Panelists at the Brookings-Tsinghua Center, a think tank, discuss the global impact of the G20, which scholars worry is waning without the immediate threat of a financial crisis. China will host the G20 presidency this September in Hangzhou (JORDYN DAHL)

When China hosts the Group of 20 (G20) Summit in Hangzhou, capital of Zhejiang Province, this coming September, the world will be watching not just the country's leaders for signs of how its economy is performing, but also what steps the G20 countries are taking to maintain order in an increasingly fraught period of economic and social unrest.

This is the first time that China, a non-Western world power, has held the presidency at the G20 summit, marking both China's rise as an economic powerhouse and world leaders' recognition of the power of emerging economies. The presidency responsibilities rotate to a different country each year.

The G20 is comprised of 19 countries, plus the European Union. Born out of crisis--it was first created in 1999 in the aftermath of the 1997 Asian financial meltdown--the organization strives to promote economic cooperation. The first G20 Leaders' Summit was held in 2008 in response to the global financial collapse.

"I think when we study global governance, we will look at the creation of the G20 and its role as one of the most important episodes of global governance in all of contemporary history," Bruce Jones, director of the foreign policy program at the Brookings Institution, a prominent American think tank, said at a March 22 panel discussing the G20. The event was held in conjunction with the 10th anniversaries of the Brookings-Tsinghua Center and the John L. Thornton China Center, also located at Tsinghua University.

But the G20's overall global reach is being called into question, with scholars and world leaders looking to the Hangzhou summit to gauge what the future of the organization will be. The organization thrives in times of crisis, but a lack of urgency has created a lackluster response to the current financial constraints some member countries are experiencing. "We're seeing a slowdown in a number of major economies, and how [the G20] acts this year and next will be very consequential on whether we see a stable economic situation," Jones said.

Setting the agenda 

Indeed, between the collapse of the commodities market, an oil glut and many emerging economies going into recession, the world has no shortage of economic crises. It is within this context that China developed the agenda for the coming summit, said Wang Xiaolong, special envoy on G20 affairs for the Ministry of Foreign Affairs, at the G20 panel.

As host of the presidency, China is responsible for setting the agenda and is largely focusing on four issues: development, trade and investment, reform, and for the first time, innovation. Development is the main focus, though Wang said it has not traditionally been a top priority for the G20. "China wants to serve as a bridge--and it's uniquely qualified to do so--between developing and developed countries," said Jeffrey Bader, a senior fellow at the Thornton center, during the panel discussion.

Growth has stagnated in many developed and emerging economies, and some central bankers are using negative interest rates to push money back into the market. Other countries, such as Germany, have lambasted the debt growth model. "The global recovery continues, but it remains uneven and falls short of our ambition for strong, sustainable and balanced growth," read a communiqué released at the end of a two-day G20 Finance Ministers and Central Bank Governors Meeting in Shanghai in February.

Another major topic at the G20 will be innovation, which is on the agenda for the first time in the organization's history. China is pushing through reforms to try and transform its economy from a manufacturing-based one to one centered on innovation to help drive growth forward as the economy experiences a broader slowdown. "China has to move up the value chain to take advantage of the next wave of GDP growth and become a more innovative economy. This is true of all emerging countries in the G20," Charles Freeman, a nonresident fellow at the Thornton center, said at the Brookings event.

Tensions in the world order 

One goal of the summit is to formulate a coherent and unified response to the economic slowdown and market turbulence. The big question, panelists said, is whether or not the world's two leading economies can work together like they did during the 2015 United Nations climate change conference held in Paris last December.

The United States and China played a leading role in finalizing the Paris Agreement, which would not have come to fruition without the two countries' cooperation, said Qi Ye, Director of the Brookings-Tsinghua Center. The agreement commits signatories to lowering their greenhouse gas emissions and limiting a global temperature increase to 2 degrees Celsius, a hard-won battle for all those concerned about climate change and something that seemed politically impossible just a few years ago.

Yet tensions have risen between the world's two largest economies over the past year in part because of the territorial disputes in the South China Sea and their unwavering, opposing positions. Another factor at play is China's increased share of global economic growth and place in the world order. Media headlines over the past year have even contained references to the Thucydides trap, which occurs when a rising power ignites fear in an established power, ultimately leading to war.

The two countries have locked heads on a number of issues in recent years, including on the United States' decision to not join the Asian Infrastructure Investment Bank (AIIB). The Americans' stance proved to be a source of embarrassment after many of their allies joined the bank, including the United Kingdom and Australia. The United States later reversed its position, with President Barack Obama saying in 2014 that the country isn't opposed to joining.

Scholars largely criticized the United States' original attitude toward the AIIB, saying it fills a need that traditional banking institutions weren't meeting. "The hesitancy came from the fact that the United States traditionally has been the upholder of the norms of multilayer banks. And the keepers of the keys on the subject--the government and the treasury department--had no idea what China's intentions were with the AIIB, and they assumed the worst. I think it was a profoundly foolish posture that they took at the outset," Bader said.

Addressing security issues 

While the G20 summit has historically focused exclusively on economic issues, many scholars on the panel called for security issues to be raised as well, particularly given the large number of calamities the world is facing, including an influx of refugees in Europe, attacks from the so-called "Islamic State" terrorist group, more commonly known as ISIS, and territorial disputes in the South China Sea.

"Outside of the Middle East we have had, and still have, a relatively stable world system. But this order is under threat, and it is eroding," Jones said.

These security threats will likely come up at the Group of 7 (G7) summit in Japan in May. The G7--consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, plus the European Union--also focuses on economic policies. These countries are the International Monetary Fund's seven major advanced economies, but the G20 overtook it in global importance following the 2008 financial crisis.

Jones said it is "illogical" for the G7 to take up security issues, particularly ones in the South China Sea, because the key stakeholders won't be there. "We're left without a forum to deal with some of these intense security issues. These need to be handled in some fashion or they will escalate, and we could get into a situation where security concerns escalate and that could erode economic progress," he said.

Copyedited by Mara Lee Durrell

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