On September 14-15, the International Conference on “Shifting Coalitions and Potential Blocs for Asian & Pacific Leadership in the G20” was held in SIIS. This is the third anural conference related to G20 after 2010. This time it is co-sponsored by the Shanghai Institutes for International Studies (SIIS), The Stanley Foundation (TSF), the Korea Development Institute (KDI), and the Global Summitry Project at the Munk School of Global Affairs at the University of Toronto, with government officials and scholars from 9 Chinese institutions including the Chinese Foreign Ministry, the International Department of CPC Central Committee, China Institute of Contemporary International Relations (CICIR), Peking University etc, and about 30 international participants from government branches and institutions of 13 countries including the Korean Ministry of Foreign Affairs & Trade, MFA of Mexico, MFA of Singapore, The Trilateral Cooperation Secretariat among Japan, PRC and ROK, Cambodian Institute for Cooperation and Peace, Russian International Organizations Research Institute, Center for Strategic and International Studies, Murdoch University in Australia, Jawaharlal Nehru University, University of Sheffield etc. The participants have a deep discussion on the China-US relation and its impact on G20, the relation between TPP and the China-Japan-Korea trilateral cooperation and their implication on the regional and global economic governance, the role of G7 and BRICS, the prospect of G20, and some other issues.

1. The China-US Relationship and Its Influence toward G20

Both Chinese and American participants think the China-US relations are “too complicated”, characterized by cooperation and competition. Chinese participants recognize that the economic interdependence between China and the US continues to increase, but from 2009-2010, the bilateral relations fall into high tension because of climate change, Taiwan arms sales, Obama meeting with Dalai Lama, Korean Peninsula, Yellow Sea, Investment & Trade Disputes, and domestic political reasons, which leading to rising suspicion over strategic intension and security issues in both countries. American participants agree that risks between two countries are rising, there’s a risk of spillover from one issue to another. All the participants from China and the US believe both countries, including the media and think tanks should do more to work together to form a knowledge community, to maximize cooperation and manage competition.

American participants think that the cooperation in G20 and the strategic dialogues reduce tensions of China-US competition and provide opportunity for cooperation. The US is aware of reforming International Financial Institutions should be a priority for US policy. In IMF and World Bank, the US is underrepresented by the size of its economy, while Europe is overrepresented, so the US will bring Europe’s size down to a representative one. The US strategy is to drive China into global system of rule and governance, and give China greater voice and greater stake in that system. G20 is a very important part of that strategy. The cooperation between China and the US is an essential condition for reaching agreements in G20. And the problems between China and the US are not reasons that make the G20 lose momentum. Chinese participants agree that China and the US cooperated well in the framework of G20. But Chinese do recognize the two countries have very different identity and priorities. For developing countries, governance reform is more important, but for developed countries, the priority is global economic rebalancing. China doesn’t seek to discard the existing system. While Korean participant thinks that the G20 got uncomfortable success in the past four years, one of the main reasons is that China and the US have too many differences on global, regional and bilateral issues; some regional and bilateral issues are involved with nationalism, which influenced their cooperation in G20. Australian participant also pointed that China’s acquiescence with the US is the basis for the possibility of success in G20. So it is important for the US to be very aware of the sensitivity of these issues and seek a balanced position.

All the participants in the conference are concerned that domestic political problems and security problems would spill over to economic fields. Some of them believe military to military relations is a critical missing piece in the China-US relationship. Now distrust characterizes the China-US relations, both sides are conducting “hedging” and “pushing back” policies, and security tensions are exacerbated by regional tensions, so it seems impractical for either to assume leadership in G20.

2. The Trilateral Summit Japan-ROK-China and the Trans-Pacific Partnership (TPP)

The conference participants pointed that there are several integration organizations, including ASEAN 3, ASEAN 6, EAS, APEC, and TPP. ASEAN is a basis for ASEAN 3, ASEAN 6, and EAS, also for Japan-ROK-China trilateral cooperation. TPP is a part of the US strategy to deepen the trade in this area, while APEC is an incremental integration organization, a softer approach than TPP, but it has 20 years of cooperation. Too many integration organizations cause difficulties for the top-level people to attend these meetings and ministerial fragmentation.

Some participants believe that the best choice for Asian economic integration is not TPP, because the TPP will be a very “hub and spoke” bilateral agreement, it won’t address the “noodle bowl” problem in East Asia. The most important economic partner for Asian countries is China, but TPP is seeking to alienate China, and the TPP has very high standards, so many countries hesitate to participate. TPP will not happen in the next few years. But the Asian economic cooperation should resolve the problem keeping the US constructively involved in East Asia; so many participants think that ASEAN 8 could be exciting, it has more potential to create more economic cooperation. For many small countries in Latin America and Asia, they would like to sit on the fence.

American participants think that TPP has nothing to do with containing China. The US wants China to join. The US wants to pull China into the rules-based international system. Also high standards are a good thing, because in a negotiation, if you start low, you’ll end lower. Chinese participants think that arguments in TPP negotiations and the cooperation between China and ASEAN helped China feel more relaxed about the TPP. And they believe the TPP could be good for the liberalization of Chinese economy, the TPP may become a driving force for Asian regional integration. But some Chinese participant warned Japan is endangering putting itself out of the economic and political cooperation in Northeast Asia.

