The G20 is an important platform for global economic cooperation, and the annual G20 summit is an important event in the field of global economic governance. The G20 is important mainly for the following two reasons: first, the G20 brings together the “heavy-weights” in the world economy, whose decision-making and actions are quite significant, with huge impacts on the global economy. Second, its meeting is the top-leader summit, where the heads of state spend two days in exchanging views on the international economic situation and macro-economic policy coordination, building consensus and seeking cooperation.

The G20 summit in 2016 will be held in Hangzhou, China from 4 to 5 September. As the second largest economy and the largest developing country in the world, China, in hosting the G20 summit, will bring more significance and responsibility to the G20. Under the current global economic circumstances, the G20 summit in Hangzhou this year attracts even more attention from all sides.  

I. The History of the G20

The G20, established in 1999, as a venue for dialogue of finance ministers and central bank governors, was aimed at advancing discussion and research between developed countries and representative developing countries on substantive issues, in the seeking of cooperation and promotion of international financial stability and sustained economic growth. Since the outbreak of the financial crisis in the United States in 2008, the G20 gained stronger influence, thus the creation of the G20 summit.

Since 2008, the successive G20 summits have acted as “positive energy” in dealing with the impacts and repercussions of the financial crisis, advancing international economic cooperation and seeking economic growth, which is praise-worthy. In particular, despite the absence of wide consensus and even less follow-up actions, the G20 Summit in France, with the theme of “New World, New Ideas”, shows that the G20 has been exploring how to understand and read the “new world” and pursuing “new ideas” to guide global economic development. The “new world” calls for new positioning, new ideas, new responsibilities and policies and behaviors from each country. The old set of practices like monopoly and “shifting crisis to others” has obviously become so unpopular. In the era of economic globalization, no country can stand alone. That actually bears on the direction of the G20 and thus offers something for the summit in Hangzhou to inherit and build on.

The famous “Cancun Conference” was held in Mexico 35 years ago, with the participation of leaders of eight developed countries and fourteen developing countries. That was the first ever large-scale “North-South dialogue” in the world, but the meeting was completely dominated by developed countries. Afterwards, the situation saw gradual changes, with the emergence of the “8+5 dialogue”. And the five developing countries involved (China, India, Brazil, Mexico and South Africa) started to have some say and weight, but still developed countries basically dominated the dialogue, with the five countries only “added” to it. And now the G20 is different. Although the G7 still plays a leading or major role in many areas, the “8+5 phenomenon” has actually been past, with the combined force of BRICS and other emerging economies working together. Thus, the G20 Summit has become a “relatively equal” platform of dialogue between emerging economies and the established developed countries. Today’s G20 has significant representation and importance, accounting for around 90% of global GDP, 80% of global trade and two thirds of global population. Its membership addresses the balance between developed countries, developing countries and different regions. Therefore, it has naturally become an important platform for “global governance”.

II.The Challenges Faced by the G20 Under the New Circumstances

The G20 was born in crisis and thus its value and raison d’etre is shown in more important ways in front of challenges. At present, global growth remains sluggish, the monetary policies of major economies are further divided, commodity prices are continuously weakening, unemployment is still grave, the growth of international trade has slowed, the multilateral trading regime is strained and many countries are beset with inequality and imbalances. We may have tided over the most serious part of the international financial crisis, but with the underlying impacts of the crisis yet to be fully fermented, the world economy is still in a stage of intensive adjustment, accompanied by slow and fragile growth. The relaxed monetary policy and stimulating financial policy seem to be less effective than before. The titanic world economy has sailed into heavy mist, with no clear direction and hard to gear up and steer ahead.

With economic troubles unresolved, a host of political and security issues have made the economic volatility worse. The refugee issue, the situation on the Korean Peninsula and many other insecure factors have magnified the economic issues. And when the two facets are intertwined, no single country or policy can resolve the situation that has been made more complicated.

The predicament we are facing somewhat seems familiar and there are those who suspect a “third wave” of impacts from the international financial crisis. That’s why people have turned their focus to the G20, curious about what good solutions can be brought about by the leaders, foreign ministers, finance ministers and central bank governors of major economies and about whether they will join hands and take concerted actions to point the direction for global economic development.

The experts may have diverse suggestions with different focuses. But one thing that is essential is the spirit of partnership of working together to tide over difficulties. That is the precondition and foundation for G20 cooperation and also lies at the heart of what the G20 should be committed to. The Washington Summit demonstrates that under the guidance of this spirit, the G20 has taken concerted actions in joint response to the crisis, thus yielding good results. “Partnership” or a “spirit of partnership” are often heard, but now we are talking about “working together to tide over difficulties”, a saying that carries profound meanings. It shows that in today’s world, no country can stand alone no matter how strong it is. The practice over the years has fully demonstrated that “global governance” by a single super power does not work and “joint governance” by a few big countries does not fit either. The world belongs to the people of all countries, and thus “global governance” shall be a shared responsibility. Big or small, strong or weak, a country can and should make different contributions. But “joint consultation, joint governance and sharing” and “equal-footed partnership” should be the general principle, the conceptual foundation of which is exactly the “spirit of partnership of working together to tide over difficulties”. That is the only way to avoid the bad phenomena of “antagonism”, “beggar thy neighbor” and “double standards” and guarantee world peace and development. That is also the only way to ensure that the “core mission” is “focused on growth”.

