China Plans To Turn G20 from Crisis Mechanism to International Policy Coordinator

James Laurenceson, Deputy Director of the Australia-China Relations Institute at the University of Technology, Sydney, welcomed China’s efforts to turn the G20 “from a crisis response to one that drives long-run improvements in living standards,” in an interview with Xinhua published Tuesday. “China is the world’s second largest economy and is responsible for 30 percent of global growth. That makes it an ideal candidate to play a leadership role in ensuring the G20 makes a successful transition and delivers widespread benefits,” Laurenceson told Xinhua.

Xinhua reported on Laurenceson’s view in a story on how China seeks to use its chairmanship of the G20 to transform the grouping, “from a crisis committee to a ‘peace time’ steering committee for international policy coordination.”

That includes turning the world away from short-term stimulus and monetarism, to what Chinese economists call “supply-side structural reforms,” which focus on increasing physical production and technological innovation—a different animal entirely from the austerity and government-reduction which the IMF and Western financiers mean by “structural reforms.”

“Short-term stimulus measures to encourage demand such as rapid credit expansion and zero interest rates have hit their limits. Structural reform is now the most realistic way to achieve sustainable improvements in living standards,” Laurenceson told Xinhua.

An overview of Chinese thinking on this front was made available to U.S. policymakers on August 28 by Washington, D.C.’s National Interest, in a column on “What To Expect from China’s G20 Leadership,” authored by Wang Wen, the executive director of the influential Chongyang Institute for Financial Studies at Renmin University in Beijing. Wang laid out China’s intent to prioritize innovative approaches to growth, and “step up global governance and transform development mechanisms to facilitate production flows on a global scale.” China believes in cooperation on international production-capacity, he wrote, “and [wants to] forge an inclusive global industrial chain to enable all countries to fully realise their comparative advantage.”

Financial governance reforms, and an “open world economy… [to] balance the developmental needs of countries at different stages of economic development,” are likewise priorities. “Urbanisation and industrialisation in developing countries is restricted by inadequate technology, equipment and infrastructure. And, in developed countries, equipment and infrastructure rejuvenation is complicated by a shortage of funds and high costs.” Here, China’s “One Belt, One Road” is put forward as exemplary of approaches for resolving these imbalances.