China has its first big opportunity to demonstrate global economic leadership when it hosts this year’s G20 meetings. The G20 leaders’ summit will be held in Hangzhou on 4 and 5 September. So far, China looks to be taking the job seriously.
When I was in Beijing in March, I was assured that that the G20 is a top priority for China. Beijing is keen to build on the existing G20 agenda and keep a strong economic focus. Australian and US officials have commented that China’s meetings have been well organised, and Chinese officials are developing their soft power skills by seeking compromises.
Global growth continues to be slow and the G20 has been talking a lot about structural reforms over the last few years. The problem is that each country has their own set of problems and structural reforms are difficult to sell at home.
China has the chance to set an example by showing it has the willingness to undertake difficult (but necessary) economic reforms and encouraging other countries to do the same. In our G20 Monitor published today, 'New Considerations for China’s G20 Presidency', David Dollar makes the case for why reforming its service sector is the best thing that China can do for the global economy.
In my own article in the Monitor, I argue that the G20 should to go back to basics and focus on cooperation and communication, even if there is no headline-stealing outcome. The G20 has already set three ambitious targets: an intention to lift global GDP by 2% by 2018, a goal to reduce the gap in labour participation between men and women in G20 countries by 25% by 2025 and a commitment to reduce the share of young people most at risk of being permanently left behind in the labour market by 15% by 2025.
China would do well to highlight these growth and employment targets, and put them back on track. This would reinforce the legacy of the Australian G20 presidency in 2014 and — more importantly — help to address the credibility problem of the G20’s ‘empty promises’.
Nicolas Véron also looks at an ongoing G20 issue in the Monitor: financial regulation. The G20's work on financial regulation after the Global Financial Crisis is accepted as one of the forum’s biggest successes. However, Véron points out that this agenda needs to continue to evolve. For example, he suggests the G20 could empower a global body with relevant membership and a clear mandate to issue standards for the global derivatives markets.
Despite China’s conventional approach to the G20, there have been a few curveballs in 2016. China has put innovation on the agenda, although there has been some kerfuffle about which Chinese ministries will be managing this work stream. Another new addition to the G20 agenda is the topic of green finance.
In the Monitor, Tristram Sainsbury talks about the remarkable success of the People’s Bank of China, Bank of England and United Nations Environment Programme in getting a Green Finance Study Group established as part of the G20 Finance Track. However, he wonders about the future prospects of the Group and whether it will be upgraded to a more permanent G20 discussion.
It is only three months until the Hangzhou Summit where China will be judged for how it has handled the G20. So far, so good. Chinese officials will need to keep preparing the ground for the summit and building consensus around the commitments that will be made in September.
The next step is for China to work on its narrative and communicate how it is progressing the G20 agenda. They could start by working on their unwieldy website.
Photo courtesy of Flickr user David Almeida.