Wendy Dobson is a professor at the Rotman School of Management at the University of Toronto. Tiff Macklem is the dean of the Rotman School of Management and a former senior deputy governor of the Bank of Canada.
Group of 20 leaders face major challenges at this weekend’s summit in China’s historic city of Hangzhou. The G20 was instrumental in co-ordinating the response to the 2008 global financial crisis, but as the urgency faded, so too did the G20’s relevance as the steering committee of the world economy.
As 2016 chair, China has the opportunity to lead in restoring that effectiveness with a determined and co-operative strategy to bolster global growth and promote openness. We need a strong G20 to counter the mounting isolationist forces so evident in the toxic rhetoric of the U.S. presidential campaign, British voters’ rejection of European Union membership and the rising popularity of xenophobic leaders in several countries. G20 leaders need to embrace innovation and openness and not settle for the apparent “new normal” of slower growth.
Chinese President Xi Jinping has taken steps that could reignite an effective G20. He has set a high bar with the theme of “building an innovative, invigorated, interconnected and inclusive world economy.” He proposes 10 deliverables expected of summiteers. The list includes innovation and entrepreneurship, structural reform, rebalancing global governance, opening trade and investment, robust financial markets, inclusiveness, climate change, sustainable development goals, and anti-corruption.
The world has come to expect such ambition from China at home. The summit affords a golden opportunity to showcase China’s far-reaching structural reform agenda, designed to achieve nothing less than rebalancing its economy by moving away from an investment-driven, polluting and export-oriented growth model toward a “green growth” economy that is consumer-led, innovative and services-oriented.
China’s agenda for the global economy is no less ambitious and wide-ranging. But for Hangzhou to be a game changer, the G20 must move beyond words to concrete actions that genuinely improve economic well-being.
Meaningful progress across all 10 deliverables is to be hoped for, but four have special importance where commitments should be closely monitored.
First, China will propose a new blueprint for innovative growth, which it is well-placed to lead, given its own digital revolution. Consumers and firms have moved online quickly to shop, sell, produce, make payments, invest and raise capital. The blueprint G20 leaders approve should commit to rethinking national and global policies, systems and frameworks to govern innovation, manage disruption and widely share the benefits of progress.
Second, in addressing slow growth, leaders should move beyond avoiding protectionism and spearhead a renewed push to liberalize trade, investment and freer movement of people – each a driver of higher growth.
Third, leaders could make a practical commitment to climate change by supporting the Financial Stability Board’s work on financial disclosure and by further aligning financial market incentives with collective climate objectives.
Fourth, leaders should strengthen global economic governance to reflect the new world order the G20 was created to represent. A more representative and legitimate global framework is not an end in itself, but fundamental to achieving strong, sustained and balanced growth. Only leaders can agree to adopt the clear rules needed to address such collective issues as ending “too big to fail” in finance, sustaining trade and investment flows, and climate change.
Canada should play a strong supporting role. While many other countries are looking increasingly inward, Canada is moving in the other direction, embracing a more innovative, open and inclusive economy, with new ambition on climate. Moreover, as a middle power, Canada benefits from effective global institutions and clear, enforceable international standards.
Focus on these priorities provides Prime Minister Justin Trudeau with an opportunity to regain the global leadership Canada provided at the birth of the G20 in the late 1990s and again during the 2008 crisis. This is an opportunity to build Canada’s brand, to spur demand for our exports and to shape global dialogue in line with our values and priorities.
Restoring this spirit of internationalism and co-operation is essential to improved global growth prospects. China is now the world’s second-largest economy. Its international footprint is growing through its infrastructure funding, enterprise investments and the internationalization of its currency. Hangzhou is uniquely placed, with China’s global heft and focus, to be a global game-changer. Canada should lean in.Report Typo/Error
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