As host of the G20 summit in Hangzhou China showed unprecedented initiative in shaping global economic governance - and to ensure that the results reflect China’s domestic economic priorities.
After the G20 summit concluded in Hangzhou, commentators in China’s party-led media presented proud accounts of how first-time host China successfully steered the meeting on global economic governance. The international gathering benefited from “Chinese wisdom”, according to accounts in party-state media.
The term “Chinese wisdom” seems to convey the image of China as a gentle and skillful moderator of the global conversation. Some outside observers may find this ironic in light of China’s authoritarian structures (which were on display in the restrictive handling of the meeting in Hangzhou) and its divisive actions in the international arena. Positioning itself as a champion of global investment openness and anti-protectionism also stands in stark contrast to realities in the Chinese market place.
China’s footprint in the G20 statement
Yet China certainly has used the G20 meeting in Hangzhou to establish itself as a power with the clout and skills to shape the global agenda. The summit's themes – promoting global growth and bolstering the stability of the global financial architecture – were not new, and the usual compromises dominated the text of the summit declaration. China demonstrated its will to influence global governance by setting its own accents:
First, while the G20 document welcomed “all policy tools” to encourage growth, the focus moved away from expansive monetary policy, infrastructure investment and the protection of old industries as primary remedies for the world economy. Rather, the statement highlighted the relevance of “innovation” and “structural reforms” for unleashing long-term growth potential. The Chinese leadership saw to it that these statements of intent were bolstered by concrete “action plans” in the areas of innovation, industrial revolution and digitization – leaving a blueprint for next year’s German G20 presidency against which to measure results.
Second, China put itself at the front of global efforts to combat climate change. The joint announcement with the US of the ratification of the Paris Agreement ahead of the summit was a smart PR move – but also a good opportunity to remind the world that China, once a very reluctant follower, is now taking its emission reduction commitments more seriously and is making progress on this front despite its obviously gigantic challenges at home. It remains to be seen whether China’s G20 initiative to promote green financing will be successful, but supporting international efforts to this aim is certainly laudable.
Third, China used the meeting to position itself as a champion of developing countries. Not only did the Chinese leadership invite representatives of other African, Asian and Latin American nations to the summit, but it also made sure that the Sustainable Development Goals, which the United Nations had issued in 2015, found their way into the summit declaration. China also pushed for closing the financing gap of global infrastructure projects through the G20.
Global economy depends on China’s reform priorities
What all of these initiatives have in common is that they connect China’s own domestic reform plans and national economic interests with the global agenda.
No other country needs the new growth drivers more than China whose current economic model – imbalanced and inequitable – has clearly reached its limits.
No other country is feeling the impact of pollution as urgently as China, which ordered factories all the way to Shanghai to contain the smog ahead of the G20 summit. And no other country benefits more from global infrastructure financing initiatives than China, which is a leading investor in the developing world and wants to enhance this status through its “Silkroad Initiative”.
Perhaps this is where the “Chinese wisdom” lay in this G20 summit: China as the host was able to convince its guests that its own priorities are that of the entire world. Since the world economy depends in a large part on the willingness of China’s leadership to implement ambitious structural reforms, this is not even far from the truth.