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UPDATED: November 22, 2010 NO. 47 NOVEMBER 25, 2010
Emerging Economic Voices
China calls for equal, balanced and sustainable development at the G20 and APEC summits

ASIA-PACIFIC REUNION: Regional leaders pose at the 18th APEC Economic Leaders' Meeting in Yokohama, Japan, on November 13 (LI XUEREN)

A bigger economic output means a larger voice for emerging economies and developing countries on the world stage. This proved true at both the recent G20 Summit and the Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting. The growing influence of developing countries and their emerging economies should make global interactions more multilateral.

Chinese President Hu Jintao, attending the G20 Summit and the APEC Economic Leaders' Meeting from November 11-14, spelled out China's stance on future world economic development and regional cooperation. His remarks represented a common stance by emerging economies and developing countries.

Analysts said developed countries' decreasing economic power marks a power shift toward emerging economies. China, as a big developing country with an emerging economy, should take responsibility and urge other countries to help create a better trade and financial system for sustainable world development.

Shifting power

Participants at this year's G20 Summit reached an important consensus that reflected the international influence of emerging economies and developing countries.

Established in 1999 to, in part, avoid another Asian financial storm, the G20 is made up of members of the Group of Eight (G8), the EU and 11 emerging economies—China, Argentina, Australia, Brazil, India, Indonesia, Mexico, Saudi Arabia, South Africa, the Republic of Korea and Turkey.

Although it was only the fifth G20 Summit, the most recent event in the Republic of Korea was the first held in a country with an emerging economy; this clearly shows the rising importance of emerging economies.

Speaking on the future mission of the G20 at the summit, Hu said the world community should improve the "framework for strong, sustainable and balanced growth," champion open trade and promote coordinated development. In addition, it should reform the financial system while narrowing the development gap.

During the Seoul summit, the leaders agreed to strengthen the role of the G20 in order to deal with new risks and challenges in the international financial sector while jointly boosting the growth of the global economy. They agreed to further promote the reform of international financial institutions, and confirmed the 6-percent shift of the International Monetary Fund (IMF) quota shares to emerging economies.

For the first time, the issue of development was considered a major topic, and the summit endorsed the Multi-year Action Plan on Development over the medium term. The members also pledged continuous efforts to intensify financial regulation and combat trade protectionism.

The declaration showed a common understanding of economic development. It requires developed economies remain alert to the effects of exchange rates and to retain exchange rate flexibility, to avoid the competitive depreciation of currencies and to craft a financial safety network.

The Seoul declaration and related agreements were the result of argument and compromise, said Professor Jin Canrong from Renmin University of China. He said the declaration transcended differences not only between developed and developing economies, but also among developing economies themselves. Currently, emerging economies, like China and Brazil, are worried about economic overheating and want to take measures to contain excess liquidity. However, developed economies like the United States, the EU and Japan prefer further economic stimulus due to their slow economic recoveries.

Prior to the summit, the U.S. Federal Reserve's announcement that it would purchase an additional $600 billion in Treasury bonds over the next seven months drew ire from around the world. During the summit, even Germany—a developed economy—condemned the United States for irresponsibly manipulating its currency and transferring its domestic economic pressure to other countries.

"The G20 Summit showed a compromise, especially on the exchange rate issue," said Jin. G20 members agreed to allow the market to determine exchange rates rather than continuing to force certain currencies to appreciate, which was acceptable to neither developed economies nor emerging economies. Developed economies cannot stop the tendency of emerging economies driving world economic development, so they must agree to transfer some economic power to emerging economies, Jin said.

The Seoul summit marked a shift for the G20 away from emergency response and toward long-term economic governance. The G20 played a significant coordinating role during the international financial crisis, and it will play an even greater role after the crisis. In fact, moving forward, the G20 will play a more important role in world economic development than the G8, said Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Cooperation.

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