G20 con­sen­sus will boost world econ­omy

China Daily (USA) - - VIEWS -

In re­sponse to global eco­nomic growth that had been “too low for too long for too few”, as In­ter­na­tion­alMone­tary FundManag­ing Di­rec­tor Chris­tine La­garde de­scribed, the G20 wrapped up theHangzhou Sum­mit on Sept 5 with a re­sound­ing call to re­vi­tal­ize glob­al­iza­tion.

In away, the “Hangzhou Con­sen­sus”, which is aimed at fa­cil­i­tat­ing global eco­nomic growth in a more com­pre­hen­sive, in­no­va­tive and in­clu­sive man­ner, can serve as a “new­start­ing point” for both China and global gov­er­nance. To make that pos­si­ble, global lead­ers should bear those prin­ci­ples in mind while ad­dress­ing prob­lems at home, and heed les­sons from the pre­vi­ous at­tempts to fix the in­ter­na­tional eco­nomic or­der.

TheWash­ing­ton Con­sen­sus, coined byUS econ­o­mist John Wil­liamson in 1989, pro­claims the so­lu­tion to the prob­lems faced by the less-de­vel­oped economies in Latin Amer­ica and post-ColdWar Eastern Europe is “neo-lib­er­al­ism” which stresses the pri­macy of mar­kets and lim­its the role of the state.

Fea­tur­ing fis­cal dis­ci­pline, cuts in pub­lic sub­si­dies, trade lib­er­al­iza­tion, and “shock ther­apy”, the con­sen­sus, in­stead of solv­ing prob­lems, led to sev­erer po­lar­iza­tion of the rich and poor in the coun­tries that adopted its pre­scrip­tions. Its fail­ure prompted Gold­man Sachs’ Joshua Cooper Ramo to con­sider a “Bei­jing Con­sen­sus” as an al­ter­na­tive path to de­vel­op­ment in 2004. His pro­posal was based on China’s un­prece­dented eco­nomic suc­cess af­ter it launched re­form and open­ing-up in the late 1970s.

The Bei­jing Con­sen­sus, as Ramo ar­gued, con­sisted of a com­mit­ment to in­no­va­tion and con­stant ex­per­i­men­ta­tion, fo­cus on sus­tain­abil­ity and equal­ity, and resolute de­fense of na­tional sovereignty and in­ter­ests. Seen by many as a chal­lenge to theWash­ing­ton Con­sen­sus, the Bei­jing Con­sen­sus, to some ex­tent, out­lined what the Hangzhou Con­sen­sus has of­fered.

In­Hangzhou, lead­ers from the world’s 20 largest economies agreed to en­hance pol­icy co­or­di­na­tion and in­no­va­tion-led growth, and im­prove global eco­nomic gov­er­nance to rein­vig­o­rate cross-bor­der trade and in­vest­ment. The fo­cus on “in­no­va­tion”, a term cited in the G20 com­mu­niqué re­peat­edly, is solid proof that Chi­nese lead­ers have been con­sis­tent in pur­su­ing in­no­va­tion-driven growth.

Be­sides, in­ter­net-based in­no­va­tions are ex­pected to play a ma­jor role in fu­ture eco­nomic re­cov­ery, es­pe­cially when the last round of in­dus­trial and tech­no­log­i­cal revo­lu­tion is los­ing mo­men­tum and newal­ter­na­tives are still in the mak­ing. This is ex­actly what the Hangzhou Con­sen­sus has un­der­lined.

In­clu­sive­ness and openness, too, are needed to help in­no­va­tion live up to its po­ten­tial and use the in­ter­na­tional or­der to the op­ti­mumex­tent. China’s rise to be the world’s sec­ond-largest econ­omy is an apt ex­am­ple of how much dif­fer­ence the re­form and openingup pol­icy has made. So China will keep pro­vid­ing qual­ity pub­lic goods to the in­ter­na­tional com­mu­nity, rather than build­ing trade bar­ri­ers like someWestern politi­cians have pro­posed to do in re­cent days.

On the other hand, the fact that 57 coun­tries have joined the Bei­jing-led Asian In­fra­struc­ture In­vest­ment Bank, and that many of them may be in­ter­ested in the Belt and Road Ini­tia­tive, is fur­ther ev­i­dence of China’s fruit­ful en­dorse­ment of in­clu­sive global gov­er­nance. And the im­ple­men­ta­tion of theHangzhou Con­sen­sus will surely add newim­pe­tus to the world econ­omy.

The author is an as­so­ciate re­searcher at the China In­sti­tute, Fu­dan Univer­sity.

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