What’s next after the G-20 summit?

Editorials JT

There is considerable, and justifiable, skepticism about international summitry. Typically, such meetings are more pomp than policy, more photo ops than substantive discussions, even though world leaders gather to tackle tough and pressing problems. The host’s chief concern is ensuring that there are no major gaffes and that the national chair looks good. More often than not, success means promising “concerted, cooperative and effective action,” while leaving the details to be filled in sometime in the future.

By those criteria, this week’s Group of 20 summit in Hangzhou, China, was a success. President Xi Jinping, the host, offered stern warnings that the global economy is at a “crucial juncture” due to volatile markets and weak trade and investment.
“Growth drivers from the previous round of technological progress are gradually fading, while a new round of technological and industrial revolution has yet to gain momentum,” he explained.

The summit’s final statement echoed that sentiment, warning that global growth was sluggish and weak and urging governments to take more direct fiscal action to stimulate growth, a message that must be music to the ears of Prime Minister Shinzo Abe, who made the same point in May when he hosted the Group of Seven summit in Japan. Acknowledging that reality, the leaders agreed to coordinate macroeconomic policies, fight protectionism and support multilateral trade mechanisms. This is all intended to promote “inclusive growth,” one of the core elements of the “Hangzhou consensus.”

It is tempting to dismiss that phrase as more overblown summit rhetoric, but the concerns that prompted its creation are real. The “Hangzhou consensus” was born of the need to build public support for an open and more liberal economy. It reflects growing anxiety about the political backlash to globalization that is evident not only in ad hoc protectionist measures that appeal to national policymakers and their publics, but the growth of nationalist political parties that reject internationalism and increasing integration into the globalized economy and world order.

Consistent with this trend is slowing global growth worldwide — the International Monetary Fund trimmed its forecast for global economic growth this year to 3.1 percent — and trade; the World Trade Organization anticipates global trade growth in 2016 to reach just 2.8 percent, its fifth consecutive year below 3 percent. As the summit final statement flatly declared, “The benefits of trade and open markets must be communicated to the wider public more effectively.”

To their credit, the G-20 leaders did address one specific trade issue: excess global capacity in steel. Today, despite a 2.8 percent cut in global steel production over the last year, it is reckoned that there remains 700 million tons of excess capacity. The G-20 agreed to set up a forum to cut production and stabilize the industry. Much of that burden will fall on China, which has promised to cut its steel capacity by 45 million tons this year. The forum is intended to lay out a global solution and report back to the G-20 next year.

Even though the G-20’s focus is economic policy, there was no missing politics, both because they influence economic decision making and because world leaders prefer to talk about things they ostensibly can influence. Thus, the summit acknowledged the risks from Britain’s pending exit from the European Union, along with terrorism and the refugee crisis that is overwhelming borders around the world.

As a reminder of how quickly political realities can intrude on the best-laid plans (and ceremonies), North Korea managed to muscle its way into the G-20 discussions by launching three medium-range ballistic missiles on Monday. 

The tests were a message to the world leaders that while they may have their designs, Pyongyang has its own and they will not be derailed by politicians acting elsewhere without its input. The offense given to China by its erstwhile ally is also a reminder that the idea that Beijing can somehow get Pyongyang to “behave” is fantasy.

On Friday, North Korea said it successfully conducted a test of a nuclear warhead — its fifth nuclear weapons test. If confirmed as such, the latest explosion testifies to miniaturization of its nuclear device that can be loaded onto ballistic missiles.

Summit optimists point out that even if multilateral meetings are more symbol than substance, the bilateral sit-downs on the sidelines of the plenary are important. There is much truth to that assertion. Abe and Xi had a valuable conversation in Hangzhou, meeting for the first time in over a year, at which they both agreed to try to get bilateral ties back on track. U.S. President Barack Obama and Xi also met, and afterward they announced that they would ratify the Paris climate change agreement, a real boost for that deal since they are the world’s two largest producers of greenhouse gases.

That deal is important, but it is much more likely that enduring symbol of the U.S.-China relationship that emerges from the Hangzhou G-20 will be Obama descending from the back door of Air Force One — in contrast to the red carpet rolled out for all other leaders — or pictures of Chinese officials yelling at their U.S. counterparts on the tarmac. That discord seems to better capture that important bilateral relationship — and many China watchers worry that relations will become even more contentious now that the summit is over and Beijing can pursue its South China Sea agenda without risking embarrassment at its Hangzhou meeting.

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