The G20 Hangzhou summit, chaired by Chinese President Xi Jinping, ended with broad consensus on stronger global economic governance, a clearer future course for the G20 as well as fresh impetus and new direction for the world.
The Hangzhou Consensus underpins China’s shifting role as it transforms from a player in global affairs to a leader of the global agenda.
The International Monetary Fund (IMF) recently warned of a low growth trap, lamenting that the world economy has not been so weak for so long since the early 1990s.
As developed nations’ prescription to the current ills seems ineffective, China shared its solution with the world.
From its own experience, China said there is no excuse to delay structural reforms. Half-baked or half-hearted measures will not address the root cause of the economic languor.
China’s resolve on structural reform was echoed by G20 members, who called for the combination of monetary easing with fiscal and structural reform, and reform based on the conditions of each individual economy.
The urgency of implementing structural reform has never been acknowledged as clearly in a G20 communique as it was at Hangzhou. Forming a consensus and designing a roadmap for structural reform is a major contribution from China to not only the G20 members but the world at large.
With China assuming a leading role in rejecting protectionism, G20 leaders reaffirmed their commitment to avoiding competitive currency devaluation and pledged to make the global economy open and inclusive.
This commitment is vital. If protectionism is left uncontrolled, a healthy and sustainable recovery will remain out of reach.
The success of the Hangzhou summit can also be measured by advances to reforming the outdated global economic governance model, as participants agreed to push forward quota reform at the IMF and World Bank.
With a record high number of representatives from developing economies invited to the summit, the voices of emerging economies were heard and their opinions translated into action.
While China is taking a more proactive role in global economic governance, it is working within the G20 framework, not creating a new system. China has no intention of challenging the existing system, but rather complementing it.
The G20 lost momentum after it revived global growth in the wake of the financial crisis. The Hangzhou summit will be remembered as defining moment — when the world’s largest developing country helped this crucial platform move forward.
Beyond that, G20 should also be remembered as a meeting with real actions, not empty talk.