G20 and global economic growth
As the G20 summit in Hangzhou draws closer, how the G20 will lead global economic growth becomes a hot topic worldwide at the key phase of global economic recovery.
In 2015, global economy continued its weak recovery with an increase of only 3.1 percent, the lowest since 2009. On one hand, developed economies faced structural dilemmas including high government debts, low inflation and insufficient effective demand. In 2016, anticipated annual growth of the US economy is only 2 percent; the EU’s economic recovery faces challenges due to the Brexit; Japan’s anticipated annual growth is 0.3 percent, and Abenomics is facing test.
On the other hand, emerging economies like Brazil and Russia are also facing multiple challenges including domestic structural adjustments and weak prices of bulk commodities. Moreover, the global economy faces challenges from problems of global governance like geopolitics, terrorism and refugees.
As the host of this G20 Summit, China proposed the theme: “Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy.” Innovation is the power source for sustainable growth of the world economy. The history of world economic development indicates scientific and technological innovation and start-ups can dramatically increase productivity. And their large-scale emergence constitutes the basis of a new round of high global economic growth.
G20 should advocate innovation-driven development, encourage all-round innovation in fields like science and technology, development philosophies, mechanisms and business models and create new drivers for world economic progress.
At present, some new industrial forms have emerged thanks to countries’ innovation strategies. With the implementation of strategies like “Made in China 2025”, “Internet Plus” and “Mass entrepreneurship and innovation”, China has attracted continued attention from the rest of the world for its innovation strategy and innovative business models of Chinese enterprises.
The Chinese mode of economic development is undergoing quiet changes at present. Its strategy of encouraging mass entrepreneurship and innovation is becoming a core engine of continuous economic progress. As the world is experiencing a “new industrial revolution”, G20 should give full play to new technologies, new factors and new industrial organization models in promoting domestic production and job creation. Meanwhile, G20 should also strengthen cooperation on industrial development, especially on digital economy, so as to realize common growth.
Reform is the only way for the world economy to get out of its sluggish status quo. G20 should seek to invigorate the global economy both through international economic cooperation and countries’ domestic structural reforms, promote global economic governance towards fairer, more rational and effective development and improve the endogenous dynamism and quality of each country’s economic growth so as to fully release the potentials of the world economy.
Meanwhile, given the global economic reality of development gaps, practice has proved that countries with better economic vitality all benefited from structural reforms. Many emerging, developing countries that didn’t pay due attention to structural reforms when they were in good domestic and international conditions, especially when international prices of bulk commodities were high, encountered many difficulties when prices of energy resources were at a low ebb. According to international organizations, China is one of the biggest contributors to the G20’s all-round growth strategy, and such contributions derived from China’s policies and measures to stabilize growth, adjust structure, promote reform and improve people’s livelihoods.
An invigorated world economy needs common efforts of all stakeholders. As G20 members account for nearly 80 percent of global trade, it has the obligation as well as capability to let international trade and investment remain a significant engine of global economic growth, and make bigger contribution to global economic stability and sustainable development.
Inclusiveness and sustainability are basic implications of global economic growth. G20, which accounts for 90 percent of the world economic aggregate, has the responsibility to contribute to global sustainable development, poverty alleviation and peace. China has always been actively engaging in global poverty alleviation, and China’s poverty alleviation model has become a treasure for world poverty reduction.
By Zhang Shirong, Associate research fellow of The Institute for International Strategic Studies of the Central Party School of the Communist Party of China, for Guangming Daily
Translated by Zhang Zhou