China can boost confidence in global economy at G20 summit

By Gao Pan Source:Global Times Published: 2016/8/7 21:53:39

As the host of the Group of 20 (G20) summit in its eastern city of Hangzhou next month, China has the opportunity to show its leadership in resisting protectionism, spurring growth and boosting people's confidence in the global economy, a US expert has said.

"I think on trade we're in a very important time because there are strong protectionist pressures in the world," said Robert Kahn, a senior fellow for international economics at the Council on Foreign Relations in Washington DC.

"Here's where China can play a very important role in showing leadership, saying (that) we need to resist these pressures and we need to do it in a way that's realistic and smart," Kahn told Xinhua in a recent interview.

Citing the dim prospects for the Trans-Pacific Partnership  trade agreement to pass the US Congress, Kahn said he was "quite worried" that it would offer a window of opportunity and an excuse for increasing protectionism globally if the 12-national trade deal is rejected by the US Congress.

"That would be bad for the entire G20," Kahn said. "I think what we have to be doing now is talking very honestly about how we can show leadership in this very difficult environment when people don't feel like trade is helping them, how we can convince people again that the fair deal is for everybody."

Kahn believed that China could play an important leadership role as chair of the G20 summit this year to help find good ways to resolve these disagreements on trade.

"I think within the G20 architecture, we need to find ways to give people confidence that it's really an honest dialogue and concerns are being addressed in a pragmatic fashion," he said.

Acknowledging rising voices of protectionism around the world, China has initiated the G20 trade and investment working group and institutionalized the G20 trade ministers meeting to promote international trade and investment, which would also contribute to much-needed global growth.

At the G20 trade ministers meeting in Shanghai last month, the ministers endorsed a broad strategy for promoting global trade growth, in which G20 members will lead by example to lower trade costs, harness trade and investment policy coherence, boost trade in services, enhance trade finance, promote e-commerce development and address trade and development.

"Trade and investment should continue to be important engines of global economic growth and development, generating employment, encouraging innovation and contributing to welfare and inclusive growth," the ministers said in a joint statement.

In terms of macroeconomic policy, Kahn said G20 finance ministers and central bank governors have repeatedly made strong statements that they would use all policy tools - monetary, fiscal and structural - to promote growth, but "the question is how we go beyond these statements to actual action."

It's politically and economically difficult to implement structural reforms and G20 members are also "quite divided" in expanding fiscal policy to stimulate growth, according to Kahn.

Kahn was concerned that there isn't really anything new policymakers can do though everyone agrees on the needs for more growth.

"That would be something for the Chinese government to try, and address, and manage," he said, adding that policymakers need to think about whether current policy measures are enough to "produce the kind of growth that will make people feel good about the global economy."

"How do we make people confident that policies are not just good headlines but really changing the way our economy's going to work in the longer run?" he asked, emphasizing that "there's a great deal of frustration and anxiety" about the economic future in the US, Europe and other parts of the world.

The author is a writer with the Xinhua News Agency. The article first appeared on Xinhua.

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