A Reform Agenda for China’s G20 Summit

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Chengdu FM July 2016 copy

Coordination and harmonization are keys to collective action in global governance.  The jury remains out as to exactly what China’s hosting can accomplish with respect to either.

ANU’s Adam Triggs recently wrote that there were only three practical things that any G20 Leaders’ summit can accomplish:

… it can share information and best practice policies between countries; it can reform global governance by either reforming existing institutions like the IMF or creating new ones; or it can undertake what Oxford University’s David Vines calls ‘concerted unilateralism’, where countries implement policies (fiscal, monetary or structural) to suit their own economies, but do so collectively.

As a number of us suggested in our V20 Hangzhou gathering at Zhejiang daxue in the spring, Leaders also can, and should extend, their efforts beyond what is described above. Indeed in our collective view there is nothing more critical than having G20 Leaders direct their message to their own publics.  They need to signal their publics as to what is critical in their G20 efforts.  As our Blue Report to the Chinese leadership urged:

Together, G20 leaders can make clear and powerful statements which can signal the path of economic progress to all actors around the world. … Leaders at G20 Summits can strengthen their connection with their publics by devoting more attention to the content and the modes of communications from the summit platform.  … Key ideas could be summarized and Leaders could speak in more direct ways to their publics.  … G20 Leaders understand that globalization requires fair and updated rules that can elicit trust, a sense of fairness, and certainty.

The Chinese host, as previous ones, has worked hard to deliver the technical initiatives – all a vivid part of the “Iceberg” decision making machinery of the  G20.  All one would need do is review the recent communiques from a variety of these transgovernmental meetings.  These include:

G20 Agriculture Ministers Meeting Communiqué, Xi’an, June 3, 2016

G20 Energy Ministerial Meeting Beijing Communiqué Beijing, June 29, 2016

G20 Trade Ministerial Meeting Statement Shanghai, July 10, 2016

G20 Labour and Employment Ministers issue declaration, Beijing, July 13, 2016

G20 Finance Ministers and Central Bank Governors Meeting Chengdu, China, July 24, 2016

In fact as reported by Luo Zhaohui, China’s current ambassador to Canada – in a recent opinion piece – China as host has held, or will hold, 60 events including 23 ministerial-level meetings and the meeting of near summits – T20, Y20, W20 and C20.  But of course review all these gatherings and there communiques – not likely. Who would?  Yes, it is true that some of us ‘summit followers’ might, but it is unlikely that citizens are about to wade through all this technical work, as good as some of it may be. It is likely that leaders won’t either. This all has to be digested and then built into action plans and communiques.  Summitry overload for sure.

And it is a slog.  Reading through this statements you quickly become mired in a vast array of aspirational statements by ministers of one stripe or another.  There are frequent entreaties to act together – but we are pretty sure that isn’t going to happen.  And with a declared objective from President Xi Jinping in taking the Presidency to “strive to build an innovative, invigorated, interconnected and inclusive global economy and explore new ways to drive development and structural reform,injecting impetus into the growth of individual countries and energizing the global economy”, well it is hard not acknowledge that these statements in some manner or another are aimed to achieve the President’s vision including the four key priorities:

  • breaking a new path for growth;
  • more effective and efficient global economic and financial governance;
  • robust international trade and investment; and
  • inclusive and interconnected development

All this is ‘stuff’ is not just a consequence of the China Presidency.  The China leaders, unfortunately, are just following a well worn path created by previous hosts.

Well is there anything in all these declarations and statements that may be worth pointing to with the prospect of significantly moving the global governance yardsticks?  In fact there is.  The commitment below deserves highlighting and has in fact generated huge excitement among my global governance ‘wonk’ friends.  And this would appear to be a collective effort to construct a more efficient structure and process for infrastructure financing through the creation of the Global Infrastructure Connectivity Alliance.

Here is the commitment from the recent Finance Ministers and Central Bankers statement:

To support our common growth objectives and the 2030 Agenda for Sustainable Development, we reaffirm our commitment to promote investment with focus on infrastructure in terms of both quantity and quality. Multilateral Development Banks (MDBs) have a unique role in supporting infrastructure investment. We have had effective communications with MDBs and called on them to take joint actions to support infrastructure investment as well as catalyze private investment. In this regard, we welcome the commitments made in the “Joint Declaration of Aspirations on Actions to Support Infrastructure Investment” by 11 MDBs which includes their announcements of quantitative ambitions for high-quality infrastructure projects within their respective institutional mandates as well as their efforts to maximize the quality of infrastructure projects, strengthen project pipelines, collaborate further among existing and new MDBs, strengthen the enabling environment for infrastructure investment in developing countries, as well as catalyze private resources. We stress the importance of quality infrastructure investment, which aims to ensure economic efficiency in view of life-cycle cost, safety, resilience against natural disaster, job creation, capacity building, and transfer of expertise and know-how, while addressing social and environmental impacts and aligning with economic and development strategies. We welcome the MDB Response to the G20 MDB Balance Sheet Optimization Action Plan and call for further implementation of the Action Plan. Greater inter-connectivity is a defining demand of the 21st century global economy and key to promote sustainable development and shared prosperity. We launch the Global Infrastructure Connectivity Alliance [emphasis added] to enhance the synergy and cooperation among various infrastructure connectivity programs in a holistic way. We ask the World Bank Group (WBG) to serve as the secretariat of the Alliance, working closely with the Global Infrastructure Hub (GIH), OECD, other MDBs, and interested G20 members to support its activities. We endorse the G20/OECD Guidance Note on Diversification of Financial Instruments for Infrastructure and SMEs and we welcome the Annotated Public-Private Partnership (PPP) Risk Allocation Matrices completed by the GIH to help developing countries better assess infrastructure risks. We support the effective implementation of the G20/OECD Principles of Corporate Governance and G20/OECD High-level Principles on SME Financing. In particular, we look forward to the revision of the assessment methodology of the G20/OECD Principles of the Corporate Governance, which will be informed by an FSB peer review on corporate governance.

Quite a mouthful but the creation of this new Alliance is crucial.  There is a strong view from financial officials, past and present, that trillions will be needed for effective global growth but the infrastructure coordination is just unavailable whether it is public and private, or the MDBs or the private lenders or the various financing agencies.

If created this could be a major step to better global infrastructure financing and implementation.  Let’s see what the G20 Leaders have to say.

Image Credit: voanews.com

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