The leaders of the Group of 20 (G20) countries concluded two days of deliberations on Monday in their latest summit in Hangzhou, China.
The summit had hardly started and China, the host country, and the United States, the most powerful nation on earth, had already stolen the thunder in setting the agenda by declaring that they have ratified the Paris Climate Change Agreement, which was agreed in December last year.
In the case of US President Barack Obama, it is not bad for a lame-duck president whose term expires in January 2017, following the elevation of a new president in the November presidential election. To Obama’s credit, he used his presidential prerogative to sign and thus fast track the ratification of the agreement. Had he sent it to Capitol Hill, both the Republican diehards and climate change deniers in the US Congress and Senate would have obfuscated the progress of any such bill.
To twist the words of former British prime minister Harold Wilson, “nine months is a long time in international politics”. That is when the last G20 summit took place in November last year in Antalya, Turkey. The stand out themes of the summit were terrorism, migration, youth employment and the global infrastructure challenge.
Previous summits tended to be pre-occupied with one central focus. The inaugural G20 summit in 2008 dealt with how to respond to the Global Financial Crisis. The summit in 2009 came up with a US$1.1 trillion financial easing package. The following summit in Seoul, South Korea, in 2011 concentrated on the reform of the International Monetary Fund (IMF).
With the onset of the Eurozone crisis, the 2012 summit focused on how to contain the crisis and pre-empt a Grexit, a Greek exit from the Eurozone.
In 2013, with Syria erupting into a full-scale internecine civil war, the pre-occupation was to eradicate chemical weapons from the theatre of war. As reports from various agencies including MSF (Medecins Sans Frontiers) have shown, the protagonists did use napalm, mustard bombs and other chemical devices against civilians. In 2014, the G20 leaders pledged to close the gender gap in the labour force by 25 per cent by 2025, an extremely ambitious target, and to promote women’s empowerment in politics, the economy and business and finance.
But, a lot has changed since Antalya 2015. We’ve had the Paris Climate Change Agreement; the Brexit referendum where a majority of Britons voted to leave the European Union; China and other Asian countries have suffered a reversal of economic fortunes with double-digit gross domestic product (GDP) growth figures a thing of the past with countries ranging from Turkey, Malaysia, South Korea, Indonesia, Singapore to India and China having to downsize their GDP growth expectations to as low as 4.5 per cent to seven per cent. Albeit these growth figures are still considerably higher than those of the G7 economies some of which are struggling even to make the one per cent figure.
Then there was the failed attempted coup in Turkey in July, which fortunately turned out to be a triumph of people’s will when ordinary Turks from all political and social backgrounds took to the streets to defend their democracy.
So what were the priorities of the G20 Hangzhou Summit? Leaders tend to come with a shopping list of demands and aspirations which of course primarily are aimed to impact positively to their self-interests whether in the economy, inward investment or geopolitics.
For the only three Muslim members of the G20, namely Turkey, Indonesia and Saudi Arabia, their demands are revealing.
As the only three Muslim representatives sitting at the top table of global discourse, they didn’t seem to be forthcoming in the bigger agenda which tend to be generic to the Muslims — rising Islamophobia in the West and beyond, the promotion of Islamic finance as a workable alternative system of financial intermediation (alternative to the interest-based system that brought the global financial system to near collapse in 2008), the issue of religious extremism, gender equality and empowerment and good governance since most of the Muslim countries are not functioning democracies.
Indeed it was left to president of the Islamic Development Bank (IDB), Tan Sri Dr Ahmad Mu-hammed Ali, who was attending the G20 Summit as a guest, to push the Islamic finance agenda.
“The G20 discussed mainstreaming Islamic finance in the global financial system under the Turkish G20 presidency in 2015. The IDB calls on the G20 leaders to consider Islamic finance to support infrastructure development. It stands ready to work closely with the G20 to implement this and other proposals from the G20’s previous and current meetings, especially those related to Islamic finance,” he reiterated in a statement.
On the other hand, the priorities for Saudi Arabia, according to Prince Mohammed bin Salman, are mitigating the problems of housing and unemployment, and “seeking to develop our economy and creating an attractive and perfect environment in our homeland.”
For Indonesia’s President Joko Widodo, it is a question of attaining and maintaining economic stability of the most populous Muslim nation. Last year, for instance, Indonesia outperformed all the economic forecasters by registering a 5.03 per cent GDP growth in Fourth Quarter 2015. This despite the fall in commodities prices especially crude oil and palm oil. The Indonesian rupiah remained stable.
Turkey’s emboldened President Recep Tayyip Erdogan has an unequivocal message — one cannot divorce politics from economics and social issues. “It is not realistic to limit the G20’s mission to global eco nomic coordination and the prevention of economic crises. It is imperative that G20 members, representing almost 90 per cent of the world economy, address geostrategic risks that have vital importance for global growth and stability and adopt a common stand to overcome these risks,” he said in a statement.
Outside the Muslim 3, British Prime Minister Theresa May was out to woo trading partners especially China with whom London currently has a spat over the Hinkley Point nuclear power plant, and to showcase Britain as a “free trade partner” to ease the way for Brexit.
But for the host, the summit theme “Towards an Innovative, Invigorated, Interconnected and Inclusive World Economy”, could not have been more revealing.
It combines economic recovery with the Internet of the World (digital economy) and global cooperation — the three objectives of China’s President Xi Jinping.
“As the world grapples with weak growth, decelerated economic globalisation, sluggish trade and investment, a widening development gap, we find ourselves at a crucial juncture of international economic cooperation. Facing the new global economic reality, the world looks to the G20 leaders to make the right and courageous choice in Hangzhou,” stressed Xi in a pre-summit statement.
China, as the world’s largest investor, has a right to have a say in shaping the global rules on trade, economic reforms, tax evasion, macroeconomic policy coordination — the list is endless.
But beware the Chinese dragon. While Beijing is the premier global investor it is probably also the most closed G20 member country for inward investment. Economists such as Nobel Laureate Paul Krugman have blamed China’s lack of consumption and market liberalisation as contributory factors to the global financial crisis.
China also has a habit of dumping goods, which are manufactured in China at a fraction of the cost because of huge subsidies and low wages. Steel is a current case in point.
Even the Chinese model of helping developing countries like in Africa is highly contentious with some activists calling it a new form of colonialism, with very little local employment generation and real economic benefits. China’s critics warn of Beijing’s repeated breaching of WTO rules, of human rights violations and abuses, and its disdain of international court rulings on the disputed South China Sea Islands.
The G20 Hangzhou challenge for Beijing would be not to be tempted to use international platforms to further its interests but to partake in genuine dialogue.
China cannot have its fortune cookies and eat it!
Mushtak Parker is an independent London-based economist and writer