The contribution to global growth and governance abroad

In a global context, China’s prospective strong, sustained, high-quality growth will come in an economy that is already the second biggest in the world. This alone will help China become a reliably, increasingly robust locomotive of global economic growth. Its growing domestic demand will attract imports from abroad, giving G7 and its fellow BRICS economies a badly needed export and growth boost. Its abundant capital, increasingly freed from the need to feed SOEs with low productivity, can finance badly needed infrastructure in developing, emerging and even advanced countries abroad. And its growing firms and multinationals in advanced manufacturing, information and communications technology and financial services will provide a competitive impulse that should make their foreign competitors in the end, if China extends its new market principles and practices at home to its activities abroad.

The world badly needs this new China, starting now. China served as a major source of fiscal stimulus and financial stability through the great financial crises that erupted in Asia in 1997, America in 2008 and Europe in 2010. The latter two have not fully ended, even as new candidates emerge. China’s current 7%-plus growth is especially welcome as the United States and its G7 colleagues struggle in a historically long recovery from the depths of the recession half a decade ago. It is even more welcome and needed as all the big emerging economies except China in the long booming BRICS experience plummeting growth rates in 2013. So do key emerging economies, such as Indonesia and Turkey, in the tier beyond.

To reap the full benefits of a changing China’s higher quality, more internationally open growth, the rest of the world must respond in an appropriately open and welcoming way.

The G20 summit and system at the centre of global economic governance is the best place to ensure that both China and its leading international colleagues co-evolve in this desired way.

As I detail in my recent book, G20 Governance for a Globalized World, China has made a critical and central contribution to G20 governance since its start at the ministerial level in 1999 and particularly since the start of G20 summitry in November 2008 to cope with the great global financial crisis that erupted in the United States two months before. In responding to that great global crisis and its successor in the European region since 2010, China and its G20 colleagues have worked well together within the G20 to restore and strengthen financial stability, to provide immediate fiscal and monetary policy stimulus and then the needed fiscal consolidation in the medium term, and to prevent a protectionist spiral similar to that in the 1930s breaking out. They have also reformed the International Monetary Fund and the international tax regime, advanced food and energy security and climate change control, and reduced terrorist finance and weapons of mass destruction. In all they have done much to produce the more stable and safe world necessary to China’s prosperous and peaceful rise. The new reforms for a changing China and the proven performance of the G20 in governing a transforming world will do much to bolster Xi Jinping’s case for hosting and chairing the G20 summit when it returns to Asia in 2016.

The author is John Kirton, co-director and founder at G20 Research Group, BRICS Research Group, non-resident senior fellow at Chongyang Institute for Financial Studies of Renmin University of China and author of G20 Governance for a Globalized World (Ashgate)