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G20 Hangzhou Summit steering the ship of the world economy into a brighter Horizon

(People's Daily Online)  Sissy Zhang, Yu Meng  2016-09-22 16:41

LEADING ECONOMIES: Chinese President Xi Jinping and other leaders of the Group of 20 (G20) members, some guest countries and international organisations pose for a group photo before the opening ceremony of the G20 summit in Hangzhou, China, on Sunday. (Picture: Pang Xinglei / Xinhua)

HIGHLIGHTS OF THE SUMMIT

G20 in 2016: More than 70 meetings and 29 outcome agreements.

Hangzhou Consensus: Vision, Integration, Openness, Inclusiveness

Three firsts in the development area:


  • For the first time, G20 puts the issue of development in front and centre of the global macropolicy framework.
  • The first G20 action plan has been formulated for implementing the 2030 Agenda for Sustainable Development.
  • For the first time, G20 is committed to co-operating to support African countries and the least developed countries in their industrialisation.


Three transformations:

  • From a crisis response mechanism to a long-term governance mechanism.
  • From short-term-oriented policies to comprehensive policies that include short-term and mid-to-longterm policies.
  • From demand-side management to supply-side reform.



The annual Group of 20 (G20) summit wrapped up in the eastern Chinese city of Hangzhou yesterday, gathering global leaders to find a way to bring the world economy back to a healthy growth trajectory. Chinese President Xi Jinping urged the leaders of the world’s 20 leading economies to prescribe remedies for the sluggish world economy to embark on a road of robust, sustainable, balanced and inclusive growth.
The leaders of major players on the globe had a series of discussions on strengthening policy co-ordination, breaking a new path for growth, more effective and efficient global economic and financial governance, robust international trade and investment, inclusive and interconnected development, as well as other issues affecting the world economy.

“The world economy is recovering, but faces multiple risks and challenges such as insufficient growth momentum, lack of demand, repeated volatility in financial markets, and sluggish international trade and investment,” Xi told the summit.
As Xi observed, the growth momentum brought by the previous wave of technological progress was waning while the latest wave of technological and industrial revolution was yet to gather steam. Ageing populations and slowing population growth also weigh on the world’s major economies.
“In addition, economic globalisation faces setbacks as protectionism rears its head and multilateral trade arrangements are being impacted. Despite substantial progress in financial regulatory reform, risks such as high leverage and froth are accumulating,” Xi said.
As the leader of the world’s second largest economy, Xi offered five proposals to the G20 members to buttress global economic growth.

Strengthening macroeconomic policy co-ordination, jointly promoting global growth and upholding international financial stability

As Xi said, the G20 members should pursue more comprehensive macroeconomic policies in keeping with their own national realities and employ various policy tools, including fiscal, monetary and structural reform policies, to expand aggregate global demand, improve the quality of supply and bolster growth foundations.
G20 members have agreed that monetary policy alone could not lead to balanced growth. Fiscal strategies are equally important, by using fiscal policy flexibly and making tax policy and public expenditure more growth-friendly, while enhancing resilience and ensuring debt as a share of GDP is on a sustainable path.
“We should, in conjunction with the formulation and implementation of the Hangzhou Action Plan, strengthen policy co-ordination, reduce negative spillovers, and work together to uphold financial stability and boost market confidence,” Xi said.

Breaking a new path for growth and generating new growth momentum

Xi mentioned that the G20 should change its policy approach and place equal importance on both shortterm and medium to longterm policies, with demandside management and supply- side reform.

“This year, we have agreed on the G20 Blueprint on Innovative Growth and made the unanimous decision to break a new path and expand new frontiers for the world economy through innovation, structural reform, new industrial revolution and the development of digital economy.”
Xi added: “We should stay committed to these initiatives to remove the root cause of sluggish recovery and weak growth that plagues the global economy, and lay a solid foundation for achieving a new round of global growth and prosperity.”
The G20 members have reiterated the essential role of structural reforms in boosting productivity and potential output, and agreed upon the nine priority areas of structural reforms and a set of guiding principles identified in the Enhanced Structural Reform Agenda to provide high-level guidance to members.

Improving global economic governance and strengthening institutional safeguards

The G20 restarted the G20 International Financial Architecture Working Group.
As Xi said, the G20 should continue to improve the international monetary and financial systems and the governance structure of international financial institutions, and fully leverage the role of the International Monetary Fund’s special drawing rights.
Xi urged the G20 members to strengthen the global financial safety net and enhance co-operation in financial regulation, international taxation and combating corruption to boost the resilience of the world economy against risks.
G20 members have recognised that it is necessary to scale up green financing to support environmentally sustainable growth globally, and will voluntarily enhance the ability of the financial system to mobilise private capital for green investment.
Recognising the detrimental effects of corruption and of illicit finance flows, G20 members also welcomed the establishment in China of the Research Centre on International Co-operation Regarding Persons Sought for Corruption and Asset Recovery in G20 member states.

Building an open global economy and further promoting trade and investment facilitation and liberalisation

“Protectionism is like drinking poison to quench one’s thirst: it may ease a country’s internal pressure in the short term,” Xi said frankly, “but will only inflict severe damage to the country itself and the world economy in the long run.”
The G20 should resolutely oppose the beggar-thy-neighbor policy, and advocate and promote the building of an open global economy, Xi said.
“We should honour our commitment of not adopting new protectionist measures, strengthen co-ordination and co-operation on investment policies and take credible steps to stimulate trade growth.”
Infrastructure connectivity should be enhanced in order to bring developing countries and small- and medium-sized companies into the global value chain and make the global economy more open and integrated, he added.
The G20 members have endorsed the G20 Strategy for Global Trade Growth, under which the G20 will lead by example to lower trade costs, harness trade and investment policy coherence, boost trade in services, enhance trade finance, promote e-commerce development, and address trade and development. The G20 Guiding Principles for Global Investment Policy-making has also been endorsed.

Implementing the 2030 Agenda for Sustainable Development and promoting inclusive development

According to statistics, the Gini coefficient has exceeded the widely recognised alarm level of 0.6 and reached around 0.7 globally.
“This is something that we must pay close attention to.” Xi said. “To achieve common development is the shared aspiration of all peoples, especially those of the developing countries.”
This year, sustainable development is high on the G20 agenda, and G20 members have committed themselves to implement the 2030 Agenda for Sustainable Development and formulated an action plan. The Technology Facilitation Mechanism will also be established to enhance the co-operation on technologies to achieve sustainable development.
G20 members have pledged to support industrialisation in Africa and the least developed countries through sharing knowledge on good practices, supporting agriculture and agri-business development, investing in energy, renewables and resource efficiency, enhancing industrial production and vocational training, and promoting science, technology and innovation as a critical means for industrialisation.
G20 members reaffirmed their commitment to promoting investment with a focus on infrastructure in terms of both quantity and quality.
“Through these means, we can reduce inequality and imbalance in global development and deliver the benefits of global growth to people of all countries,” Xi said.

(The story was originally published on Business Report on September 6th, 2016.)