By Chen Chenchen Source: China Daily Published: 2017-7-7
The 2017 G20 summit has been getting underway in Hamburg, Germany. During China`s 2016 presidency, the G20 summit was held in the coastal city of Hangzhou. The two locations are highly symbolic. Both are pivotal ports. The two countries are perceived as the most vigorous economies in the developed and the developing world. And what links them now is the Belt and Road Initiative, aiming for regional and global interconnectivity of development strategies, infrastructure, trade, finance and talent.
Given this background, the China element is again eye-catching in the G20 Hamburg summit. The 2017 summit is themed at "shaping an interconnected world", which is in line with the 2016 emphasis of boosting interconnected development and tolerant growth. Nonetheless, within less than a year, new uncertainties, twists and turns have popped up in global governance geometry that dilute the vigor of the G20 mechanism itself. The role of emerging economies, especially China, is indispensable for the G20`s upgrading.
First, the stimulus for open and innovative economic growth lies in emerging markets, with China as a typical example. At the moment, the G20 faces the dual task of combating global economic risks and looking for new driving forces for growth. But one symptom of global economic fatigue is the prominent slowdown of economic innovation capability and investment in innovation, which is especially evident in the West. The only way out of the long-term economic stagnation evident since 2009 is to boost the real economy and to allow the innovation-driven economies in emerging markets to fully release effective demand and vigor.
In this sense, the 2016 Hangzhou G20 summit was a brainstorming opportunity to shape policy consensus over innovation-driven growth. This should be emphasized more in the Hamburg summit, as issues like immigration, climate change, anti-terrorism and public health now seem to dominate Germany`s attention. In-depth participation of developing countries and small and medium-sized enterprises in the global value chain would help improve the global industrial structure. And China, which has the world`s largest efficient market, most comprehensive industrial systems and great efficiency in resource mobilization, would help lead global innovation.
Second, China and other emerging markets serve as powerful forces to push global economic governance in a fairer and more sustainable direction. Since the 2008 financial crisis, the global economy has remained in profound adjustment. Equal participation and collective decision-making by developed and developing countries under the G20 framework continues to be the momentum for global governance.
China, as the largest developing country on the G20 platform, has been serving as a stable economic engine in the past nine years. But in the era of the global value chain, the redistribution of global economic resources can only be realized through development interconnectivity among various countries. Developed economies should make efforts to avoid negative spillover effects, whereas developing ones should give full play to their comparative advantages.
It is worth noting that the essence of China`s Belt and Road Initiative is to rebalance economic globalization through binding the interests of various countries, constructing grand international logistic routes, and promoting trade and industrial transformation. The initiative has already shown practical effect in attracting and gathering developing countries.
Last but not least, efficient implementation of reform measures in emerging countries, especially China, provides illumination for the G20 mechanism itself.
In the past few years, it has become an evident challenge that the G20 mechanism lacks binding force and enforcement capability. Many issues brought forward hardly go to implementation and could be instantly ignored. There is still no global economic coordination system under the G20 to practice codes of conduct and assess policy effects. Agenda-setting is frequently dominated by the developed world, and political support from the G20 platform is still urgently needed to guarantee that emerging markets and developing countries are fully represented and have their say.
In this process, the overall rising power of developing countries, including China, is key to changing "Western governance" into joint governance by the West and the East. Efforts like the formation of the Asian Infrastructure Investment Bank, the Silk Road Fund and the BRICS New Development Bank serve as beneficial compensation for the existing global financial system. These efforts, as innovative moves in economic and financial governance mechanisms, provide illumination for the G20.
In the past year, more uncertainties have been added into the "three Ds" era we are facing - "deregulation, depopulation and deglobalization." It is increasingly difficult to find intrinsic driving forces for economic growth. Nonetheless, these uncertainties in turn highlight the role of emerging markets on the G20 platform. With broader markets, richer labor forces and greater development potential, emerging economies, with China as a typical example, are key to integrating G20 resources and boosting G20 upgrading.
The author is deputy director and research fellow at Department of Macroeconomics of Chongyang Institute for Financial Studies, Renmin University of China.