Work Together for a New Round of World Economic Growth

Li Baodong
The 11th G20 Summit will be held in Hangzhou on September 4 - 5, 2016. It will be the first G20 Summit ever hosted by China and the most important diplomatic event held in the country this year. All eyes will be on Hangzhou.

The G20 Summit was born at a time of crisis when the world economy hung by a thread under the impact of the subprime loan crisis on the Wall Street. At the defining moment, G20 members came together for shared interests and took decisive actions that pulled the world economy from the edge of a precipice to the path towards stability and recovery. The G20 Summit has since gained its position as the primary forum for international economic cooperation. 

The world economy is now undergoing complex changes, troubled by anemic overall growth, worsening financial fluctuations, stubbornly low prices of crude oil and other major commodities, sluggish growth of global trade, and slow recovery of market confidence. Eight years have passed since the outbreak of the financial crisis, the world economy, however, is yet to be back on its feet, and is still going through a difficult period of transition when old issues remain unresolved and new challenges keep cropping up. Divergent policies of major economies can hardly form synergy. Protectionism is on the rise due to the interplay of geopolitical and economic factors. Various stimulus policies are showing diminishing effect. Fiscal and monetary policies alone are no longer enough to solve problems. New growth points are still in the making. Some economies tend to choose "safe", easy short-term policies over painful structural reform and other medium- and long-term policies and as a result, only symptoms instead of the root causes are addressed. 

Against this backdrop, the G20 Hangzhou Summit is much anticipated. The G20 is widely expected to step forward again to promote consensus among major economies and bring the world economy onto the track of strong, sustainable and balanced growth, while at the same time, transforming itself from a crisis management mechanism into one for long-term governance. 

The theme of the Hangzhou Summit is "Towards an Innovative, Invigorated, Interconnected and Inclusive World Economy". It aims to respond to the development needs of all countries in the current world economic situation and focus both on treating the symptoms to satisfy the immediate need for steady growth and on addressing the root causes to generate dynamism for long-term development. Under this theme, China has identified four key agenda items, namely, “Breaking a New Path for Growth”, “More Effective and Efficient Global Economic and Financial Governance”, “Robust International Trade and Investment”, and “Inclusive and Interconnected Development”. These agenda items are not designed to tinker around or fix isolated problems, but to look at the bigger picture of the world economy and address mechanisms, structures, drivers, bases and other fundamental issues, so as to resolve at its source the problem of inadequate driving force for global growth. This approach has been widely recognized and supported by all G20 members. 

I. Breaking a new path for growth to nurture new drivers for world economic growth

Many economies are now faced with the challenge of slower growth and declining effect of traditional stimulus policies. The fundamental reason lies in the lack of internal drivers for growth. China believes that while tackling the short-term risks, priority should also be given to address the root causes to increase medium- and long-term potentials. 

Agenda item "Breaking a New Path for Growth" contains four topics, namely, innovation, structural reform, new industrial revolution and digital economy. Under this item, G20 members will be encouraged to follow an innovation-driven development strategy, deepen structural reform, fully utilize the thrust of new technologies, new factors of production, and new forms of business, and increase total-factor productivity. 

China promotes "greater innovation" that focuses on science and technology and involves other aspects such as development concept, institutional arrangement and business model. At present, a new round of industrial revolution with the Internet at its core is gaining momentum. Artificial intelligence, virtual reality and other new technologies are making advances at a fast clip, but are yet to become the main growth points driving the world economy. China hopes to work with other countries to translate the advances in scientific and technological innovation into driving forces for growth. 

Innovation tops the list of China's five new development concepts laid out in its 13th Five-Year Plan for Economic and Social Development. Countries like the United States, Germany and India have also formulated their own innovation-driven development strategies. This shows that innovation serves the development needs of not only China, but all countries in the world. It has won wide recognition in the international community as an important development driver.

Innovation knows no limits. China hopes that the G20 will reach consensus, draw up plans and make institutional arrangements to promote innovation. We hope a G20 blueprint for innovative growth will be drawn and an ambitious action plan formulated to charter the course for global innovation and unfold greater prospects for the medium- and long-term growth of the world economy. 

II. Improving global economic and financial governance to effectively enhance resilience of the world economy

To promote international economic and financial reforms is G20’s flagship endeavor. By making “More Effective and Efficient Global Economic and Financial Governance” one of the key agenda items, China hopes the G20 will make fresh contribution to making global economic governance more fair, reasonable, reliable and efficient. This includes continued efforts to advance governance reforms in international financial architecture, energy, anti-corruption and many other fields. 

Under this item, G20 members will continue with their discussion on quota and governance reform of international financial institutions to increase representation and say of emerging markets and developing countries. They will be encouraged to timely and comprehensively implement all financial reform measures and closely monitor and manage potential risks and frangibility of the financial system. Action plans will be formulated to strengthen cooperation in areas such as energy accessibility, global energy governance, renewable energy and energy efficiency. On anti-corruption, G20 members are expected to identify G20 high-level principles for international cooperation on fugitive hunt and asset recovery, set up a G20 anti-corruption research center and formulate a 2017-2018 anti-corruption action plan. These specific outcomes and action plans will consolidate G20’s strengths, help improve the global economic and financial governance system and provide solid institutional guarantee for recovery and steady growth of the world economy. 

