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Despite calls for action, G20 yields little more than talk

The Hangzhou summit presented G20 leaders with the chance to
reassure citizens that they are on top of the world’s pressing challenges, but
this was an opportunity they failed to grasp. 

By: /
8 September, 2016
China's President Xi Jinping speaks at a news conference after the closing of G20 Summit in Hangzhou, Zhejiang Province, China, September 5, 2016.REUTERS/Damir Sagolj
Thomas Bernes
By: Thomas Bernes
CIGI Distinguished Fellow

The G20 has just concluded its latest Leaders’ Summit in Hangzhou, China. The final communiqué, which could only have been written by a committee, is almost undecipherable – even to policy wonks. It highlights the problem that the G20 process has become fixated on “plumbing issues” which should be the work of technicians, and leaders have lost track of the overall architecture and political messaging that should be their concern. This will provide little comfort for those concerned that the G20 has lost its way.

Expectations for this Summit had been high, perhaps unreasonably so, as this was the first time China had chaired the G20. This was seen by some as its global economic governance “coming-out” and came on the heels of its recent initiatives to establish the Asian Infrastructure Investment Bank and its One Belt One Road Initiative to promote infrastructure and development in Eurasia.

At the same time, there has been a growing sense that the G20 has been adrift in recent years. While the G20 has been given credit for its response to the 2008 global financial crisis, many observers have argued that the G20 has failed in putting together a meaningful program for non-crisis times, in order to achieve strong, balanced and sustainable world economic growth – the objective that it had set for itself. Could China reverse this situation through its chairmanship?

The meeting also came at a time when globalization is seen as being under assault on many fronts, particularly given the dysfunctional U.S. presidential electoral campaign and the puzzling Brexit vote in the UK – both of which are creating huge uncertainties. Political and expert policy elites are increasingly being characterized as out of touch with the middle class who have seen stagnant or declining living standards in recent years and who are losing hope for a reversal. Liberalized trade has been cast as the villain in this drama. 

As has been the case for the last five years, the IMF again downgraded its growth forecasts just before the meeting. More pointedly, it underscored that G20 member countries were failing to deliver on the growth commitments agreed in Brisbane two years ago, and that the target of two percent additional growth was virtually out of reach – even with urgent action to implement undertakings. Failure to address subdued growth and increased global downside risks would contribute to a further decline in the climate for reform. The IMF called for “more forceful, comprehensive, and well communicated policies” from G20 members.

This, after all, is the raison d’ être of the G20, which has declared itself the premier forum for members’ economic cooperation. Sadly, this clarion call from the IMF was met largely with a reiteration of previous promises to use all available policy tools to achieve growth. Leaders could not even acknowledge that their countries were off-course on delivery of their previous commitments, instead stating that there has been “further progress.” 

Moving on, the G20 undertook “to forge a comprehensive and integrated narrative for strong, sustainable, balanced and inclusive growth.” What on earth does that mean? What do they expect the public to take away from that? It is little more than gobbledygook. It is an axiom that the less substance there is to articulate, the more language communiqués use to mask the fact. The lengthy 7000 words from Hangzhou fail to mask the lack of bold action. Fortunately, perhaps, few are likely to read it through to the end.

Ask yourself, what are leaders going to do differently the day after the Summit? They have been told that, after five years, their G20 announced strategy is not delivering the necessary economic growth. If nothing is to be changed, then what are leaders doing?

Now to be sure, modest progress was registered on a number of issues during the year-long G20 preparatory process. These are mainly in the form of future work programs. The Summit can be a decision-forcing event that moves work forward but there are other means by which to record these decisions. They are undecipherable to the average person.

The U.S. and China announced ratification of the Paris Climate Change Accord which is important, but where were the other G20 countries? 

Leaders got to know each other better and became acquainted with new leaders (UK, Argentina) but surely this alone does not justify the extraordinary cost of these events.

The Chinese presidency had in some cases sought a more ambitious outcome. And the Chinese orchestrated a very well-run event (even if a little heavy on the security side, according to many participants). But this is beside the point. Surely what was needed from leaders, and what the world was waiting to hear, was a clear articulation that they understood the economic challenges confronting the world – even if they didn’t yet have all the answers. And that they had directed work to be undertaken to strengthen the toolkit of policy responses available to address insipid growth, lack of employment opportunities and growing inequality. 

But alas, this was not to be. 

Canadian Prime Minister Justin Trudeau tweeted during the meetings, “I encouraged fellow global leaders to focus on inclusive growth that supports the middle class and those working hard to join it.” He went on to tweet, “The benefits of growth cannot be felt by the wealthiest one percent – they need to be felt by everyone.” Simple language such as this in the communiqué would have relayed the concerns that we were told that leaders genuinely held. 

Instead, as one reporter in attendance tweeted, “Every reporter for most of the #G20: where’s the bloody communiqué? Every reporter at the end of the #G20: wow, this is boring boilerplate.” Yes, committee drafting amongst a group with a variety of mother tongues is not easy but this is not an acceptable excuse. Leaders lost an important opportunity at a critical time. It was even more disheartening to hear, while on the ground, that the communiqué was agreed before leaders started meeting and was left untouched. Did they even read it?

Was this outcome the result of political weakness within the G20 as U.S. President Barack Obama enters his last four months, European leaders face elections and are again absorbed by intra-European affairs, and Brazil, South Africa and Australia face significant leadership issues? Was it that bilateral and geo-political issues dominated broader economic concerns? Or was it that leaders don’t fully grasp the risks facing the liberal global economic system?

Whatever the answer, this Summit has not left the world with greater confidence that the G20 is able to provide the strong leadership needed to surmount the severe challenges we face.

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