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Fixing eurozone crisis not G20's job

Source:Global Times Published: 2012-6-17 19:15:02

 

Chen Youjun, an associate research fellow on international political economics with the Shanghai Institutes for International Studies
Chen Youjun, an associate research fellow on international political economics with the Shanghai Institutes for International Studies
 
Yves Tiberghien, an associate professor of Political Science and faculty associate of the Center for Chinese Research with the University of British Columbia
Yves Tiberghien, an associate professor of Political Science and faculty associate of the Center for Chinese Research with the University of British Columbia 
 

Editor's Note:

The G20 summit will convene in Los Cabos, Mexico today. The summit arrives against the backdrop of the sprawling EU debt crisis. The debt crisis and international financial reform are set to be major topics at the summit. What challenges does the G20 face in seeking solutions to the issues? What role can China play? Global Times reporter Wang Zhaokun (GT) talked to Chen Youjun (Chen), an associate research fellow on international political economics with the Shanghai Institutes for International Studies, and Yves Tiberghien (Tiberghien), an associate professor of Political Science and faculty associate of the Center for Chinese Research with the University of British Columbia, on these issues.

GT: How do you see the G20 summit's role in dealing with the ongoing eurozone crisis?

Chen: The G20 was first created in 1999 as a forum of finance ministers and central bank governors, and was later expanded into a summit to cope with global economic and financial issues. So its role is important for the world's economic recovery, and this is a chance to show leadership.

It also needs to be stressed that the Mexico G20 summit was already planned last year and originally was not aimed at discussing the EU debt crisis.

Tiberghien: The G20 summit was first established in November 2008 with the aim of dealing with the shock of the 2008 global financial crisis. The G20 summit has had to deal with major economic crises since its inception. It is not new.

What is new this time, however, is that the crisis is affecting Europe more than the rest of the world, while the 2008-09 crisis was a common crisis for all countries of the world. The situation now makes it harder for countries to come together and cooperate. But ultimately, it is not up to the G20 to solve the eurozone crisis, but Europe.

GT: Some argue the G20 is more representative than G8, and its influence and role in global governance and global affairs will be increasingly important. What is your view?

Chen: The G20 summit is certainly more balanced. For example, 11 of its 20 members are emerging and developing economies. It is undeniable that it has replaced the role the G8 once played in global governance.

But there are people who doubt the criteria for deciding G20 members. People want to hear more voices from small- and medium-sized nations. This is a major step the G20 needs to take next.

Tiberghien: Clearly, the G8 is not adapted any longer to coordinating global economic policies or advancing global governance among key countries. It is impossible to solve any global economic issue without at least China, India, and Brazil at the table. The G8 is gradually losing steam and turning into just an informal discussion forum.

It remains true that the G20 is large and divided, especially now during global uncertainties and risks. Many countries are focused on their domestic priorities. But the G20 is roughly equally divided among advanced economies and emerging economies.

Hopefully, over time, as leaders in the G20 get used to each other, they will be able to put aside some of their domestic interests.

GT: The G20 has been actively promoting the reform of the international financial system. Brazil announced Tuesday it was frustrated with the slow progress of IMF reforms, saying the amount of additional money Brazil plans to contribute to the IMF will depend on whether emerging-market nations can have more voting power in the institution. How do you see the pace of global financial reform?

Chen: Emerging economies and developing nations' now provide the most of the impetus for world economic growth. The reform of the international financial system is urgent because it can't reflect today's international economic structure.

 Developed nations dominated the international financial system for over 60 years after the end of World War II, and it is hard for them to accept the new trend. But I think it is still possible for the two sides to reach agreement.

Tiberghien: Making the governance of the IMF and the World Bank fairer and more representative for emerging economies like Brazil and China is of critical importance.

At the Seoul G20 summit in 2010, leaders agreed on a gradual process of reform in the voting rights at the IMF. The first step is due to be implemented by the end of December 2012 by shifting several points in the voting shares toward emerging economies.

What Brazil is protesting against is the fact that the deal has not yet been ratified by all countries. The chief culprit today is the US.

Although the US supports the Seoul deal, the US congress has not moved forward with ratification due to its high partisanship and paralysis. Other European countries have taken this as an excuse not to move forward with their own ratification process. These delays are regrettable and wrong.

GT: China is one of the world's largest economies and a major emerging economy. How do you evaluate the role China has been playing in the G20, especially on the global economic recovery and the international financial reform?

Chen: China has been playing a constructive and responsible role by providing other nations of trade and investment opportunities through its own economic development. This is especially important for the global economic recovery.

China is also a leading representative of emerging economies and developing nations, and always actively speaks for their interests and voices their views.

China also acts as a bridge between developing and developed nations to facilitating the transition of the task of promoting globalization and economic integration between the two sides.

Tiberghien: China has emerged as a pivotal player at the G20 and in all issues of global governance. But there is a paradox about China's role. While most outsiders start to see China as future world power and expect China to solve many global problems, most Chinese stress that they are still a developing country.

China is still in the process of adjusting to globalization and learning to deal with global governance. Thus, China is unwilling to rock the boat yet and to propose major new proposals. But on the whole, China has acted in a constructive and stabilizing way, both during the Asian crisis of 1997 and after the 2008 financial crisis.

 

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