The world awaits China's G20 solutions

HANGZHOU - As the scenic city of Hangzhou in eastern China gets itself ready for the G20 summit, the host country is poised to come up with solutions for a sluggish global economy.

The leaders' meeting comes as the world pins its hopes on China and other major economies sketching out a road-map to solve the conundrum facing a world economy plagued by weak growth and rising protectionism.

Despite concerns over its economic slowdown, China is undoubtedly a role model for other economies to look up to, and it remains the single largest contributor to world economic growth.

Stephen S. Roach, a senior fellow at Yale University's Jackson Institute of Global Affairs, estimated in late August that China could contribute to nearly 39 percent of the world's economic growth this year.

As a matter of fact, the Chinese economy has also been under heavy downward pressure, largely due to its ongoing shift from reliance on investment and foreign trade toward innovation and consumption.

Chinese policymakers have not resorted to aggressive stimulus that could work in the short term but would create enormous after-effects.

The Chinese solution is to stay calm and cool, and call for an end to unsustainable growth, while pressing ahead with structural reform and encouraging innovation and entrepreneurship.

Painful restructuring is starting to take effect: economic freefall has been avoided and new growth engines such as the high-tech sector and consumption are taking shape.

As most major economies suffer structural problems, structural reform should be a natural recipe for building new paths for growth, and is on the agenda of the G20 summit accordingly.

In Hangzhou, where the online retail giant Alibaba is headquartered and Internet-based businesses are booming, innovation is also likely to be adopted by the leaders as another engine for more robust growth.

For China, innovation is driving forward its ambition for "green development." Just days ago, China announced its plan to establish a green finance mechanism to facilitate the economy's transition to sustainable growth, becoming the first country worldwide to make such a move.

The summit also comes as a weak global economic recovery is fueling the rise of protectionism in trade and investment among European countries, the United States and in some other developed economies.

China has stressed "strong world trade and investment, as well as inclusive and interconnected development," which are crucial to spreading economic benefits widely and shoring up support for free trade.

Since the global financial crisis began in 2008, G20 members have taken a total of nearly 1,600 new trade restriction measures, and only 387 of them have been abolished to date.

In contrary to "lock-up" policy, China sees further opening up as a real solution and has translated the idea into action.

After setting up its first free trade zone in Shanghai in 2013 and following it up with another three in 2014, China announced plans in late August to set up seven new free trade zones.

On foreign investment, Chinese legislators are currently considering amendments to four laws, which, if adopted, will lay a legal foundation for applying a "negative list" mechanism to all foreign investment.

The upcoming Hangzhou summit is expected to create the first multilateral investment framework, an initiative that China and other G20 members put on the agenda.

China has lots of solutions, and with the theme "Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy," the G20 summit looks set to drive the global economic agenda.