The G20 London summit made history. While applauding the summit's productive communiqué, Ni Xiaoling, senior financial observer with Xinhua News Agency, warns of the gap between the greater responsibilities the International Monetary Fund shoulders and its limited capabilities to play the role of coordinator in economic globalization.
The leaders of the G20 countries are now worshipers of the principle of "seeking common ground while putting aside differences," and under this principle they solved multiple contradictions and reached a broad consensus on a range of issues at the London summit. Bringing with them different expectations and varied values, they gathered in London and discussed issues pertinent to the livelihood quality of the "global villagers" of the future. They strived, through compromises and a responsible attitude, to lift the global economy out of the current recession and find a "stabilizer" for it to guard against further crisis.
"The G20 summit needs more reforms and varied coordination mechanisms in order to play the role of coordinator in economic globalization." --Ni Xiaolin, senior financial observer with Xinhua News Agency
The fruits this summit yielded made us believe that the G20 summit can be an effective mechanism for coordinating major global economic contradictions, because the 20 countries make up 85 percent of the world's total GDP. Before the summit, many an analyst predicted their different stances on issues, such as international monetary system restructuring, financial supervision tightening and market salvation cost-sharing, could prevent participants from reaching any substantial consensus. Yet, the results have proven them wrong.
What we saw was a broad consensus that the leaders of the G20 countries reached in the G20 communiqué Its wide coverage indicated there is no alternative but for the countries involved to ally with each other in order to ride out the crisis. The communiqué addressed almost all the issues that had concerned economists worldwide the most before the summit, including injecting capital into the International Monetary Fund (IMF), cutting the salaries of top financial executives, combating tax havens and fending off protectionism. This summit has proven through the rich content of the communiqué the importance of having an effective multilateral negotiation mechanism.
The rise of the BRIC countries-Brazil, Russia, India and China-in particular will help to promote changes in the global economic structure. With huge forex reserves in hand, the four countries have won a greater say in deciding where the global economy will head, because the global economy will have to count on their huge forex reserves for salvation if there are no signs of economic pickup in the coming quarters. These emerging markets are expected to lead the global economic recovery, which explains why China had a much larger audience for its presence and voice at the London summit.
As an outcome of globalization, economies worldwide are now increasingly entangled with each other, and it is impossible for a single economy to stay intact amid the global economic recession that originated from the U.S. financial crisis. That also explained why the leaders of the G20 countries were willing to compromise and put aside differences in order to reach further consensus at the summit.
It is noteworthy that this communiqué placed unprecedented emphasis on less developed countries, and the heads of state all pledged financial aid for crisis-stricken poor regions. This was because developed countries cannot revive the global economy on their own. Their nearly satiated markets leave little room for consumption stimulation.
Having evolved from the G8 summit for developed countries, the G20 summit now witnesses the presence of more emerging and developing countries in discussing and negotiating issues pertinent to the future of the global economy, which also corresponds to the changes in the world economy.
However, whether the multilateral negotiation mechanism can play the role depends on more than just a couple of negotiations. For example, the richer the content of the communiqué as a substantial outcome of the G20 London summit is, the greater the tasks it puts forward for the G20 countries will be. In terms of international monetary system restructuring, the countries agreed to take advantage of the existing framework of the IMF, inject more resources into it, and increase financial support for the poorest countries.
Yet, we should not ignore the limited capabilities of the IMF to smooth the coordination of problems among its members under the current framework in contrast to the greater responsibilities the fund shoulders. The IMF needs more changes to its system in order to be a truly multilateral, international financial organization that is free from domination by any country. Many economists worldwide are concerned about the current weakness of the IMF, and some scholars in the United States have raised questions about how the IMF spends money and where the supervision over its operation is.
The G20 London summit was history, but as China's President Hu Jintao pointed out in a Xinhua report, any market salvation should be based on the domestic situation of a specific economy. The development of the domestic economy remains the top priority of all countries, no matter how the global economic structure evolves.
U.S. President Obama also said in London, "If there is going to be renewed growth, it can't just be the United States as the engine. Everybody is going to have to pick up the pace." His words indicate that every head of state has to go home and solve problems within their economies after they reach an agreement on anti-crisis cooperation. It is a hope as well as a demand for G20 countries as the global economy lapses into deep recession.
All in all, all countries still believe the G20 summit needs more reforms and varied coordination mechanisms in order to play the role of coordinator in economic globalization. Otherwise, it would be hard for it to carry out these responsibilities as globalization deepens.
It was said that New York, the center of the financial storm, would play host to the third G20 summit. Should this decision be interpreted as a symbol of courage and determination the leaders of the G20 countries have in allying and fighting the crisis?