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China Urges G-20 to Focus on Domestic Reforms
Dec 29, 2015

China, the host for the 2016 G-20 meet and holder of the rotating presidency, urged member countries to pursue structural reforms to spur global economic growth even as the Asian giant’s economy slows. Macro-economic expansionary policies such as monetary easing remain a ‘temporary response’ to the global financial crisis of 2008.

  • G-20 leaders had recently met at Antalya and resolved to persist with collective action to lift actual and potential growth of their economies and boost job creation. The G20 summit mechanism for economic co-operation had evolved in the aftermath of the 2008 financial crisis.

  • The Chinese government laying out the theme for the next summit said, “Many countries are suffering from a series of unfavourable factors, including anaemic global growth, decline in potential output, increasing volatility in financial markets, weakening global trade and investment, high levels of unemployment and inequalities. Due to growing divergence in economic performance and policy priorities among major economies, we are seeing increasing difficulties in macro-economic policy co-ordination. The world economy calls for a new impetus, and the G20 has managed ‘mainly short term risks’ through co-operation so far.

  • Raising concerns about persistent decline in global trade growth ‘to levels below the global growth rate in the past three years,’ China has questioned the significant rise in protectionist measures adopted by countries in trade and investment and the lack of movement on the World Trade Organisation’s (WTO) Doha Development round of talks. G-20 nations account for 80 per cent of global trade volumes.

  • In a separate document drafted by China’s finance ministry proposing a new G20 Structural Reform Index the efforts to maintain financial stability and support economic recovery, since 2008, have helped achieve certain results but structural deficiencies persist that can hold back growth in the long run. The expansionary macroeconomic policies mainly focus on managing aggregate demand as the temporary response to the financial crisis. Without solving the deep structural problems, these policies could not reverse the prevailing trends of slow growth in potential output and productivity, and therefore could barely deliver sustainable economic growth.

  • China has proposed a new assessment system that focuses on aggregate impacts of the structural reform measures undertaken by G20 countries instead of focusing on the progress of implementation. 

  • China has also said that the prolonged delay in the implementation of reforms in the quota and governance structure at the International Monetary Fund and review of World Bank voting shares ‘jeopardises the credibility of the G20’ and must be pushed.


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