China set to make its mark on the G-20
Like the G-20 summit last year in Brisbane, Australia, the upcoming gathering Nov. 15-16 in Antalya, Turkey will be remembered for keeping the grouping of the world's largest economies alive rather than for any transformative outcomes.
The next summit should be altogether different. With uncertainties growing about global growth and China's economic rebalancing, the stakes will be high. However, China, whose presidency of the G-20 will begin at the conclusion of the Antalya summit, is well positioned to maximize its role and is ready to invest time and political capital to push major issues forward.
Interestingly, China's G-20 leadership will coincide with Japan holding the rotating chairmanship of the G-7 and its hosting of a trilateral summit with China and South Korea, which will offer Tokyo a chance to contribute to the global economic governance agenda too.
With three globally important summits in quick succession -- the G-20 will be followed swiftly by the Asia-Pacific Economic Cooperation forum in Manila and then the East Asia Summit in Kuala Lumpur -- November is a key month for economic summitry. Yet this year's crop is likely to disappoint.
Turkey has had limited time to attend to the G-20 agenda, focusing instead on the Syrian war, its own internal conflicts, domestic elections and massive refugee flows. As a result, Turkey has set out a narrow G-20 summit agenda based on "inclusiveness, implementation, and investment."
The main agreement coming out of the Antalya summit is a likely to be an action plan to tackle tax avoidance by large multinational companies, an item inherited from the 2013 G-20 in Russia. Antalya will provide a useful focal moment for various ongoing G-20 working groups. However, it will not be much of a moment for world leaders to anticipate the future institutional needs of the global order or to nudge major forward issues.
China will embark on a different agenda with its G-20 presidency. In the wake of a roller-coaster summer for its stock markets and currency and at a time of slowing Chinese growth, outsiders will certainly focus on Beijing's own economic management. China just concluded a key Communist Party meeting, unveiling a series of economic, financial, and demographic reforms to address the perceived risk that it may fall into the so-called middle-income trap.
This policymaking process will culminate in the approval of a new five-year plan next March. Although it remains to be seen whether planned reforms go far enough, especially in respect to state-owned enterprises and local government financial risks, the new five-year plan focuses on reduced but higher quality growth, targeted at about 6.5% a year, that would be driven by consumption, services and financial liberalization instead of investment and government spending. It would also put the emphasis on a serious environmental transition toward greener growth and continued infrastructure investment.
After presiding over a study session on global governance in October, and discussing the issue at length during his U.S. visit in late September, President Xi Jinping is signaling a real commitment to global economic institutions. China is clearly ready to invest significant time and effort on the 2016 G-20 summit and in advancing the global agenda on several key fronts.
Xi will likely officially announce China's priorities in the coming weeks. On the basis of his discussions with U.S. President Barack Obama in Washington, it is likely that China's priorities for the G-20 will focus on five areas.
First, China will continue the existing G-20 priority of fostering global growth and developing synergies among the macro-economic actions of key countries. China's own initiatives matter greatly in this regard.
Second, China will seek to move forward the global financial architecture agenda, including regulatory reforms on banking and financial safety net issues designed to govern the global response to future crises. As well, China will continue to prioritize the continued internationalization of the yuan and its inclusion into the basket of currencies included in the Special Drawing Rights reserves maintained by the International Monetary Fund.
Third, China hopes to elevate trade as a key issue in the G-20. The 2016 summit could be the occasion to discuss how to ensure that the current proliferation of trade agreements, including the recently finalized Trans-Pacific Partnership, does not lead to an erosion of the global trading framework. China may also seek to advance the global agenda on common investment rules.
Two further issues could also become signature dimensions of the G-20 in 2016. China has announced that it will devote serious attention to development, including support for the implementation of the U.N. Sustainable Development Goals. Developing monitoring mechanisms and other tools to accelerate their implementation could be a welcome initiative, given that all U.N. members committed to these goals in September.
The G-20 could also advance the global commitment to infrastructure investment made during Australia's G-20 presidency and develop a grand bargain under which G-7 nations would fully welcome the newly created Asian Infrastructure Investment Bank while the AIIB and other new development institutions spearheaded by emerging nations would commit to upholding key global standards on transparency, the environment, and social and labor rights.
China is also likely to pick up the momentum from the U.N. environmental summit due to take place in Paris Nov. 30-Dec. 11 and offer leadership on energy and climate change issues within the G-20.
The U.S., Japan and other developed nations should embrace this opportunity. This could be the year when China fully takes on its promised role as a "responsible stakeholder" in global governance and helps buttress the currently frayed institutions of the global order. Since Obama is now in his last year in government, he may feel released from electoral pressures and able to engage fully with China's commitment.
In these circumstances, 2016 could be a key window of opportunity for fixing global rules and preventing a collapse of the global economy into competing trading blocs. It is also a chance to reduce security tensions through increased cooperation on a shared global economic approach.
Japan finds itself in a strategic position as well. Sometime around May, Japan will hold a trilateral summit with China and South Korea at a time when its relations with these two key neighbors are improving. Japan will also host the G-7 in late May. Tokyo could end up playing a key bridging role in the necessary effort to engage emerging powers more fully with global institutions, while upholding key global standards and international rules.
Yves Tiberghien is director of the Institute of Asian Research at the University of British Columbia, a senior fellow at the Asia-Pacific Foundation of Canada and the editor of the book "Leadership in Global Institution Building: Minerva's Rule."