Even before the final communique is drafted for the annual G20 summit the leaders of the world’s largest economies already seemed to agree on their most pressing priority: to find a way to sell the benefits of globalization to an increasingly skeptical public.
As host of this year’s G20 meetings, President Xi Jinping is eager to maintain a united front at the two-day summit (Sept. 4 and 5) being held in a circular conference hall in this lakeside city of Hangzhou, news outlets reported.
Xi, whose country has arguably benefited more than any other from globalization, struck a cautious note on inclusive and sustainable growth in his speech to business leaders. He said, “We will make the pie bigger and make sure people get a fairer share of it.”
He also recognized global inequity, noting that the global gini coefficient—the standard measure of inequality—had raced past what he called its “alarm level” of 0.6 and now stood at 0.7. “We need to build a more inclusive world economy,” Xi said.
Globalization is increasingly seen as a zero-sum game, with figures such as US Republican presidential nominee Donald Trump arguing that China’s rise has come at the expense of US manufacturing heartlands.
At the G20, French President Francois Hollande pitched himself as the leader to address globalization’s shortcomings, saying in a Facebook post: “Our country refuses a globalization without rules, where social models are pit against each other and dragged downward, where inequalities grow.”
Meanwhile, US President Barack Obama, along with some leaders, also took aim at Beijing. “You can’t just export problems,” he warned China. “You’ve got to have fair trade and not just free trade.”
More needs to be done to grow wages and shrink inequality in the global economy, Obama said.
Need for Coordinated Efforts
The global economy is expected to grow at just 3.1% this year, according to the International Monetary Fund’s current forecasts, as trade and investment flag.
IMF's Managing Director Christine Lagarde said on Monday, "A first priority is a coordinated effort to raise growth. The G20 agreed that this will require making full use of all policy levers—monetary, fiscal, and structural—individually and collectively. The G20 also agreed to identify and prioritize reforms that provide the biggest growth impulse for each country, which is an area where the IMF is actively engaged. Pushing back against protectionism and pushing forward with free and fair trade is a vital component of this growth agenda.
"A second priority is a commitment that growth must be more widely shared. We need increased growth, but it must be better balanced, more sustainable, and inclusive so as to benefit all people."
Steel Overcapacity
G20 leaders recognize that excess capacity in steel and other industries is a global issue that requires a collective response, according to a White House press release published at the end of the G20 summit.
China agreed to cooperate more closely with its trading partners on its politically volatile steel exports.
In a joint statement, Xi Jinping, Barack Obama and the leaders of Britain, Japan, Russia and other Group of 20 nations pledged to boost sluggish global growth by promoting innovation.
There was no mention of a global stimulus or other joint action, which officials said earlier was unworkable because economic conditions vary widely from country to country.
In an effort to shore up public support for trade, the leaders promised "inclusive growth" to spread the benefits to people who have been left behind by wrenching change. That reflects a recognition that economic strains are fueling political tensions and a growing clamor to raise barriers against foreign competition.
The statement expressed "opposition to protectionism on trade and investment in all its forms."
The governments pledged to avoid devaluing their currencies to boost exports. They called for cooperation to reduce tax avoidance. They appealed for stepped up aid for surging global numbers of refugees and their host countries.