3. The Impact of G7 and BRICS toward G20

Most participants agree that the G7 & G8 have lost a lot of their clout; the power has shifted to G20. But Japanese participants argue that the G7 members share common values, and G7/8 is a good way for leaders to get together and coordinate, it will focus on global political and security issues. Some American participants also argue that the G7 is too strong to be ignored, but the views and interests of the G7 members diverge on global economy and environmental governance, so it is not functional in solving the globalization problems and the financial crisis born of a USD-denominated system. All the Western participants don’t think there is any kind of G7 caucus for the G20, the G7 do not meet in advance or coordinate before the G20 summits. Korean participants think that G7/8 got some success in dealing with nuclear security issue and the “Arab Spring” last year. But on Syria issue, the G7/8 didn’t reach consensus. So the G7/8 no longer leads the security policy internationally.

Chinese participants think that compared with G8, G7 is more related to G20, while G8 now focuses more on political & development issues. Though there isn’t a G7 caucus and a BRICS caucus within G20, G7 poses more competition to G20, most of the agenda topics of the G20 were brought up by G7 countries. But the G7’s representativeness is not enough, given the broad issues facing international relations, and its members are adopting more inward-focused policies, so the G7 is diminishing in importance.

Most participants from both BRICS countries and non-BRICS countries think that the influence of BRICS on G20 is increasing. But BRICS will not form a political or geo-political bloc, though it has three tracks, i.e. economic, political and security, and member countries have many common grounds in the reform of global currency reserve system, international financial institutions, and dealing with global imbalances, etc., because there is likely mutual suspicion and mistrust among BRICS members. Participants from BRICS members believe that BRICS is a very constructive power backing current international order, not a challenge to it. In the near future, BRICS countries don’t expect the change of global governance structure, but this work should begin now. They propose that BRICS should set up a permanent secretariat as soon as possible, promote the reform of the international monetary system, promote regional economic integration, respond jointly to global climate change, talk more about the possibility of a BRICS Bank, and begin to set agenda for the G20, WTO, IMF or any other forum.

There are also some participants from non-BRICS developing countries don’t value BRICS, arguing that BRICS represents the North-South cleavage and East-West divide; it is lack of cohesion, mutual trust, representativeness, and the social basis for sustaining bilateral cooperation is very fragile too.

Almost all the participants agree that the coexistence of G7/8 & 20 will persist for some time, and the existences of G7/8 & G20 should not be zero-sum. The G20 is playing very high stakes in a volatile situation, and they do not hope to see a “developed vs. emerging powers” split in G20. But the G20 members should find ways to enforce cooperation.

4. The Tree of Global Economic Governance Institutions and Perspectives of the G20

The G20 and other international economic governance institutions, such as IMF, World Bank, WTO, FSB, etc., form a global governance tree. Participants of the conference argue that the G20 is mainly a platform for world leaders to have talks and reach political consensus on political willing. The G20 is informal and should remain informal. This informality has some advantages of flexibility, coherence, and authority, which produces power. But the G20 doesn’t work, it is just a platform for dialogue, so the relations between the G20 and other international organizations are very important for G20‘s efficiency. The G20 can only use other international organizations, it cannot replace them.

Participants believe that Mexican government made great efforts on Los Cabos summit, and this summit also got a lot of successes on funding the IMF, initiatives of financial inclusion, and Climate Change Financing, etc., but the timing of Los Cabos summit is a problem, more earlier than the expected one. Its achievements are influenced by Euro Zone crisis, Mexican domestic politics, and its conflict with Rio 20 Summit. The 2013 summit of G20 will be held in Russia. No official agenda has been published by now. Russian participants believe that most agenda in Los Cabos summit will be continued by Russia. Fiscal deficit, financial regulation and financial inclusion, international financial structure reform, food security and commodity price volatility, and climate change and energy efficiency may be on the agenda. The first draft of Russian priority will be presented in this December.

Many participants believe the G20 has got some successes in the past four years, especially in the fields of dealing with financial crisis, regulation of financial regulating sector, and IMF reform and financing. But those successes are limited, mainly because of Euro Zone crisis and the priorities of individual G20 chairs in the process of agenda-setting. Observers of G20 should not be too disappointed with or have too high expectation on major economic governance reform or substantial growth on international cooperation. Global governance structure reform is a long term reform; it needs internal and external balances. The failure of implementation of G20 decisions is not an absolute failure, because there are several challenges that influence the implementation, such as negotiators and coordinator on the table are not implementers; policy making in the local level is even more complex; and the adoption of agreements depend on individual countries’ political regime and structure. But we do find that some significant reforms are taking place in some G20 countries, for example China.

On perspectives of the G20, some participant argues that in the future the G20 should make clear of its fundamental mission, its strategy, and its priority. But participants still cannot reach agreements on agenda-setting, evaluation of success, and composition of the G20 and global governance structure. Some participants from developing countries in G20 suggest that the G20 agenda could be made more broadly to include political and security issues, and other strategic topics, such as development and climate change; and Foreign Ministers’ Meeting in Los Cabos this year should continue in next summits. But many participants argue that the G20 should mainly focus on economic issues, global economic growth and financial stability, it should not erode UN’s functions. Some participants argue that agenda-setting should include some urgent issues in the world, and some others are against that host countries should have special priorities and pitch their own issues to G20 that would make agenda lose succession and continuity. On evaluation of success, some participants believe it’s very difficult to evaluate, there is not good ways, and the communiqué is the very method for assessment; but some others argue that we should set up some benchmarks. On the composition of G20 and global governance structure, some participant still argues that G20’s representativeness should be improved, and at the same time the member of G20 is too much, some members have not qualification to sit on the table. And some participants argue that global governance structure should include regional level, sub-regional level, and even city-level organizations.

 

 

Source of documents：