Founded in 1999, the group of 20 commonly known as G-20 is an international forum of the governments and central bank governors from twenty major global economies. The nineteen nations Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union constitute this huge economic bloc. In addition each year, the G20’s guests include Spain, the Chair of ASEAN, two African countries (the chair of the African Union, a representative of the New Partnership for Africa’s Development) and a country (sometimes more than one) invited by the presidency, usually from its own region.
The aims of these important economies are promoting and reviewing high level policy discussions on the issues pertaining to the promotion of international financial stability. This giant bloc is focusing on global economic governance and its themes vary from year to year. However, its goals are beyond the economic and financial issues with largely fair commentaries relating to single organization. Collectively, with the growing stature, the G-20 nations account for around 85% of Gross World Product (GWP) and 80% of the global trade as per various economic analysts.
At this year’s Summit in Antalya, Turkey, Leaders committed to undertaking a number of concrete actions to strengthen the global economy, making global growth more inclusive, enhancing the resilience of the international financial system, mobilizing investment to raise long-term growth, and implementing previous commitments on economic reform and labor markets.
At last year’s G-20 Summit in Brisbane, Australia, the G-20 leaders put forward national growth strategies to lift G-20 output by an additional 2 percent by 2018. Over the past year, commitments representing one-third of that collective growth ambition have been implemented. Leaders are committed to expedite implementation of the remaining commitments, to continue the robust monitoring framework developed this year, and to update growth strategies to take account of ongoing economic developments.
This year, the G-20 took several important steps forward, including the development of two key international standards designed to address “Too Big to Fail” around the world. First, Leaders endorsed the Financial Stability Board’s standard for total loss-absorbing capacity of global systemically important banks so that these banks can be wound down without damaging the broader economy or making taxpayers foot the bill. Second, Leaders also welcomed a first version of a higher loss absorbency standard for global systemically important insurers.
Moreover, 2015 is a landmark year for development, and G-20 Leaders expressed their determination to ensure that their actions contribute to inclusive and sustainable growth. Implementing the 2030 Agenda for Sustainable Development and Addis Ababa Action Agenda: Leaders stated their strong commitment to implementing the 2030 Agenda for Sustainable Development, adopted in September 2015, which sets a comprehensive and ambitious framework for global development efforts for the next 15 years and commits to ensuring that no one is left behind in our efforts to build an inclusive and sustainable future for all.
Most of the members among G-20 nations are also present in various other important economic accords like India, Brazil, China, Russia and South Africa in BRICS and BASIC. These common countries among all significant accords could simultaneously help to resolve multiple economic and foreign issues due to fairly a deep connection with Asian, Latin American and European economies. The formation of new trade accords to overcome escalating financial crisis will help the common member countries to resolve various disputes in different economic and trade accords accordingly. This will drastically enhance the power to negotiate without wasting the years to reach the accord.
The role of Asian countries:
Asia being a gigantic economy and its role in global trade generally plays a more
central role in the financial markets. The world focus on the Asian region in recent years, like many economic corridors formulated, has made it more significant in economic value.
China also wants a discussion around whether some commodities should be priced in the IMF’s reserve currency, known as Special Drawing Right or SDR, according to a European officials involved in the G-20 talks.
The Asian Development Bank (ADB) predicted that large Asian economies such as China and India would play a more important role in global economic governance in the future. The report claimed that the rise of emerging market economies heralded a new world order, in which the G-20 would become the global economic steering committee. The ADB furthermore noted that Asian countries had led the global recovery following the recession in 2000. It predicted that the region would have a greater presence on the global stage, shaping the G-20’s agenda for a balanced and sustainable growth through strengthening intraregional trade and stimulating domestic demand. Over the next year China will assume the G-20 presidency after the September summit to be held in Hangzhou. China plans to lay the cornerstone for a global economy that is turning more innovative and inclusive.
In the last year, Turkey has spearheaded a new accountability framework for efforts to boost growth in the G-20 countries. It has launched a World Small and Medium Enterprise Forum aimed at enhancing the contributions of SMEs to the global economy. And at the recent G-20 summit in Antalya, held just two days after the November 13 terrorist attacks in Paris, a consensus emerged that the fight against the Islamic State is a “major priority.”
