China’s G20 Challenge

Overview

China's leadership of the Group of Twenty (G20) in 2016 comes at a moment when the role of the G20 itself is being challenged by disappointingly slow global growth and a trend toward regionalism, epitomized by trade deals such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), as well as China's own One Belt, One Road initiative. At the same time, issues such as climate change and growing inequality are creating a rift between industrial and developing nations (and between the rich and the poor within countries) that has hampered progress on global solutions. 

On April 6, 2016, the Maurice R. Greenberg Center for Geoeconomic Studies and the Asia Global Institute convened a workshop in Hong Kong with more than twenty scholars and market participants to assess the agenda facing the G20, why the group had fallen short of expectations in recent years, and whether China's leadership in 2016 provides an opportunity for renewal. Participants included experts from academia, industry, international organizations, and think tanks, and brought backgrounds in economics, international relations, technology, and law to the discussion. The workshop addressed questions about China's ability to reinvigorate the G20, in light of its struggle to deal with slowing growth, and manage a complex structural transformation. Participants also addressed whether the G20 is even the appropriate forum to reach consensus on the critical growth and reform challenges facing the global economy. The report, which you can download here, summarizes the discussion's highlights. The report reflects the views of workshop participants alone; CFR takes no position on policy issues.

Framing Questions for the Workshop

Prospects for the Global Economy

What is the outlook for growth in the short term and what are the central risks facing policymakers? Are G20 countries using the available policy space to support sustainable growth? Are emerging markets at risk from renewed capital outflows? How concerned should we be with continued high levels of debt and leverage in the private sector? What is the outlook for global commodity prices, and what are the risks for the major exporters if prices remain low? What does recent financial market turmoil tell us about the nature of macroeconomic cooperation and the adequacy of policy coordination?

Strengthening Global Trade and Development

How can the institutions tasked with managing the global economy work more effectively together? Since 2007, global trade has increased more slowly than economic growth. What forces are at play and what should policymakers do to address these trends? With the failure of the Doha round, what more should be done to harmonize regional trade initiatives to strengthen global movement toward more open markets? Is there scope for new multilateral initiatives in trade? Are improvements needed to the rules governing global investment? What is the appropriate development agenda for the G20, and how it can best meet the growth aspirations of emerging markets?

Addressing Global Financial Turbulence

How should international financial institutions (IFIs) respond to the demands of rising economic powers for a greater say in the management of the global economy? After International Monetary Fund quota reform, what more needs to be done? As global capital markets continue to expand rapidly, do IFIs have the resources in place to address future financial crises? Are central banks sufficiently coordinating? What are the next steps in financial regulatory reform and cooperation?

Investing in Infrastructure

How can the G20 promote needed infrastructure investment? How can the new, and old, development banks promote additional private investment in infrastructure? How can China's objectives for boosting infrastructure investment be supported and integrated into a G20 agenda? How should the Asian Infrastructure Investment Bank coordinate with other development institutions? 

Setting China's Priorities for the G20 in 2016

Is the G20 still relevant? How effective has the G20 been in recent years? Has the agenda become too broad? What are the immediate priorities for strengthening the G20 process? Has the participation of emerging economies made a difference? The policy agenda for 2016 includes growth and income distribution, financial regulatory reform, financial safety nets, investment, trade, and development. What's new?                                    

Charts From This Report