People are all questioning what is going wrong with the economy. In my opinion, the problem lies in the lack of new growth drivers. Each and every round of great development in human history is attributable to breakthroughs in invention and creation. From the steam engine to the computer and to the Internet, new technologies have generated the substantial upgrading of productive forces, thus leading to the adjustment of productive relations and the creation of new demand and supply. For now we can hardly find a technology that can live up to the task by that standard. Since the dividends of the development of the Internet are gradually fading and new technologies such as Cloud technologies, 3D printing and artificial intelligence take time to develop, a gap now exists in between. At the same time, how the new technologies can give deep-going and comprehensive stimulus to economic development is still a challenge to be addressed with support and facilitation.

The challenge calls for solidarity. But in the current troubled situation where global economic governance gets more difficult, macro-economic policy coordination has become more valuable. The monetary policy divided between developed countries as shown by the depreciating Euro and Japanese Yen versus the interest-rate growing US dollar has produced huge negative spillover effects on emerging economies. With the advent of the post-Nairobi era, how can we uphold and consolidate the position of the multilateral trading regime? The G20 is expected to offer a strong solution with wide representation, with a view to advancing the reform of international financial institutions, energy governance and the multilateral trading regime.

In addition, the issue of development should not be neglected. In 2015, a number of epoch-making documents were adopted on the international development front, including the 2030 Agenda for Sustainable Development and the Paris climate deal. Unlike the MDGs, the new development agenda not only sets requirements for developing countries but also is applicable to developed countries. And therefore all countries shall be involved in the implementation of the new development agenda. The focus on the development issue is what is called for in eradicating poverty and resolving inequalities and imbalances and also provides a source for exploring new drivers of the economy. For developed countries, the potential for economic growth to tap is limited. But if developing countries can be fully developed so that they can participate in the global value chain, they will create huge demand and supply and bring new stimulus to global trade and finance. The G20 has unique advantages in this regard and can play its role in leading the international community in the delivery of the 2030 Agenda for Sustainable Development, the Paris climate deal and other commitments.

III. The China Plan

In his letter to various parties on 1 December 2015, President Xi Jinping introduced the theme and proposed agenda of the Hangzhou Summit. The G20 Summit in Hangzhou this year has a simple and clear-cut theme with profound meanings, i.e. "Building an innovative, invigorated, interconnected and inclusive world economy". The four key words correspond to four key issues, namely, innovation, global governance, trade and investment and development. It is expected that the whole year’s work will be focused on frequent consultation on these four aspects in order to seek the biggest common denominator of consensues.

First, “innovation in growth models”. As State Councilor Yang Jiechi said in his interview with the People’s Daily, innovation should be “great innovation”, meaning that lying at the core is scientific and technological innovation which in turn generates all-dimensional, multi-tiered and broad-based innovation in development concepts, systems and institutions, business models and so on. Discussions shall be focused on such topics as structural reforms, new industrial revolution and digital economy as a way to explore how to promote the reform and innovation of growth models, explore and seize new opportunities and increase the potential for global economic growth.

Second, “more effective global economic and financial governance”. Efforts must be made to improve the international economic and financial governance, enhance the representation and say of developing countries and increase the resilience of world economy against risks. There should be strengthened cooperation in reforming international financial institutions, improving the international monetary system and enhancing financial regulation and in the fields of international taxation, green finance, energy governance and the fight against corruption, so as to make global economic governance more balanced in structure, more reliable in institutions and more effective in action.

Third, “strong international finance and investment”. International trade and investment shall be given a stronger role in promoting growth towards an open world economy. Under the active push of the Chinese side, the Antalya Summit decided to institutionalize the G20 Trade Ministers’ Meeting and establish a trade and investment working group. As a big trading and investment nation, China has placed trade and investment as an important item on the G20 agenda, hoping that the G20 will reiterate the anti-protectionism commitment and reach consensus on promoting the multilateral trading regime and coordinated development of regional trade arrangements, advancing global trade growth, supporting the development of the global value chain and increasing international investment policy cooperation.

Fourth, “inclusive and interconnected development”. The goal is to implement the 2030 Agenda for Sustainable Development, eradicate poverty and realize win-win development. At the Antalya Summit, leaders announced that the G20 will formulate action plans in 2016 to bring the G20 agenda in line with the 2030 agenda. In addition, the Chinese side initiated the discussion on supporting the industrialization in Africa and least developed countries, with a clearly-directed focus on the development needs of Africa and relevant countries, thus also providing a good point of cooperation between the G20 and developing countries.