Fortunately, China has lately been showing its commitment to becoming a more responsible global stakeholder. Perhaps most notable, it recently led the establishment of the Beijing-based Asian Infrastructure Investment Bank (AIIB), which will serve largely as a vehicle for Chinese foreign investments.
The G-20 under China’s presidency will also need to consider whether to let $250 billion worth of its reserve unit expire, which was issued in 2009 to boost liquidity during the global financial crisis.
Specifically, the AIIB will (among other things) provide funding for China’s ambitious “one belt, one road” policy, which aims to enhance trade linkages throughout Asia, across the Middle East, and into Europe, through massive infrastructure investment. The fact that more than 50 countries signed on as founding members, despite opposition from the United States and Japan, indicates that members’ interest in securing resources in meeting urgent infrastructure trumps geopolitical competition. The same brand of pragmatism was apparent in China’s response to its exclusion from the recently agreed Trans-Pacific Partnership (TPP) trade agreement, spearheaded by the US and including 12 Pacific Rim countries.
“We have seen China grasping every multilateral occasion to enhance its image and leadership role, be it regionally or globally,” said Yun Sun, a senior associate with the East Asia Program at the Stimson Center in Washington. “There is little reason for China not to fully exploit the G-20 chairmanship.”
India is set to be the G-20 Chair in 2018, and New Delhi could host the prestigious annual G-20 summit. The chairs on the coming summits in Asian countries will boost the focus on the financial markets in Asian regions and their growing influence on other regions as well. On the other hand, despite the growing disputes among the Asian members primarily China-Japan disputes on the Zhou’s Yuan Plan to stabilize its financial markets, this will not put the importance of the Asian members in the G-20 summit in the coming years.
However, Japanese Prime Minister Shinzo Abe has told the G20 summit of global leaders that he sees an overall improvement in relations with China, a spokesman said on Sunday, although sticking points remain around the East China and South China Seas. China, the world’s second-largest economy, and Japan, the third-largest, have a difficult political history, with relations stained by the legacy of Japan’s World War II aggression and conflicting claims over a group of East China Sea islets. In a sign of the improvement in Sino-Japanese relations, Abe has met Chinese President Xi Jinping twice since last November.
Amid China’s muscle-flexing in Asia, Japan’s PM Shinzo Abe will embark on a three-day India visit, hoping to seal key defense and trade deals, as well as a civil nuclear pact in the 9th annual Indo-Japanese summit scheduled for December 1113, 2015.
Deals among G-20 members:
The G20 is generally recognized as the premier forum for international economic cooperation, and its 2015 objectives under Turkey’s presidency were announced as “strengthening the global recovery and lifting potential, enhancing resilience and buttressing sustainability.”
“The G-20 must rise to the challenge and lead a coordinated and innovative response to the crisis that recognizes its global nature and economic consequences,” the presidents of the European Council and European Commission wrote in a joint letter. It will be an uphill battle. Several key G-20 states, such as Russia, China and India, have been unaffected by the waves of refugees, and would prefer to focus on economic issues. But the EU will lend a willing ear in Turkey.
Australia will begin negotiations on a free trade agreement with the European Union in 2017 after the conclusion of talks on the sidelines of the G-20 summit in Turkey.
Malcolm Turnbull, the current Australian Prime Minister, met with the EU leadership in order to secure a timeline for the negotiation of the proposed FTA with Europe, and was told it would take time to do the requisite groundwork with EU member states.
The Australian prime minister secured the backing of the German chancellor, Angela Merkel, for Australia to negotiate a free trade agreement with Europe during his one day visit to the chancellery in Berlin.
The aim of the summit is to pave the way for a road map on how to increase the global economy’s flexibility, support, trade and investment, create new job opportunities, help low-income countries, fight all types of global terrorism, and look for a solution to the growing threat of climate change and the refugee crisis.
The steps that have been taken since 2008 have played an important role in eliminating the impact of the global financial crisis and especially in making the global finance system more resilient.
By linking key economic issues to the broader security agenda both domestically and internationally, the G-20 continues to promote coordinated economic and financial policies, and help member states to formulate a more effective foreign and economic policy. It remains to be seen, however, whether China pushes for this wider role.
