From Sept. 4-5, world leaders will gather in Hangzhou, China for an annual meeting of the Group of 20 or G20. Learn more about what this gathering is all about.
hat is the G20?
The G20 is an organization of nations with advanced and emerging-market-economies that account for 80 percent of the world’s trade volume. The organization meets to discuss discuss global financial and monetary policies. They also work to reform international financial institutions and spur world economic development, according to its website. The gathering in Hangzhou will be the group’s 10th leader’s summit.
ho makes up the G20?
Members of this elite organization include the European Union and the following countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, and United States.
In addition to member nations, special invitations to the leader’s summit have been extended to certain guest countries, the United Nations, the International Monetary Fund, the World Bank, the World Trade Organization, the Financial Stability Board, the International Labour Organization, the Organization for Economic Co-operation and Development.
hy was the group created?
The G20 was founded in 1999 after the financial crisis in the late 1990s to strengthen policy coordination and improve financial stability, according to the International Monetary Fund.
Initially, the meetings just included finance ministers and central bank governors from G20 states, but in 2008, the group held the first leader’s summit for heads of state following the recent global financial crisis.
hat will they discuss this year?
The theme for the Hangzhou G20 is: “Towards an innovative, invigorated, interconnected and inclusive world economy.”
Due to the sluggish global economy, this year the G20 will focus on ways to combat declines in output, volatility in financial markets, weakening trade and investment, and high levels of unemployment, China’s President Xi Jinping said in a message about the summit.
Xi also urged the G20 to examine new and innovative areas for growth and reform including new technologies, new organizational models, and new possibilities for cooperation.
“We are seeing increasing difficulties in macroeconomic policy coordination. The world economy calls for new impetus,” Xi wrote.
Trade protectionism will be a big topic. Just prior to the September summit, G20 trade ministers urged their nations to prevent the anti-trade measures that are on the rise. The ministers said protectionism has “significantly slowed” growth in global trade.
In June, the World Trade Organization urged the G20 economies to dismantle anti-trade measures, 1,583 of which have been erected since 2008, with just 387 removed during that time.
One top protectionism issue will be excess steel capacity. China, among other steel producers, has been accused by the U.S. and Britain of dumping cheap steel and driving down global prices.
China produces half the world’s 1.6 billion tonnes of steel in 2015, making it the world’s biggest producer. As part of its economic restructuring, china plans to cut up to 150 million metric tons of its annual crude steel production in the next five years. Only 3 percent of China’s overcapacity gets exported to the U.S. But in 2016, the U.S. placed a 500 percent tariff on steel products from China anyway.
The excess inventory appears to be a byproduct of China’s breakneck development — at home and abroad — before the slowdown.
“China contributed over half of the global economic growth between 2009 and 2011 via infrastructure investment, which brought he accumulation of excessive capacity such as in coal and steel,” said China’s finance minister Lou Jiwei. “At the time the world was applauding China.”
Washington has also hiked import duties on steel products from Brazil, India and Japan.
Discussions will also include fully implementing IMF quota and governance reform. Quotas are how the IMF determines each country’s financial commitment to the IMF, it’s voting power, and its access to IMF financing.
The G20 will also discuss expanding the Special Drawing Rights in the IMF (see video below), sovereign debt restructuring, improving cross-border capital movements, and pushing forward on World Bank voting share review.
What are Special Drawing Rights?
Other topics include international tax cooperation, combatting tax evasion, developing consensus on denying safe haven to corrupt officials, repatriation of corrupt officials, and recovery of proceeds of corruption. The G20 will also discuss job creation, support for industrialization in Africa and other developing nations, support for infrastructure investment, promoting affordable energy, improving food security, working on climate finance, and investment in poverty eradication efforts.
hat are all these other 20 groups?
Groups of interested parties to the G20 also meet before and during the summit to offer recommendations to the G20 in the areas of business, labor, and policy. They include:
B20: The Business 20 is made of representatives from the international business community who work to advance global private-sector interests. The B20 make recommendations on economic governance and regulation in areas such as financial system reform, trade, investment, infrastructure, employment and anti-corruption policies, their website said. The group consults with global business communities and then sends a list of recommendations to the G20. Since 2010 more than 400 policy recommendations have been proposed, the B20 said, many of which were incorporated into previous G20 communiques.
C20: The Civil Society 20 was created in 2013 as a way for civil society to make recommendations to the G20, its website said. It met in July in Qingdao, China.
L20: The Labour 20 represents the interests of workers and unites trade unions from G20 countries and global unions, L20 website said. It is convened by the International Trade Union Confederation and the Trade Union Advisory Committee to the OECD. The
T20: The Think 20 meets prior to the G20 and includes 500 think tank experts, politicians, and representatives of international organizations from 25 countries, according to the group’s website. Their recommendations include how the G20 can build new global relationships. It serves as a platform for global think tank researchers to provide policymaking thoughts and suggestions for the G20.
Y20: The Youth 20 allows rising future leaders from G20 nations to discuss pressing global issues and was first held in 2010. More than 600 rising leaders have participated. Each year they submit a report to the G20 that communicates “young people’s attitudes and suggestions about human beings’ common future,” their website said.
hat’s the difference between the G20 and the G7?
The G-20 represents developed and emerging-market economies while the G7 or Group of Seven represents the major developed nations of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. The G7 reflects a name change from the previous G8, which was used when Russia was still a member. Russia was suspended from the organization in 2014.
For more information on various international economic gatherings the IMF offers a guide to committees, groups, and clubs.
hy should you care?
While any agreement made by the G20 is non-binding, the discussions that take place among members impact everyone in the world — 800 million of whom live below the poverty line.
In previous G20 meetings, leaders agreed to pool trillions in funds for stimulus measures, and sent additional billions to the IMF and multilateral development banks. The G20 has also adopted country specific goals for certain issues.
However recent global economic turmoil may through a wrench in concrete change, said Hannes Dekeyser, program coordinator for European Institute for Asian Studies to Xinhua News.
“Domestically, many member states have political developments that are quite challenging,” Dekeyser said citing impacts of Brexit, political turmoil in Brazil, the upcoming U.S. presidential election, and next year’s elections in Germany and France.
“It might be quite hard for these member states to make long-term commitments.”
Story by CCTV America with information from the Associated Press, Xinhua, and Reuters.