G20 coordination crucial to control uncertainties

The fourth G20 Finance Ministers and Central Bank Governors Meeting of the year was held in Washington on Oct 13, in preparation for the upcoming G20 Summit in Bali in November. The meeting discussed the global economic situation, international financial framework, sustainable finance and other topics.

As the world faces multiple headwinds from the COVID-19 pandemic, the Ukraine-Russia conflict, global inflation and other crises, the meeting's policy proposals are of great significance to the global economy. Compared with the G7, whose economic scale has been withering, the G20 members account for over 85 percent of the global economy and the G20 platform has a key role to play in global economic and financial governance.

In the current situation, it is necessary for the major economies of the world to strengthen their coordination and render joint efforts to control inflation and prevent possible debt or financial risks.

China emphasized the necessity of the G20 giving full play to its collective strength by promoting sustainable development, boosting investment in infrastructure construction and strengthening connectivity.

In addition, China suggested that development financing should be extensively mobilized and the causes of debt vulnerability should be analyzed objectively. Multilateral creditors such as the World Bank and commercial creditors should also deal with their debts in accordance with the principle of "joint action and equitable burden". At the same time, China proposed to build a fair and sustainable modern international tax system, take into full account the national conditions and concerns of all countries, and advance the work related to challenges of taxation on economic digitalization.

Apart from the Federal Reserve's interest rate rise that has dealt a major blow to the international monetary system, there are also other risks such as the Russia-Ukraine conflict which has disrupted the global food and energy supply and industry chains, along with the impact of the COVID-19 pandemic that has dragged many economies into recession. Especially for some developing countries, how to both minimize the effects of the pandemic and keep the economy going is a huge challenge that must be met.

Therefore the debt and financial risks must be taken into full consideration. That's what the just-concluded meeting was aimed at. By strengthening macro-policy coordination, the G20 countries can stabilize inflation expectations, control the debt and financial risks, and maintain the stability of the global financial system.