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Beijing Review Exclusive
Special> G20 London Summit> Beijing Review Exclusive
UPDATED: March 27, 2009 Web Exclusive
Better Than Nothing
Chinese scholars predict the upcoming G20 London summit

"On the U.S. side, it is common practice that a superpower will be the first to introduce aggressive stimulus plans amid global economic slowdown. But the risk is that it will spend more on the road to recovery as it is the world's first to act," Sun continued.

"The U.S. will inevitably spend more if it promotes an aggressive stimulus plan without other countries' support; or even worse, if it is used by other countries for export expansions. Hence, the U.S. is eager to push for global stimulus to reduce costs," he added.

BRICs consensus views

The BRIC countries have different domestic situations, but managed to reach consensus on "demanding more say" in global financial system reform.

"High expectations have been put upon the BRIC countries, but it is unrealistic to rely on them to save the world economy, because their GDP still accounts for a relatively small percentage of the global total," Huang said.

Sun echoed Huang's view, noting that the gap between China and other major economies remains huge in terms of growth quality and sustainable development.

"There is still a long way to go if China, the world's third largest economy, intends to play a role on the world stage that parallels its economic scale," Sun said.

Forecast for G20 London Summit

On April 2, world leaders from the G20 countries, which represent 85 percent of the world's output, will meet in London. The summit will focus on how to stabilize financial markets and restore global economic growth. The reform and strengthening of the global financial and economic system, which the EU advocates, and emerging market economies' demands for more say will be on the agenda as well.

The biggest challenge is how to realize global financial regulation. "Regulations that international economic institutions like IMF pose are suitable for government actions; but corporate actions are the major force behind the world economy and global finance, and they are hard to regulate," Huang said.

"At present, the U.S. is still powerful enough to prevent a new framework from emerging. The U.S. dollar remains the core of the international monetary system, and the U.S. Government did not lose all its credibility amid the crisis," he continued.

Huang said he personally has low expectations for the summit.

"The global financial system will probably remain the same," he said. "Nothing new will happen."

Sun showed more confidence in the summit. He predicted that opposition to trade protectionism and issues like banking data leaks would be topics of discussion as well. The Chinese Government will advocate more participation in reforming the global financial system as a series of stimulus programs have been introduced nationwide.

"There is a consensus amid the global economic turmoil that a crisis prevention mechanism requires a brand-new regulation system, as the role that current international economic institutions like the IMF play concentrates more on crisis assistance rather than prevention. This will also be one of China's concerns at the summit," Sun said.

"On a positive note, diversity in decision making is emerging. But there might not yet be any significant result; if any, the influence will probably become visible in years to come," he continued.

"The significance of the summit, in my opinion, should not be neglected, for reforming the international monetary system has been initiated for the first time, while the developing countries are establishing their presence in the global economy," he added.


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