G20 summit will boost trade to revive global economy
The upcoming G20 summit will boost global trade and investment to reinvigorate lackluster economic growth, an expert in trade and economics told China.org.cn on Wednesday.
The world's 20 largest economies will gather in the eastern Chinese city of Hangzhou in early September to discuss ways to lead the world economy out of its stagnation. China has set one of the agenda items as "robust international trade and investment."
Commenting on the agenda, Ni Yueju, a researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences, said that trade and investment is currently the most effective way to spur economic growth.
Trade and investment are traditional engines of economic growth, but they have been growing tepidly in recent years. Data from the World Trade Organization (WTO) shows that last year marked the fourth consecutive year that global trade growth slumped below 3 percent from an average of 7 percent between 1990 and 2008, and this year shows no signs of significant improvement. Global investment growth is also expected to be moderate -- sitting somewhere between 10 percent and 15 percent -- this year, reports say.
Setting trade and investment as priorities will help the global economy by further promoting trade facilitation and liberalization, boosting new types of trade (especially cross-border e-commerce), and reducing global trade costs, Ni said.
Moreover, as the major participants and stakeholders in the global value chain, G20 members can work together on reducing tariff barriers and expanding trade in services. If the G20 members, who represent 90 percent of the world's GDP and 80 percent of global trade, manage to ease tariff barriers and boost trade facilitation, they will set an example for and further promote regional and world economic cooperation.
Industrial overcapacity and rising protectionism
Industrial overcapacity has time and again made business headlines recently, especially with regards to the glut in the steel industry. Countries have been blaming each other for producing more than needed. The root cause of overcapacity, however, is the shrinking global demand and the slowing economy, Ni said, adding that the steel sector bears the brunt, as it involves various industries ranging from manufacturing and infrastructure building to real estate.
The Chinese government has been calling for countries to resolve overcapacity on various fronts instead of playing the blame game, and is also keen to handle its own problem by expanding domestic demands. However, the country is still blamed for excess capacity and has been involved in increasing trade frictions. But as a matter of fact, some countries are practicing trade protectionism under the pretense of steel glut and government subsidies, Ni said.
There has been a surge in trade protectionism in recent months. The WTO said in a June report that between mid-October of last year and mid-May this year the G20 economies had introduced 145 new protectionist measures -- the fastest pace seen since the organization began monitoring G20 economies in 2009.
Trade protection measures will only drag countries to the brink of trade wars and hurt the countries involved, Ni warned. As the world's leading economies, the G20 countries should ramp up their efforts in opposing trade protectionism and pull global trade out of its current slump.
Anticipating the outcomes
Trade ministers of the G20 economies met in Shanghai in July, where they issued the first trade ministers' joint statement in the history of G20 and several agreements concerning investment policy, investment guidance and multilateral trade system. Ni said that those outcomes are expected to be endorsed at the upcoming G20 leaders' summit, adding that they will effectively deal with slowing trade and investment, production overcapacity and trade protectionism.
But as the outcomes of the G20 summit are not legally binding, China should carry out talks with the next two host countries of the G20 summit -- namely, Germany in 2017 and India in 2018 -- to smooth the way and implement all the measures and consensuses reached in this year's summit, Ni emphasized. The summit should also promote measures related to regional trade agreements, multilateral negotiations and international investment to be carried over into WTO negotiations, she said.
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Thursday, August 25, 2016
G20 summit will boost trade to revive global economy
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