The 14th G20 summit took place in Osaka, Japan, from June 28 to 29. The Osaka summit was held against the backdrop of notably increasing uncertainty, the spread of unilateralism and protectionism, and the aggravation of global trade conflicts.

Addressing issues of global economy and trade, President Xi Jinping called for joint efforts from the international community to build a high-quality world economy. President Xi’s speech re-calibrated the orientation of the world economy and global governance at this critical juncture. He proposed four principles, showing the way for high-quality world economic development. By upholding multilateralism, the international community can support this development. He also declared that China will unveil five major measures aimed at breaking new ground in opening up and delivering high-quality development to the world.

 

High-level opening up, cooperation
How to increase the impetus for economic growth and achieve high-quality economic development is a crucial problem facing the world today. The drivers of the world economy’s growth are transitioning from old to new, and the aftermath of the international financial crisis persists. Global economic growth lacks momentum. According to the IMF, the economic growth rate of emerging markets and developing countries is 4.9%, while that of developed countries is only 2%. High-quality world economic development will break through development bottlenecks and satisfy the needs of all people in the world for a higher quality of life. It will also provide new driving forces to global economic growth, promote the development of new modalities such as the digital economy and establish an economic operation system that suits future trends.  

Opening up and cooperation are essential for economic development. Opening up helps to make full use of the comparative advantages of all countries. In particular, as the global value chain develops in depth and breadth, all countries will find their position in the value chain, increasing economic efficiency by allocating resources globally. Opening up helps expand market scale and maximize benefit from economies of scale. It will promote market competition, increase economic efficiency and stimulate economic growth driven by human resources and technology.

High-level opening up ensures high-quality economic development. Unilateralism and protectionism impact the steady growth of the world economy. Economic globalization has entered an adjusting phase. However, globalization is still an important guarantee for world economic growth, and the world needs a new type of globalization.

In his address at the summit, President Xi proposed embracing development opportunities with greater openness and seeking win-win results with better cooperation, so as to lead economic globalization toward the right direction. Seeking the right direction for a new type of globalization is to establish a new type of international governance system oriented toward opening up and cooperation. This is the establishment of a fairer and more open globalization that strives to avoid the increasing income gap and populism and to achieve high-quality world economic development.

 

Multilateralism safeguards
China proposes a global governance of extensive consultation, joint contribution and shared benefits, and it actively promotes the establishment of a new type of international relations featuring mutual respect, fairness and justice, and win-win cooperation. At the G20 summit this year, China upheld multilateralism forged by the consensus of all parties, supporting a multilateral trade system centered on the WTO and an international system centered on the UN. This proposal of China’s was agreed on by most members at the summit. In addition to trade and business problems, there are other global issues that require the efforts of and solutions by all countries. These problems include intertwined populism and nationalism, the trust deficit, increasing international competition and friction, the aggravation of geopolitical conflicts, wars, climate change, and transnational crimes and cyber-security issues. Addressing all these global problems requires a multilateral platform and framework.

A multilateral trading system is an important guarantee for the steady development of the world economy and world trade. The WTO follows such principles as nondiscrimination and transparency. It forbids a member from taking measures that discriminate against other member states, while striving to promote the liberalization and facilitation of trade and investment. It also encourages its member countries to create a stable and predictable business environment. Such a stable and orderly institutional environment helps attract foreign investment, increase jobs, and benefit consumers with the products brought by market competition and trade. As for underdeveloped countries, the WTO shows more flexibility by allowing them more time to adjust to the implementation of trade rules.

The WTO covers about 98% of global trade. Its principles follow a multilateral spirit, reflecting consensuses reached by most member countries. In particular, the WTO principles reflect the appeals of developing countries and transition economies, which account for about three-fourths of all WTO members.

There is no doubt that the multilateral trading system needs some reforms to adjust to the new situation of world economic development. To some extent, the existing multilateral business and trade rules of the WTO fall behind the needs of today’s international trade and development. On the one hand, the existing international trade rules of the WTO were based on traditional trade forms. Its rules were made to promote the free movement of products across borders. The Doha Round of WTO negotiations focused on only traditional trade problems, including tariff concessions and subsidies on agricultural products. It did not provide a timely response to the need for uniform rules regulating new forms of trade in the global value chain.

The transparency of WTO trade policies should also be strengthened. The dispute settlement mechanism is facing the crisis of paralysis. The operation efficiency of the WTO  also needs to be enhanced.

China has been actively promoting economic globalization and participating in the reform of the multilateral trading system, safeguarding the WTO’s important role in global trade governance. China called for efforts in four areas to reform the WTO. The first is to solve the crucial and urgent problems that threaten the very existence of the WTO. The second is to enhance the relevant role of the WTO in global economic governance. The third and fourth are to increase the operation efficiency of the WTO and elevate the inclusiveness of multilateral trading systems. All these suggestions are valuable in promoting the reform of the multilateral trading system and adjusting to new demands for ensuring the high-quality development of international trade and the world economy.

 

High-quality development
China is an important contributor to world economic development. From 1978 to 2018, the proportion of China’s GDP in the world GDP increased from 1.74% to 15.86%. China’s average annual GDP growth rate has been 9.5% over the last four decades. In the meantime, the average annual world GDP growth rate was 2.93%. China has made great achievements in poverty alleviation. China has gradually become an important engine of world economic development and an important defender of world stability. In recent years, China has implemented a new round of high-level policies of opening up. At the G20 summit this year, President Xi announced major measures aimed at breaking new ground in opening up, including further opening up the Chinese market, demonstrating more initiative in expanding imports, continuing to improve the business environment, extending equal treatment to all foreign investment, and making an effort to advance trade talks.

China is actively honoring its commitment to opening up its market. This commitment was manifested in the shorter negative lists for foreign investment released in 2019. The government has expanded investment access in agriculture, mining and manufacturing, and it has promoted greater openness in the service sectors. All these measures, which demonstrate China’s resolution to further open up its market, will bring steady growth in foreign investment and the long-term confidence of transnational companies in China.

Demonstrating more initiative in expanding imports is a major policy based on China’s practical experience over the past four decades. It is a voluntary policy choice made to satisfy market needs and national economic interests. It demonstrates China’s shouldering its responsibility as a major country by sharing opportunities of development with all other countries. China’s growing middle-income group creates great potential market demand. China’s import accounts for an increasingly larger proportion of global import. Since 2009, China has replaced Germany as the second largest importer. China’s demand for imports is a positive factor for developed countries to address the financial crisis and European debt crisis.

China’s total imports in 2017 and 2018 increased by 17.2% and 15.8% respectively. Notably, the high growth of Chinese imports in 2018 was against the backdrop of the slowdown of global economic growth, the difficulties facing multilateralism and increasing trade friction. This demonstrates China’s breadth of vision and determination to promote greater openness, to contribute to global prosperity and to establish a community of shared future for mankind.
Currently, China is striving for high-quality economic development. By reforming the quality, efficiency and driving forces of its economic development, China aims to strengthen the creativity and competitiveness of its economy. China’s prosperity and development is not just a domestic affair; it will benefit the entire world and further promote the high-quality development of the world economy.

 

Dong Yan is a research fellow from the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.

edited by CHEN ALONG