The time has come for greater collaboration and dedicated action from all members if the G20 is to fulfil its promise and remain a relevant force in the world economy, warns China’s Wei Min.

At the Pittsburgh Summit, the G20 was designated as the “premier forum for international economic governance”. Now, four and a half years later, we see that growth coming back, but not exactly the strong, sustainable and balanced kind as expected by far. The global economy still confronts challenges, including but not limited to sluggish demand, volatile financial markets, mounting debt and stubborn unemployment figures. With all these and many other issues on the table, G20 risks shedding relevance – not least because, with the crisis ebbing away, the will to cooperate among members also tapers due to different economic cycles. In this context, the recent G20 Finance Ministers and Central Bank Governors Meeting in Sydney agreed on shifting global focus from austerity to growth and set a first-of-its-kind $2 trillion-growth target for the global economy in the coming five years. As good as it can be, a target is not enough. A plan to get us there is more urgently needed…

Planning Ahead

The world needs more cooperation, not less. Ever since the Federal Reserve first hinted about tapering the QE (quantitative easing), emerging markets have suffered quite a few shocks – from economic slow-down and exchange-rate slump to inflation hikes and financial vulnerabilities. The risks are there for the world economy as well. Economies around the world, developed or emerging, have all the reasons to step up cooperation and policy coordination lest negative macro-policy implications spill over even further. Discussions can cover, among others, specific preventive measures and even joint efforts for a financial firewall if necessary.

The Road from Doha

We return to the old thorny issue of trade liberalisation. While the Doha Round has stalled for years, regional and bilateral free-trade agreements are making fast progress, leading to ever greater fragmentation of the multilateral trade regime. Now that the Bali package deals have broken the Doha Round deadlock, the international community should seize the opportunity to safeguard the authority and integrity of the multilateral trade regime – something which is in the fundamental interest of a sound and healthy development of the world economy. Financially, developed nations need to honour their commitment by completing their domestic approval procedures in order for the 2010 IMF quota and governance reform to take effect as scheduled. It is pivotal – not only in maintaining confidence in the global financial system but for the ongoing credibility of the G20 itself.

Shared Interests, Shared Stakes

As for the G20, it is still the forum for global economic governance it was designated to be. But its role has been spread thin over the years by too many preoccupations. The G20 needs to highlight its focus on issues of shared global interests, and on top of that, improve the efficiency of its decision-making process and global influence.

As a member of the G20, China stands ready to take up its responsibilities and obligations. Our economy is slowing down but we have relatively high and steady growth, and economic reforms going ever deeper. So China still remains the engine for the world economy, ready to work with other G20 members in promoting steady and sound development around the globe.

Wei Min is Associated Research Fellow, Department for World Economy and Development Studies, China Institute of International Studies.

This is an extract from G20: Words into Action Brisbane 2014, to be published by Faircount Media in association with the Australian Institute of International Affairs in October 2014.