G20 sum­mit’s gift will be long-term view

China Daily (Canada) - - LIFE -

back­load of is­sues will be ad­dressed at next month’s G20 Lead­ers’ Sum­mit in­Hangzhou, East China’s Zhe­jiang prov­ince. At a time when the world econ­omy is strug­gling to re­cover from global fi­nan­cial cri­sis, still show­ing a low growth tra­jec­tory and high un­em­ploy­ment, the G20 is striv­ing to turn it­self from im­me­di­ate cri­sis man­age­ment to a mech­a­nism for es­tab­lish­ing long term gov­er­nance strate­gies for bet­ter macroe­co­nomic co­or­di­na­tion and co­op­er­a­tion to pre­vent fu­ture crises.

A more struc­tured pol­icy co­or­di­na­tion frame­work has been in the works since 2014, when the Bris­bane G20 sum­mit set a tar­get of an ad­di­tional 2 per­cent growth by 2018 us­ing “1,000-plus ac­tions”. Ev­ery G20 mem­ber state pre­pared growth strate­gies with a large num­ber of macroe­co­nomic and struc­tural re­form com­mit­ments. The “Bris­bane agenda” was fur­ther de­vel­oped last year when Turkey held the G20 chair — for in­stance, coun­try-spe­cific in­vest­ment strate­gies were adopted to ad­dress short­falls in growth com­mit­ments.

Af­ter as­sum­ing the G20 chair this year, China laid spe­cial em­pha­sis on re­forms to boost medium- to long-term growth po­ten­tial of the world econ­omy. In this con­nec­tion nine pri­or­ity ar­eas of struc­tural re­form have been iden­ti­fied, and the guid­ing prin­ci­ples and a set of in­dex sys­tem for mea­sur­ing the progress and re­sults of the re­forms are un­der­way.

Since the 2008 cri­sis pol­i­cy­mak­ers, es­pe­cially those in ad­vanced economies, have over­re­lied on mon­e­tary poli­cies to stim­u­late eco­nomic ac­tiv­ity, lead­ing to macroe­co­nomic and fi­nan­cial in­sta­bil­ity in de­vel­op­ing coun­tries. The use of fis­cal poli­cies to stim­u­late growth on the ag­gre­gate de­mand side has been con­strained be­cause of high pub­lic debt lev­els in many coun­tries, es­pe­cially in some ad­vanced economies. While both mon­e­tary and fis­cal poli­cies re­main crit­i­cal, the struc­tural re­form agenda will ad­dress the short­com­ings in the cur­rent pol­icy frame­works that are crit­i­cal for boost­ing long-term growth po­ten­tial.

The in­tro­duc­tion of in­no­va­tion to the G20 agenda in or­der to boost po­ten­tial growth is the most sig­nif­i­cant de­vel­op­ment, and it will cer­tainly be a high­point of the Hangzhou G20 sum­mit. Mak­ing in­no­va­tion one of its over­ar­ch­ing four pri­or­i­ties, China also iden­ti­fied “in­no­va­tion-driven de­vel­op­ment” and “across-the-board in­no­va­tion in sci­ence and tech­nol­ogy” as en­gines for growth. This frame­work takes into ac­count the im­pact of tech­nol­ogy on growth com­bined with links be­tween sus­tain­able de­vel­op­ment and in­no­va­tion. In­no­va­tion is also cen­tral to the com­mit­ment to struc­tural re­forms.

Be­sides, China has set up three task­forces this year for in­no­va­tion, dig­i­tal econ­omy and the NewIn­dus­trial Revo­lu­tion. The last and Third Sherpa meet­ing in Xi­a­men, East China’s Fu­jian prov­ince, on June 23-25 this year sig­naled that in­no­va­tion, as part of the new­growth agenda, would be a lead­ing item at theHangzhou sum­mit. And the con­crete out­come of the en­deavor is the G20 blue­print for in­no­va­tion-driven growth, theNewIn­dus­trial Revo­lu­tion ac­tion plans as well as de­vel­op­ment of and co­op­er­a­tion in dig­i­tal econ­omy.

