Expectations for imminent G20 Toronto Summit

15:53, June 25, 2010      

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The incoming Fourth Group of 20 (G20) Summit in Toronto is a very important meeting at the time when the European Sovereign Debt Crisis is spreading instead of being limited to Greece and Spain, and the global economy faces another round of recession. And the two-day summit has the historical mission to consolidate the global economic recovery or balanced and sustainable growth, and to go on revamping the international financial setup in the aftermath of the global financial crisis.

This will have been the fourth G20 summit since the global financial crisis started in 2008. The G20 has a membership comprising 19 countries and a regional bloc, including the United States, Japan, Germany, France, Britain, Italy and Canada.

The G20 leaders have met three times since the global financial crisis struck in September 2008 to coordinate under a global plan to fight the worse recession ever since the Great Depression in the late 1920s and early 1930s. The first three summits, respectively held in Washington D.C., London and Pittsburg, have contributed a lot in working with the international community to meet challenges from financial crisis, spur global economic recovery, stabilize global financial markets and retool the exiting global financial order. Owing to the present undulating global economic developments, the unstable financial situation has turned out to be an intrinsic hindrance to the world economic recovery. Against such a backdrop, people hope that the participating parties at the Summit will pull together in times of trouble to tide over the difficult period by means of seeking common grounds while reserving differences, so as to attain a positive, substantial outcome in the ensuing aspects:

First of all, G20 member nations should promote the "strong, sustainable and balanced growth framework" of the world economy in a comprehensive manner, through coordinating macroeconomic policies, reinforcing the gains to cope with the financial crisis and further ensuring the recovery and sustainable growth of the global economy.

To date, the global recovery is better than expected on the whole. In the meanwhile, Europe's debt crisis has become an issue of concern, and it posed new challenges to world economy and global financial market. In face of the new, complex global economic and financial situation, the G20 members should maintain the continuity and stability of macroeconomic policies, and strive to find the balance point in their efforts against inflation and for economic recovery while working hard for economic growth.

Besides, the G20 members should press ahead with the reform of international financial institutions and very much need to develop a definite "roadmap" and schedule for the future strategic reform in this regard. As the world today is heading into an entirely new direction toward multilateralism, the developing nations have been playing a more vital role in the world economic recovery to resume economic growth, and global financial institutions should step up its own reforms to conform to the new reality.

In the past year or so, the World Bank and the International Monetary Fund (IMF) have made some headway in their reforms nevertheless, but the pace of the reforms is slow and gingerly. Consequently, the G20 leaders should confer and decide on how to accelerate progress in such reforms, so as to increase the fairness and justice of global financial multilateral organizations.

Thirdly, the G20 leaders should continuously advance the reform of financial supervision, especially over the reform of transnational groups and credit rating agencies (CRAs). Collaborative efforts of the main international bodies and national authorities indicate the very key direction that has to be upgraded, and the CRAs play a crucial role in the efficient operation of global capital markets, since both investors and lenders hinge on CRAs to provide capital infusions. At the Pittsburg summit, the G20 leaders reached consensuses on numerous major issues, and they called for an internationally-developed financial managerial system to be used for monitoring market risks and economic capital.

Finally, all forms of trade protectionism should be dealt with continuously for carrying out trade and investment facilitation. In spite of important consensuses reached at the three previous G20 summits, the G20 leaders still need to guard against or prevent the trade protections and other forms of protectionism from rearing; they should also reaffirm and implement their commitment to fight the protectionism made at the Pittsburg Summit in September 2009, to help promoting the growth of global trade and investment.

By People's Daily Online and its author is Shi Jianxun, a noted PD guest commentator and professor of economics at Shanghai's elite Tongji University


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