China has a great opportunity to help pave the road towards a robust Group of 20 (G20) agenda that could generate more concrete outcomes as the country is preparing to host the G20 summit next year, U.S. experts have said.[Special coverage]
As a premier forum for global economic and financial issues, the G20 was very effective in responding to the global financial crisis in 2008 and 2009, but it has become very difficult for the G20 to generate big outcomes since the crisis abated in 2010, said Matthew Goodman, who is a senior adviser for Asian economics and holds the William E. Simon Chair in Political Economy at the U.S. think tank Center for Strategic and International Studies (CSIS).
"I think the biggest topic on the agenda would be how we generate more growth, but frankly, I don't have very high expectations of major accomplishments to improve growth," Goodman told Xinhua in a recent interview, referring to the upcoming G20 summit in Turkey's southwestern seaside city of Antalya scheduled on Sunday and Monday.
The 10th G20 summit comes at a time when the International Monetary Fund (IMF) warned that the global economy faced risks of persistently sub-par growth, calling on the G20 members to take structural reforms and effective demand-side measures to promote further growth.
At the G20 summit last year in Brisbane, Australia, G20 leaders agreed to put policies in place that would raise their collective GDP by an additional 2 percent by 2018. "The current forecast is they are 2 percentage points below what was then forecast. So they have to make 4 percent," said Edwin Truman, a senior fellow at the Peterson Institute for International Economics.
"The problem is that growth is slow in the advanced countries as well as emerging markets and developing countries ... there's not much consensus about how to go about cracking this nut," Truman told Xinhua.
Goodman, who served as White House coordinator for the Asia-Pacific Economic Cooperation (APEC) and the East Asia Summit forums during U.S. President Barack Obama's first term, said that G20 leaders should move away from "big action plans" and focus on very specific things and what he called "bricks in the road" that would lead towards the G20's ultimate destination of strong, sustainable and balanced growth.
As a founding member of the G20 and the host country of the G20 summit in 2016, China could adopt this realistic approach to advance the G20 agenda by tangible work in the areas of infrastructure investment, trade and financial regulatory reform, he said.
Infrastructure investment has been on the G20 agenda for several years, but there are a lot of underlying problems for practical investment, including land rights acquisition, regulation, standards of lending, environmental and social standards, and procurement practices, Goodman said, suggesting that China could help upgrade the Global Infrastructure Hub, established at the G20 summit last year in Brisbane, to a more institutionalized forum to study and agree on new approaches in infrastructure investment.
"China has a lot of capital and a lot of experience with infrastructure investment, and China has interests in good standards in addressing some underlying frictions or obstacles to infrastructure investment," he said, noting that the China-proposed Asian Infrastructure Investment Bank (AIIB) could be another tool to help support the G20 infrastructure agenda.
With authorized capital of 100 billion U.S. dollars, the AIIB will promote the sustainable development of the Asian economy and invest in sectors including energy, transportation, urban construction and logistics as well as education and healthcare.
This initiative is "very constructive" in terms of promoting cooperation within Asia, said Truman. "There are fewer multilateral organizations that are oriented towards Asia than there are in other parts of the world. So Asia is somewhat underrepresented by this."
In terms of trade, Goodman said G20 leaders have agreed not to impose new protectionist measures and to support the multilateral trade agenda.
As China has strong interests in a good multilateral trade regime, Goodman believed that could help push forward some sectoral negotiations under the World Trade Organization, such as expanding the Information Technology Agreement and environmental goods agreement.
"If China moves ahead on several of the other multilateral trade agreements that are under negotiation, that would be good," Truman said, echoing Goodman's view. He added that China could embrace trade as a major focus of the G20 agenda next year.
In terms of financial regulatory reform, Goodman said the G20 has done a lot of good work in strengthening bank capital base and making sure no bank is "too big to fail," but that conversation has mostly been between U.S. and European regulators.
"I think there may be an opportunity, especially for China when it hosts the G20, to not give up the work on bank regulation, continue that good work, but shift the focus a little bit to capital market issues, which would be supportive of objectives of China and other emerging markets," he said.
"We try to find an agenda that's more relevant to Asian economies. One of those things might be to encourage deeper and more liquid capital markets. This is a priority for China and its own domestic economy," he added.
"I think it's very helpful that China is taking the host role in 2016 and has an opportunity to advance the G20 agenda, especially on growth, financial stability and governance reforms of international financial institutions," Goodman said, noting that China has been a very good host of international organizations like the Olympics and APEC.
"China is still emerging, but it's an economically important and powerful country. I think it has a role to help bring the whole group together to advance common objectives," Goodman said.
White House officials also have high expectations for China's upcoming G20 host role.
"We have the exciting prospect of a G20 hosted by China. The Chinese have been thinking a lot about how best to accomplish the work," White House Deputy National Security Adviser Caroline Atkinson said at an event held at the Peterson Institute for International Economics earlier this month.
Atkinson said he had no doubt that Chinese officials would develop a robust and ambitious agenda.