III. Boosting international trade and investment to jumpstart the dual engines of the world economy 

Trade and investment are important engines for world economic growth. For a good while, global trade has remained feeble. Its growth has been hovering at a rate lower than the average growth rate of the global economy for five consecutive years. As protectionism rises and multilateral trade negotiations falter, bilateral and regional free trade arrangements have flourished, showing a tendency of fragmentation and exclusiveness. Countries tend to tighten regulation over foreign investment as international investment loses steam in boosting GDP growth. To reverse such a situation, China has made “Robust International Trade and Investment” one of the key agenda items in the hope of invigorating trade and investment, consolidating the multilateral trading system and fostering an open world economy. 

China is strengthening communication and coordination with all the other members to promote G20's efforts in stepping up institutional development for trade and investment, jointly formulating a G20 strategy for global trade growth, enhancing inclusive and coordinated development of global value chains, supporting the multilateral trading system and reaffirming the commitment to opposing protectionism. At the same time, G20 members are expected to discuss and formulate non-binding G20 guiding principles for global investment policy making, the G20 investment facilitation package and the G20 initiative for the promotion of investment in low-income countries, with a view to strengthening G20 coordination and cooperation on investment policies. China looks forward to reaching agreement with all other members on these outcomes so as to revitalize trade and investment and enable these dual engines of the world economy to provide strong impetus for growth. 

IV. Promoting inclusive and interconnected development to ensure that G20 cooperation brings benefits to all

As the biggest developing country, China knows full well the importance of development. Since reform and opening-up, China has registered marvellous development achievements and made huge contribution to the attainment of the Millennium Development Goals including the target of halving the population living in poverty. In 2015, a year designated for international development, the UN 2030 Agenda for Sustainable Development and the Paris Agreement on climate change were reached, marking a milestone in international development endeavors. 

The G20 Hangzhou Summit falls in the first year for the implementation of the above-mentioned historic consensus. China innovatively chooses “Inclusive and Interconnected Development” as one of the key agenda items for the Summit. For the first time in history, the G20 will incorporate development issues into the global macroeconomic coordination framework; for the first time in history, the G20 will formulate detailed action plan to implement the 2030 Agenda; and for the first time in history, developed and developing countries will take actions together for development. During the preparations for the Summit, China has carried out deep-going dialogue with the Group of 77, African countries, the least developed countries and landlocked and small island countries to listen to their views, accommodate their concerns and protect their interests. We are making every effort to ensure that G20’s work responds to the needs of developing countries and brings tangible benefits to their people. 

In order to facilitate an early entry into force of the Paris Agreement, Foreign Minister Wang Yi wrote to his counterparts in the other G20 countries and guest countries, calling upon the parties concerned to take the initiative to sign and implement the Paris Agreement. At the second G20 Sherpas’ Meeting, G20 members unanimously agreed to issue a presidency statement on climate change, committing themselves to signing the Paris Agreement on April 22 or on an early date thereafter, to joining the Agreement according to their domestic procedures and to working for an early entry into force of the Agreement. This first-ever G20 statement on climate change stands as an important early harvest of the Hangzhou Summit. It was welcomed by UN Secretary-General Ban Ki-moon in his statement, in which he expressed appreciation for G20’s strong political support for the signing of the Paris Agreement and lauded China’s leading role in achieving it. Going forward, China will continue to encourage G20 members to take a responsible attitude and play a constructive role in implementing the Paris Agreement. 

In Hangzhou, G20 members will also focus on supporting industrialization in Africa and the least developed countries, inclusive business, employment, food security and infrastructure investment in an effort to make fresh contribution to international development endeavors. 

The Hangzhou Summit comes at a crucial time when the G20 is making its own transition. Some believe that G20's influence and role is far less than before with the end of the international financial crisis. This argument does not hold water. The G20 has its own advantage. Compared with the G7, the G20 represents a historic step forward as it allows developing and developed countries to participate in global economic governance on an equal footing. Over the years, the G20 has taken a host of effective and result-oriented measures and contributed significantly to tackling the international financial crisis, promoting international economic cooperation and pushing forward reform of international financial institutions, and has thus emerged as the primary forum for international economic cooperation. On the other hand, the G20 needs to adapt to the new circumstances and keep abreast with the time in order to better play its role. It needs to shift its focus from crisis management to long-term governance, from short-term policies to ones that combine short-term and medium- and long-term considerations. A smooth and successful transition bears on the immediate interests of all G20 members and has an impact on the development of all countries. We are confidant that with the joint efforts of all its members, the G20 will make a fresh start from Hangzhou and march into a new phase of development. 

China attaches great importance to the preparations for the Hangzhou Summit. President Xi Jinping has made clear to the world China’s overall thinking on the meeting. The sherpas’ meetings, the financial track, and various working groups are well under way. Chinese government agencies and the host city Hangzhou have all been fully mobilized. The preparations are in full swing. A successful Hangzhou Summit calls for not only China’s effort, but also the joint effort of all G20 members. China looks forward to working with all others to demonstrate partnership, strategic vision and ambition, and produce outcomes that will have overall and far-reaching significance. Together, we will foster an innovative, invigorated, interconnected and inclusive world economy. 

In a few months, G20 leaders will gather in Hangzhou to draw the blueprint for the world economy. We have every reason to believe that the world economy will make a fresh start from China, and the G20 will set sail again from Hangzhou and embrace an even brighter future.