G20 London 2009


China Upgraded to Global Power

Brown-Hu-G20

Paola Subacchi  Research Director, International Economics, Chatham House
From the London Summit Media Centre

It is the end of the big day and I am travelling from the Excel Centre to a Brazilian café in Acton. The BBC wants to record an interview for Newsnight there, so to add some colour – a long way to go for a couple of soundbites! Does the London Summit make any difference for countries like Brazil? What do the BRICs get out of it?

Perhaps the voice of the developing countries was a bit muted, but surely being around the table is already a big achievement. By delivering a sensible, albeit not exciting, plan of action and showing unity and cooperation, the G20 has qualified to be the key multilateral forum for some years to come. It has de facto replaced the G7 in terms of depth and scope of its agenda – the G7 will continue to be the forum for developed economies. And the developing countries are part of it. However, they will have to move from the background to the limelight and ensure that they are not ‘junior partners’ forever. How can this happen?

Assertiveness is not only a function of geopolitics, but, and foremost, of the ability and willingness to commit resources. This is the big lesson of the London Summit, and the dividing line between ‘senior’ and ‘junior’ partners, or ‘global powers’ and ‘regional powers’. Putting aside some initial reluctance – as in the G20 summit in November 2008 – in London China graduated from regional to global power. It showed political and financial muscles and the appetite to be involved in the global dialogue – with also an interest in developing a closer relationship with Washington.

China is no longer a BRIC, and should no longer put together with countries, like Brazil, that have the potential of becoming large economies and global powers, but they are not quite there. Economic figures clearly show this divide. China’s economy is about US$30,000 bn in volume, has about 10% of GDP current account surplus and approximately US$2,000 bn in FX reserves (estimates for 2008). Brazil’s economy is much smaller (slightly below US$3,000 bn), has about 2% current account deficit and just below US$200 bn FX reserves. This puts China along with the other large economies – US, EU and Japan – and, also, in a special relationship with the US – it is worth noting that President Obama and President Hu Jintao have already agreed to meet twice later this year under the framework of the China-US strategic and economic dialogue.

Political influence and economic power go together, and China seems determined to use both to shape a more global role for itself.

Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.



G20: All Systems Go
April 2, 2009, 3:17 am
Filed under: Analysis | Tags: , , , , , ,

morning-2april

Andrew Schrumm  CIGI Research Officer
From the London Summit Media Centre

It’s early morning here in London, and the G20 meetings have just begun. UK Prime Minister Gordon Brown, the eager summit host, is welcoming all the leaders now, in advance of the traditional “family photo”and their working sessions. While the G20 is a fairly new leaders’ grouping, the familiar G8-style of informal interactions (working meals and press briefings) has found its way into the process.

Most significant so far has been the series of bilateral meetings, particularly by US President Barack Obama. As his first major overseas trip, a priviledged few national leaders have had the opportunity to sit down with the president one-on-one. Yesterday, his meetings with both Russian President Dimitri Medvedev and Chinese Presiden Hu Jintao made international headlines – while mainly congenial and a demonstration of good will, these meetings surprisingly engaged in substantive dialogue. With Russia, the US will begin a new conversation on global nuclear disarmament and a broader security agenda. With China, the US is anticipated to launch a renewed dialogue, leading into an official state visit by President Obama to China in late-2009.

Today, we are anticipating the final language on the summit declaration which will outline the G20’s major initiatives to correct the world economy and establish an international financial regulatory framework to avoid future crises. The exact language here must be both cautious and aggressive at the same time; cautious in that leaders will be held to account on their agreements by national groups and international civil society; and agressive in that strong corrective measures are needed to stimulate national economies and bolster international financial institutions.

As posted yesterday, Lord Mark Malloch-Brown (UK’s G20 special envoy) set some clear expectations for the summit declaration, noting that it will avoid setting strict standards on national stimulus programs and will leave climate negotiations to the UNFCCC.  Clearly the G20 won’t be able to accomplish everything in one day – as things continue, CIGI and Chatham House will continue to provide commentary and analysis on develops here in London.

Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.