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China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
G20 leaders will meet in China thisweekend in a climate of economic uncertainty and sluggish global growth –- butthe absence of an urgent crisis means the forum will be short on breakthroughs,analysts say.
Eight years after the first G20 summitin Washington, when countries coordinated a response to the financial meltdown,Beijing has set a modest agenda for the Hangzhou gathering -- focusing onmaking the world economy “innovative, invigorated, interconnected, andinclusive”.
But as countries’ economic needs diverge-- the US is mulling a rate hike, Japan is toying with fresh easing, Germany issceptical of fiscal stimulus, Chinese overcapacity remains huge, and Britainhas voted to quit the EU –- the prospects for major unified action are dim.
"At the moment there's simply not alot of common overlapping interests between the major economies,"Christopher Balding, professor of economics at Peking University HSBC BusinessSchool, told AFP.
The G20 is made up of the world'sleading industrialised and emerging economies, which together account for 85percent of the world's gross domestic product and two-thirds of its population.
But its failure to deliver on pastpledges has raised questions about the credibility of future promises.
Compliance with vows made in 2015 hasfallen to a low of 63 percent, according to analysis by the University ofToronto.
"Ongoing economic malaise has beenaccompanied by the unwillingness of G20 members to sustain their commitment tothe structural reforms needed to meet the growth pledge," said TristramSainsbury and Hannah Wurf of the G20 Studies Centre at Australia's LowyInstitute in a report.
Despite repeated promises to achieve theG20’s mission of strong, sustainable, balanced growth, members are "notachieving any of those three terms", Sainsbury told AFP.
Every year since 2011 the IMF hasrevised downwards its economic forecasts made at the beginning of the year ashopes for recovery have disappointed.
This summer it again cut its forecastfor global growth in 2016 to 3.1 percent.
It is a far cry from the sunny pledgesof the Brisbane Action Plan two years ago, when G20 leaders set a goal oflifting collective GDP an extra 2.1 percent beyond baseline IMF predictions by2018.
Leaders said at the time that doing sowould add $2 trillion and millions of jobs to the world economy.
“The best way to think of the forum is adinner party that happens to include leaders of 85 percent of the world economyaround the table making pledges,” said Sainsbury.
“People can go and make statements, butthen they go home, and there’s no guaranteed way of enforcing a commitment.”
But there is no doubt the G20 wasuseful, he added, as it provides a platform for leaders to coordinate financialpolicies, bolster market confidence, and reach agreements on matters such astax havens.
"What we often say is, if the G20didn't exist, someone would have to invent it."
Beijing’s G20 presidency this year hasseen some areas of agreement, with a finance ministers' meeting in Februaryhelping bring a measure of stability to volatile markets that were hit byconcerns about China’s growth and the depreciation of its yuan currency.
While global growth remainsunderwhelming, experts say Beijing will probably seek longer-term agreements onlower-key matters at the G20 that support its domestic goals.
Among them are financing eco-friendlyprojects and pressing its campaign for wider use of the International MonetaryFund's Special Drawing Rights (SDR) basket, which includes the yuan.
There could also be a push for morecoordinated fiscal stimulus and infrastructure spending, analysts withHSBC said in a note, as Beijing hopes to win support for President XiJinping’s signature One Belt One Road policy of expanding trade and buildingports and highways in foreign countries, often using Chinese constructionfirms.
But one area where agreement could bedifficult is trade.
Since 2008 the grouping has promised tohalt and roll back protectionist measures, but a WTO study found that earlierthis year G20 members were adding more than 20 restrictive policies per month.
“Around the world you see an obviousglobal movement towards introspection, a country-first mentality, call itxenophobia if you will," said Andrew Polk, China economist for MedleyGlobal Advisors. "It makes it harder for these international forums,especially on trade."
