The photo taken on August 4 shows that the express way linking airport and Hangzhou city has been revamped for the 2016 G20 Summit set to be held in Hangzhou, capital of east China’s Zhejiang Province (XINHUA)
The annual G20 Summit will take place in Hangzhou in the midst of what is now a relatively long-term lackluster performance of the overall global economy. While the G20 garnered widespread praise in containing the 2008 global financial crisis, it now faces issues related much more to long-term economic governance than to crisis management. The G20 faces questions about both its effectiveness and its ability to address multiple global economic challenges. With this in mind, the Hangzhou Summit comes at a time when China, now the world's largest economy in terms of purchasing power parity (PPP), will likely seek a much more active role in shaping global economic governance.
Announced at the closing of the 2014 G20 Brisbane Summit, the 2016 G20 Hangzhou Summit marks the first time that China will chair what has been described as "the premier forum for international economic cooperation." For those unfamiliar with the G20, it was established in the wake of the Asian financial crisis of the late 1990s primarily as a venue for discussions between finance ministers and central bank governors. Its goals then, as now, were to bring stability to the world's financial markets and to promote economic cooperation. Membership consists of both advanced and emerging economies from all regions of the world.
During the global financial crisis of 2008, the G20 was seen as the most effective forum to lead global efforts to stem the crisis and to mitigate its effects. Since that time, separate summits have allowed G20 leaders to discuss methods to stabilize the global financial system, to coordinate national economic policies in order to steer the world toward recovery, and to ensure that international financial institutions were provided with the right underpinnings and adequate resources.
As an original member of the G20, China's involvement stretches back to the summit's establishment in 1999. In this respect, China has a claim to a stake in the ownership of the G20 process as equal as that of the United States or any other G8 nation, something which is both politically and symbolically important. Given that the G7/8 wrongly refuses to involve China as a member, leadership of the G20 is of historic importance. The G20 provides China with an opportunity to shape global economic governance. The nation's growing economic clout and its experience in handling short- and long-term economic challenges make it an ideal candidate to work well with both developed and developing economies.
The G20 offers an opportunity for China, as chair of this year's summit, to demonstrate its key roles in both global relations and global governance.
As Chinese President Xi Jinping has noted, the G20 Summit shows both the international community's strong confidence in China and China's wish to make a contribution to the international community. But the G20 Summit comes at a time when China is making an uncomfortable transition from an export-led economy to a consumption-driven economy, while still producing gross domestic product data that almost all G20 members would envy.
Given the developments in China's economy, what can we expect from the G20 Summit? China will likely use the G20 as an opportunity to promote its own robust program of economic reforms as well as its foreign policy objectives. China's leadership of the G20 occurs within the first year of its 13th Five-Year Plan (2016-20). While the G20 itself will have no influence over either the content or implementation of the five-year plan, the summit provides a venue for China to use the G20 as a platform to both publicize the plan's authoritativeness and to garner domestic support for it.
The G20 also provides China with an opportunity to use the summit as a venue to leverage support for China's role in international affairs, particularly as a leader in shaping the world's economic and financial policies and rules. President Xi has regularly demonstrated his willingness to have China engage more actively in economic diplomacy. China's G20 leadership can be viewed as a continuation of both the country's economic diplomacy and its peaceful development strategy. Economic leadership is a key component of China's soft power campaign, which seeks to counter the theory that China's rise threatens regional peace and security and to promote instead a benign and positive image of the nation. In this respect, leadership of the G20 Summit fulfills an element of the Chinese dream: soft power as a diplomatic strategy that not only promotes the renewal of the nation, but also enhances China's international appeal and, in turn, its stature in global relations.
Perhaps the four themes created by China for the G20 can provide some context: "Innovative, Invigorated, Interconnected and Inclusive World Economy." These themes spell out China's four priorities for the G20 agenda: seeking new growth models and opportunities from reform and innovation to uncover growth potential; strengthening global economic and financial governance and the representation and voice of developing countries to build up resilience; making trade and investment contribute more to growth and building an open global economy; and, facilitating inclusive and interconnected growth by following through on the 2030 Agenda for Sustainable Development by reducing poverty and pursuing shared prosperity.
As both G20 leader and host, China will likely play a key role at the summit by mediating the interests of the developed and developing members. In particular, China's G20 leadership in Hangzhou will be critical in fostering areas of cooperation and consensus in trade, investment and the coordination of both new and established economic governance management systems.
Choosing Hangzhou as the G20 Summit host city is the perfect way to highlight China's dramatic transformation on the international stage since reform and opening up. In many respects, Hangzhou is the ideal city in China to showcase, because it both represents the nation's traditional cultural values and exemplifies China's current achievements and future plans.
As the capital of the prosperous province of Zhejiang, Hangzhou expresses the nation's economic potential as one of its most promising technology hubs and a pioneer in education. Hangzhou has been a leader in China's move toward a more consumption-based and service-oriented economy. It was Zhejiang's first city to advance into a service economy, with its service sector already accounting for more than half of the city's GDP growth since 2012. It is also an example of the leadership of President Xi, since this was the province that he led as he rose to the position of General Secretary of the Communist Party of China Central Committee and the state presidency.
What China seeks
During the G20, China will focus on several areas for discussion: seeking new growth drivers; increasing the power of emerging economies in global economic governance; increasing global trade and investment; and fostering growth in developing countries. Also, look for a discussion about expanding the role of the G20 in non-traditional security.
China will likely seek changes to the traditional global economic governance model. Specifically, China will propose that the world move away from the exclusivity of monetary management by the Bretton Woods Institutions (BWIs), which, since the end of World War II, have been the primary source of the rules for commercial and financial relations between the United States, Canada, Western Europe, Australia, and Japan. While BWIs such as the World Bank and the International Monetary Fund have set up a system of rules, institutions and procedures to regulate the international monetary system, China will contend that these accords are not enough for a changing and diverse global economy, one in which China has a preeminent role. It will be within this context that China will push for experimenting with new global economic processes such as the BRICS forum and the Asian Infrastructure Investment Bank (AIIB).
China, like the United States, Japan and Europe before it, has an incentive to pursue global economic rules that are more favorable to itself. China also has an interest in retaining those aspects of the international system that have facilitated the prosperity of both itself and other nations. Simply stated, China's global economic governance preferences will shape the future character and distribution of global governance responsibilities, particularly between the G7/8-dominated BWIs and the more diversified group of emerging 21st-century governance actors.
The G20 Hangzhou Summit affords President Xi with a unique opportunity to show that China is willing and able to advance its cooperation with economic partners and develop new standards for global governance. China's interest in reforming global economic governance, particularly by giving greater voice to the developing world, has been a key part of China's foreign policy since the establishment of the G20 in 1999. As China assumes leadership of the G20, that foreign policy objective remains unchanged. Multilateral economic processes like the AIIB, the New Development Bank, and the Silk Road Economic Belt and 21st-Century Maritime Silk Road (Belt and Road) Initiative demonstrate China's interest not only in giving greater voice to the developing world and emerging economies, but also in creating a win-win environment for both the developed and developing worlds. The G20 Hangzhou Summit will enhance China's global standing as it pushes for further reform of the BWIs, pursues newly emerging global economic processes, and carves out a greater role for Chinese-created development bodies.
The author chairs the Department of Political Science at the University of St. Thomas in Houston, United States
Copyedited by Chris Surtees
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