Action expected on several fronts
Updated: 2013-09-06 09:25
By Fu Jing (China Daily)
Sustained development, balanced growth are key priorities for G20 leaders
Expectations are high that the eighth conclave of G20 nations in St Petersburg, Russia, will produce more concrete steps to aid global economic growth and for increased participation of emerging economies in international finance and trade.
However, sparks are also expected to fly over topics like Syria and the quantitative easing program of the US. The US, where the first G20 summit was held in 2008, is likely to face criticism for its possible monetary and fiscal policy scale-back, actions that are likely to cause more shocks to global economic growth. Currently nations such as India and Brazil are facing capital flight problems due to the policy speculation in the US.
Before the summit, Russian President Vladimir Putin had indicated that he expects further consensus among the participants on major global issues and commitment for strong, balanced and inclusive growth along with sustainable development.
However, Putin says the global economy still faces several risks. "Though we are witnessing a slow recovery, the pace is not sufficient enough to offset the global imbalances," he says.
Putin says important decisions need to be taken to stimulate investment, while a roadmap for long-term investment financing needs to be developed and implemented during Australia's G20 presidency next year, along with the principles for institutional investors.
According to Putin, the G20 leaders may also unveil steps to:
Invigorate capital markets;
Improve financial regulation and create better infrastructure both globally and nationally;
Create a stronger multilateral trade system;
Enhance sustainability of energy and commodity markets; and
"I am convinced that the forthcoming leaders' summit in St Petersburg will reaffirm the G20's role as an efficient mechanism for coordinating the world's leading economies' policy approaches to global economy and finance," Putin said.
Discussion of the US Federal Reserve's plan to scale back its economic stimulus is expected to feature prominently in St Petersburg, a Xinhua report said.
Ksenia Yudaeva, Russian sherpa of the G20 group, says policymakers will consider steps to boost sagging economies in developed and developing countries, and work for the creation of a favorable environment for private investment, along with measures to boost infrastructure investment.
"Uncertainties surrounding the US Federal Reserve's plan to phase out stimulus are also expected to be discussed widely," she says. The US government has not specified its priorities at the summit.
Russia's concerns have been echoed by China. Vice-Finance Minister Zhu Guangyao and central bank Vice-Governor Yi Gang had said that the US Federal Reserve should consider when and how fast it unwinds its economic stimulus to avoid harming emerging markets. However, both officials say that the impact on China is limited compared with some other countries.
"The US economy is showing some positive signs and is recovering gradually and we welcome this," Zhu said during a briefing ahead of G20 leaders' summit in Russia. "But the United States, the main currency issuing country, must consider the spillover effect of its monetary policy, especially the opportunity and rhythm of its exit from the ultra-loose monetary policy."
According to a recent Reuters report, financial markets are already worried that the US Federal Reserve may decide to reduce its monthly bond purchases when it meets on Sept 17-18. In June, US Federal Reserve Chairman Ben Bernanke indicated that the bond purchase program could be halted by the middle of next year.
The Russian official Yudaeva says the EU feels that economic growth and employment should be the main items on the G20 agenda along with concerted action on financial regulatory reforms.
The EU is a member of the G20, as are Britain, France, Germany and Italy. The European Commission President Jose Manuel Barroso and the European Council President Herman Van Rompuy have listed four priorities for the summit.
Van Rompuy and Barroso said the EU has made steady progress in implementing a comprehensive reform agenda and is delivering on time and on all fronts. The EU is well on track to have all the main financial reforms in place by next year, they said.
"The G20 needs to develop a clearer narrative to set out what has been achieved so far and what is left to be done," the two leaders said in a joint statement.
The EU has also called for more action on issues such as tax avoidance and evasion. It has also called for reform of the international financial architecture and more work on fighting corruption.
"The full implementation of the 2010 IMF quota and governance reform is a critical element for boosting the legitimacy, credibility and effectiveness of the IMF," it said. China, for its part, has called for more representation in international monetary regimes.
The EU also says the world needs to be more vigilant and active in supporting the recovery process and find ways to ensure strong, sustainable, balanced and inclusive growth.
"The G20 leaders in St Petersburg should send a positive message to improve global confidence and support global recovery," Van Rompuy and Barroso said. "We therefore need to show unity around a common purpose and demonstrate that global institutions, and in particular the G20, are delivering."
Though the G20 is a collective platform of old powers and emerging economies, their leaders are expected to organize separate talks on bilateral issues and reach consensus on international issues.
TV crew at the International Media Center for the G20 Leaders Summit in St Petersburg, Russia. Xie Songxin / China Daily
(China Daily European Weekly 09/06/2013 page7)
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