G-20 summit aims at reviving global economy

G-20 summit is scheduled to be held on September 04-05 in Hangzhou, the capital city of Zhejiang province in east China. China took over the G-20 presidency on December 01, 2015. Experts say the group is now busy envisioning a global economic recovery through pro-growth strategies and innovations.
The G-20 nations or the Group of Twenty is the premier forum for its members' global economic cooperation and decision making. It was founded in 1999 and its first summit was held in 2008. The group is an international forum for the governments and central bank governors from 20 major countries and accounts for about 85 per cent of world trade. It is made up of the finance ministers and central bank governors of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America. The EU is represented by the rotating Council presidency and the European Central Bank (UCB).
Past few months were particularly hectic for the group's member countries. According to China's official news agency Xinhua, the group's finance ministers and the governors of their central banks held several meetings in recent months, focusing on concrete economic and financial problems and laying the foundation for a consensus to be reached at summit of the leaders.
The group has already held three meetings of finance ministers and central bank governors and four meetings of senior officials from the finance ministries and central banks to give advice and suggestions promoting global economic growth. The latest meeting of G-20 finance ministers and central bank governors was held on July 23-24 in Chengdu, Sichuan province in Southwest China. In a statement on global economic situation, they said they will "use all policy tools" at their disposal to boost confidence in the global economy and promote growth.
nINNOVATION AND TAX SYSTEM: G-20 has pledged to actively adopt measures to promote investment in infrastructure and expand global demand, laying the foundation for mid- and long-term economic growth. China, as the group's president has put forward a 'fair, inclusive and ordered' new international tax system on G-20 platform. It also restarted the International Financial Architectural Working Group (IFAWG) to promote international economic governance reform to push emerging markets to play bigger role in the global financial system.
Besides, the meetings of finance ministers and central governors have also set up an inclusive framework for the Base Erosion and Profit Shifting Project - to fight tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no tax locations - as well as governance entities for the implementation of the project. In addition, China is also working with fellow members to draw a G-20 blueprint for innovation-driven growth that highlights the concept of inclusive innovation and concrete action plan for building a new industrial revolution and the digital economy which may help shore up people's confidence in global economy.
There is a fundamental difference between the working philosophies of G-7 and the G-20. For example, the G-20 focuses on measures to support global economic growth with strong emphasis on promoting job creation and open trade. It reflects the wider interests of both the industrial and emerging market economies. The G-7, which was set up in 1976 as a forum of the world's seven major industrial countries, Canada, France, Germany, Italy, Japan, the US and the UK; seeks agreement on current economic issues specifically to serve the interests of the member countries only.
According to the World Trade Organisation (WTO), global trade growth has slowed down significantly since 2008, from an average of seven per cent annually between 1990 and 2008 to less than three per cent between 2009 and 2015. The release of WTO's trade-related index, called World Trade Outlook Indicator (WTOI), coincided with the two-day G-20 trade ministers' meeting in Shanghai on July 10. It suggests that trade growth will remain weak during the third quarter of 2016.
Similarly, in its forecast in June this year, the World Bank cut the global economy's projected growth in 2016 from 2.9 per cent to 2.4 per cent while in April, the IMF had cut its growth projection from 3.4 per cent to 3.2 per cent. The Managing Director of the Bologna-based think-tank Nomisma Andrea Goldstein said at the meeting of G-20 experts and economists held in Beijing on 29-30: "Global trade growth rate is currently lower than global gross domestic product (GDP) growth."
In this context, the G-20 group has now promised that to support low-income countries (LICs) it would participate more in global value chains (GVCs) to drive global trade growth. On such global inclusive issues, it becomes difficult even for the most dissenting countries to resist a consensus.
INTERCONNECTED, INCLUSIVE WORLD ECONOMY: The theme of the next month's G-20 summit is: "Towards an innovative, invigorated, interconnected and inclusive world economy." This vividly reflects the G-20's efforts to fully let innovation inspire sustainable economic growth and overcome structural and institutional obstacles.
The final outcome of the G-20 summit next month may produce some positive results because of so much intensified discussions and consultations at the preparation level, which actually help reach a consensus at the top. Meanwhile, the G-20 ministers have stated that the world's major economies have already agreed to cut costs, boost trade and increase policy co-ordination and enhance financing. To recall, the early July Shanghai meeting of G-20 ministers in a statement said: "We agree that we need to do more to achieve our common objective for global growth, stability and prosperity."
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