Hopes high for G20 Hangzhou summit to revitalize world trade

BEIJING - The upcoming Group of 20 (G20) summit in China will serve as a vital platform for reversing the trend of trade protectionism and giving new impetus to global trade growth, observers have said.

Under China's presidency, G20 trade ministers have met regularly. In an important first step, the G20 members are also leading a push in global investment rule-making.

Urgency?

The G20 summit, scheduled for Sept 4-5 in the eastern Chinese city of Hangzhou, comes at a time when the growth of global trade is lower than that of the global gross domestic product (GDP), which is "indeed rare," said Zhang Yuyan, director of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences.

Experts are at a loss to explain the slowdown in global trade growth. Some have cited the rise of protectionism at a time of economic challenges, while others referred to a slowdown in the expansion of the global value chain as the globalization process plateaus in recent years.

Protectionism, as it often does at times of sluggish economic growth, is on the rise. The World Trade Organization (WTO) in June this year urged the G20 economies to dismantle anti-trade measures, 1,583 of which have been erected at an all-time-high pace, while just 387 have been removed since 2008.

Deborah Elms, executive director of the Asian Trade Center in Singapore, warned that it's time for the G20 "to move forward with a proactive agenda" about trade, and otherwise, the developing economies would suffer more than the developed ones.

Timeliness

China, as the host of the 11th G20 summit this year, has put international trade and investment on the top of the agenda, WTO Deputy Director-General Yi Xiaozhun said.

"This is particularly important since G20 countries account for about 80 percent of global trade," Yi said.

Eight years after the world financial crisis, the global economy and trade haven't shown clear signs of a revival, and the maneuvering room for countries to further implement fiscal and monetary policies is shrinking. However, in the areas of trade and investment, Yi said, space still exists for cooperation and development.

Robert Kahn, senior fellow for international economics at the Council on Foreign Relations in Washington, D.C., said that "in this very difficult environment when people don't feel like trade is helping them," China could play an important leadership role as chair of the G20 summit to help find good ways to resolve these disagreements on trade.

Effectiveness

Since taking the rotating G20 presidency at the end of last year, China has done "considerable amount of work," Zhang said, citing the initiation of the G20 trade and investment working group and the institutionalization of the G20 trade ministers meeting. These efforts are believed to be a good beginning for the upcoming summit.

At the G20 Trade Ministers Meeting held in China's financial hub Shanghai in early July, the G20 members endorsed the G20 strategy for global trade growth, by pledging to lead by example to lower trade costs, harness trade and investment policy coherence, boost trade in services and enhance trade finance.

"Trade and investment should continue to be important engines of global economic growth and development, generating employment, encouraging innovation and contributing to welfare and inclusive growth," the ministers said in a joint statement.

The strategy, once adopted, will largely boost global trade and investment, Yi said.

The G20 members have promised to produce an agreement on trade facilitation by the end of 2016. The agreement is estimated to increase the global trade volume by 1 trillion U.S. dollars each year, and create 21 million new jobs worldwide, including 8 million in developing countries.

Experts are confident that the G20 Hangzhou summit will deliver a desirable cure for the still anemic global economy. Yi said that if the G20 leaders are committed to discussions to boost trade and investment cooperation in accordance with guidelines set out at the G20 meetings, their efforts will pay off in the long term.