G7 political plot vs G20 economic management

By Zhang Jingwei
0 Comment(s)Print E-mail China.org.cn, June 7, 2016
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The Group of Seven (G7) wrapped up their latest summit accompanied with protest echoing from the Japanese public. As the presiding country, Japan dominated the meeting, and included the East China Sea and South China Sea issues in the communiqué.

The G7 advanced economies have now become an ideological group, which abandoned its original target of discussing global economic management. Thus, the G7's guiding role of global economic management should be replaced by the Group of Twenty (G20).

Three months later, the 2016 G20 Summit will be held in east China's Hangzhou, and vows to focus on a range of practical problems in the global economy. The upcoming summit will be under the theme of "Building an innovative, invigorated, interconnected and inclusive world economy." Here, these four words not only precisely identify the "new mediocre" position of the world economy, but also present the answer of how to solve it.

However, identifying problems and finding the solutions doesn't mean the existing problems in the world economy can be solved immediately. Globalization involves various interests and complex politics. As developed countries and emerging economies feature different marketing environments, legal foundations and economic management systems, the suggestions and ideas initiated by the G20 can only periodically promote the market.

From "inclusiveness, implementation and investment for growth" in 2015 to "Building an innovative, invigorated, interconnected and inclusive world economy" this year, we can see that the G20's goal to manage world economy has never changed.

As U.S. economy begins to recover, the G20 seems to have lost its value. But compared with the G7's controversial political issues, the G20 has never changed its focus on the global economy. For G20 members, the most depressing question is why the economic crisis originating on Wall Street is lasting such a long time, and why the G20 couldn't lift the global economy out of it.

As a complicated process, global economic management calls for open and inclusive mechanisms to coordinate conflicts. If there was no G20, the world economy would have fallen into a state of higher disorder. From the G7 to the G20, the world has witnessed an adjustment of global economic order. Before the crisis, the global economy was dominated by Western countries; now, it is guided by both developed countries and emerging economies.

A sluggish economy brought about by a crisis is troublesome, but the adjustment of global economic order will bring benefits. In future, global economic management will be more balanced, and the global economic order will become more equitable.

The International Monetary Fund (IMF) has distributed more voting rights for China, Indian and other emerging economies. The Asian Infrastructure Investment Bank (AIIB) has become a global financial management institution like the World Bank Group (WBG). All of these are the fruits of the crisis. Whether or not it is formally admitted, the G7's function of managing the global economy is being replaced by the G20.

In order to justify its existence, the G7 has to expand its topics from economic to political. However, it's interesting that the G7's existence relies on issues related to China, including the East China Sea and South China Sea issues, as well as the influence of overcapacity in the Chinese economy.

Different from Japan, as the presiding country of this year's G20 Summit, China won't introduce or worry about political issues. The upcoming G20 Summit will focus on the global economy, and try to find practical solutions in dealing with the current recession.

Zhang Jingwei is a researcher with the Charhar Institute.

The article was written in Chinese and translated by Lin Liyao.

Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn.

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