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Can G20 be institutionalized?
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During the three G20 Summits, the significance of transformation is more profoundly reflected in international economic management.
The G20 group's choice of Pittsburgh, which used to be a "rust belt city" representing the U.S.'s sunset industries but has successfully transformed into a "green city," to hold its 2009 Summit is somewhat symbolic as transformation means something special to the G20 group. Since the first G20 Summit held in November 2008, transformation has become a focus of economists from all over the world and it was also one of the major issues discussed at the Pittsburgh Summit.
Decision-makers and economists from all countries mainly discussed the transformation of a single economy or that of the global economy however. During the three G20 Summits, the significance of transformation is more profoundly reflected in international economic management.
The role of the G20 group is demonstrated in transformation. The period between the G20 Washington Summit held in November 2008 and the recent Pittsburgh Summit is actually a process of transformation, during which the G20 group has continuously improved its ability to manage the global economy. A prominent feature of this transformation is that a batch of emerging economies has been able to sit together with developed countries to jointly discuss the future global economy and reform of financial systems. Reuters noted that “rich nations humbled by a home-grown financial crisis have made room for emerging economies on the world stage, reflecting a lasting power shift that will be on full display at the G20 Summit this week ”.
The outbreak of the financial crisis demonstrated the urgency of transformation of the global economic management system from at least two aspects. Firstly, the financial system of the western world led by the U.S. has become ineffective, causing the virus of the financial crisis to ferment and spread rapidly. Secondly, in an age of emerging economies continuously growing, it is impossible to effectively control the operation of the global economy by solely depending on developed countries, not to mention coping with the attack of the financial crisis. This determines that the rise of G20 on the world stage is a historical necessity.
In less than a year, the G20 members have effectively contained the economic recession and promoted the reform of the international financial supervisory system through coordination in various fields including macro-economic and monetary policies, and diplomacy and finance, by adopting over 100 economic stimulus plans of varying extents.
G20's greatest success is coordination and consistency between its members on the basis of mutual trust. If the G20 Washington Summit last year aimed to show confidence, the London Summit held in April was a meeting for discussing and determining the future direction, while the Pittsburgh Summit signified that the G20 group has entered a tougher stage of coordination.
The G20 members comprise both developed and developing countries, which are in different stages of political, economic and social development and have varied considerations for individual interests as well as requirements for reforms of international economic and financial systems. They therefore need more time to adjust to each other.
At present, the grim period of the financial crisis has passed and the global economy will start to recover. This critical moment is also the hardest for G20 members to coordinate and remain mutually consistent. Some members tend to care more about their own interests and adopt measures for self-benefit. Some developed countries in particular, have brought up the so-called global economic imbalance issue again to divert the attention of others, aiming to excuse trade protectionism. This has brought about a number of uncertain and complicated factors to future coordination.
It is unpractical to expect the achievement of complete coordination and consistency with only one G20 Summit session, but diversion from the goal must not occur. The success of the Pittsburgh Summit must rely on coordinated and consistent achievements made by the G20 members in reinforcing macro-economic policies, promoting the reform of management structures of international financial institutions and fighting against trade protectionism. Only by doing this can the global economy embark on a road of steady recovery and the foundation for the institutionalization of the G20 group after the financial crisis be laid.
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