Also global in­vest­ment pol­icy co­op­er­a­tion and co­or­di­na­tion, closely linked to the global dif­fu­sion of in­no­va­tion agenda, emerged as a cen­tral fo­cus of the Chi­nese Pres­i­dency. One out­come of dis­cus­sions this year is the launch­ing of G20 Guid­ing Prin­ci­ples for Global In­vest­ment Pol­i­cy­mak­ing, which is the first frame­work for mul­ti­lat­eral global in­vest­ment rules.

China, as the G20 chair, has made a rather bold state­ment that the reach of the G20 should ex­tend be­yond its mem­bers to in­clude the de­vel­op­ing world, which re­flects its holis­tic ap­proach to de­vel­op­ment. China’s co­op­er­a­tion ini­tia­tive in Africa to sup­port the in­dus­tri­al­iza­tion of the con­ti­nent’s coun­tries is a very im­por­tant move. And its holis­tic ap­proach is aimed at link­ing the in­dus­tri­al­iza­tion process with the de­vel­op­ment of in­fra­struc­ture and trade. On the other hand, China’s 2016 in­fra­struc­ture agenda em­pha­sizes con­nec­tiv­ity en­hanc­ing in­fra­struc­ture— help­ing de­velop an in­ter­con­nected world econ­omy is one of China’s over­ar­ch­ing pri­or­i­ties— which is vi­tal for pro­vid­ing de­vel­op­ing re­gions with re­gional and in­ter­re­gional con­nec­tions and fa­cil­i­tat­ing trade.

More­over, fol­low­ing up on the de­ci­sion in An­talya, Turkey, to align theUnit­edNa­tions and G20 agen­das, China urged G20 mem­ber to pre­pare their na­tional plans for the im­ple­men­ta­tion of the 2030 Agenda. Based on these, the G20 lead­ers will be pre­sented with a col­lec­tive ac­tion plan, which could to be an­other high­point of theHangzhou sum­mit.

The au­thor is a pol­icy an­a­lyst at the Eco­nomic Pol­icy Re­search Foun­da­tion of Turkey (TEPAV), the lead­ing T20 think tank un­der G20 Turk­ish pres­i­dency, and a vis­it­ing re­search fel­low at Chongyang In­sti­tute for Fi­nan­cial Stud­ies, Ren­min Uni­ver­sity of China. ast week, the Aus­tralian govern­ment blocked State Grid Cor­po­ra­tion of China and Che­ung Kong In­fra­struc­ture Group’s bid to lease Aus­grid, a ma­jor NewSouthWales state power grid, on na­tional se­cu­rity grounds. The two Chi­nese com­pa­nies had bid $7.7 bil­lion to lease the grid for 99 years.

Although the Chi­nese com­pa­nies can ap­peal against the move in a week, they are not likely to suc­ceed in leas­ing Aus­grid be­cause the Aus­tralian fed­eral govern­ment can use “na­tional se­cu­rity” again to veto their bid, as it had done to the SGCC bid for Trans­grid in the same state in Novem­ber.

Aus­tralia’s Fed­eral Trea­surer Scot­tMor­ri­son de­clined to de­tail the se­cu­rity is­sues in­volved, say­ing: “The is­sues are real. They’re mat­ters ob­vi­ously of na­tional se­cu­rity in­ter­est to the Com­mon­wealth and elab­o­rat­ing on those ob­vi­ously would not be in the na­tional in­ter­est ei­ther.”

Some se­cu­rity an­a­lysts have even al­leged that a Chi­nese-con­trolled Aus­grid could be shut down be­cause of cy­ber­at­tacks, and their views have been widely re­ported by the Western me­dia.

As the world’s largest elec­tric­ity util­ity com­pany, SGCC has been suc­cess­fully man­ag­ing the power grid in China as well as many other projects around the world, in­clud­ing those in the Aus­tralian Cap­i­tal Ter­ri­tory, Queens­land, South Aus­tralia and Vic­to­ria. And it was the most com­pet­i­tive bid­der for Aus­grid be­cause of its ef­fi­cient man­age­ment and ser­vice ca­pac­ity.

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