driven one. They must try to narrow gaps in air quality, food security, convenient transport, elder care and medical services. Conversely, developed economies need to focus on reducing income disparity and achieving sustainable and inclusive economic development goals. In this process, the G20 can be a platform both for policy coordination and mutual learning among its members. When the G20 framework leads to and displays the benefits of multilateralism to all countries, then it will manifest the vitality and power of the G20.