G20 must step up to the plate

The G20 has become the premier forum for international economic cooperation since 2008. When it was launched it was a shining moment in global economic cooperation.

It was through the G20 that world leaders gathered amid the turmoil that wracked global financial markets; it was through the G20 that the advanced economies acknowledged the indispensable roles emerging markets play in tackling global economic problems and maintaining the credibility of international financial institutions.

Yet this initial spirit of a shared future dissipated quickly, so too have the effectiveness and efficiency of the G20 summits. The results of the recent G20 summits have been disappointing, even though expectations have dropped lower and lower.

Nothing significant has emerged in the communiqués to catch people's attention, let alone forming a global policy agenda. Ironically, the G20 leaders seem unable to agree on much of anything other than the importance of economic growth. In this sense, the G20 is becoming nothing more than an expansive talking shop.

There are several reasons for this. First, the current administration of the United States has brought trade tensions and multidimensional uncertainty to the global society, and it has made the G20 a sideshow since the US put forward bilateral trade tensions challenging multilateralism－it is after all difficult to deal with a global problem without US engagement.

Second, the rotating presidency of the G20 summits has resulted in weak policy agenda consistency. The lack of a permanent secretariat makes almost everything declared not trackable in an official manner.

For instance, the 2014 Brisbane summiteers boasted of putting together a list of some 800 measures that would increase GDP in the years to come, while by 2016, the International Monetary Fund had concluded that the Brisbane goals "seem out of reach".

Third, although the G20 countries account for about 85 percent of global economic output, 75 percent of global exports and two-thirds of the world's population, the G20 is a so-called self-appointed steering committee for the global economy. In other words, voices from outside get neglected, which is a standing challenge for the G20's legitimacy and effectiveness.

However, the current disadvantages do not mean the G20 is not necessary nor worth the efforts. As European Central Bank President Christine Lagarde has said, "during the 10 years since the first G20 Leaders' Summit, the G20's efforts have been crucial in helping the global economy recover". That view is supported by the following points: the G20 Leaders' Summit actually can result in important policy changes.

As the University of Toronto's G20 Research Group shows, a G20 summit generates 194 tangible, measurable commitments on average with an average compliance rate of 71 percent in 23 tracked areas. Moreover, the summits are invaluable opportunities for intensive top-level diplomacy. Subtle changes happen when leaders meet face to face as they signal, charm, bargain, cajole and shame each other.

The summits also offer an opportunity to promote mutual understanding. So many international conflicts are grounded in misperceptions and apathy.

Also, the G20 summits can stimulate public awareness, arouse interest and debate, contributing to an informed global dialogue on common affairs.

Nonetheless, the G20 could work much better to avoid the risk of becoming as irrelevant in global economic cooperation as the G7. After its birth, the G20 tended to attract mostly junior officials until the financial crisis.

That indifference could return. Andrés Manuel López Obrador, Mexico's president, skipped the 2019 Osaka summit for no apparent reason, while other leaders appeared to be more willing to appear somewhere else.

First of all, the G20 should rescue its credibility by refraining from making big promises it cannot keep and making broad, empty statements. Instead, the outlined actions should each be of a size that can be easily implemented. The China-proposed Belt and Road Initiative is a good example. While based on the broad principles of consultation, contribution and shared benefits, the Belt and Road Initiative is extremely practical at the project level, with a special focus on infrastructure.

Second, as to the disadvantage of the interim secretariat, the G20 summits can catalyze international engagement groups to be policy task forces in different areas and this is more governance, less government.

For instance, the International Finance Forum for global policymakers, professors and professionals was announced at the G20 Financial Leadership Summit under the chairmanship of Zhou Xiaochuan this year, to contribute policy recommendations to the 2020 G20 summit on financial issues. Similar groups can include business groups, civil society groups, labor unions, think tanks.

Besides offering professional and practical policy advice, these groups can also be followers of implementation to help generate influencing summit outcomes.

Third, the concluding statements should deliver a clear message on the future objectives. Thus, there would be public attention and supervision on whether the governments are acting in line with their statements.

Finally, although composition is an intractable problem with no correct answer, the G20's legitimacy and efficiency could be strengthened by the host country inviting two or three guest countries together with related international organizations.

Only through multilateralism and international economic cooperation can we reach sustainable and inclusive growth, which is precisely the role of the G20. With appropriate actions, both the legitimacy and effectiveness of the G20 could be improved.

The author is a young research fellow in China Finance 40 Forum and a PhD candidate in Tsinghua University.

The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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