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G20 needs a kick in the butt
The G20 process is stalling. It needs a big kick in the butt. Host countries should deliver it at future G20 meetings. What's the proof that the G20 is stalling? Simple: the global economy is stalling. Since the first G20 summit, held in 2008 with the explicit mission to "work together to restore global growth," it has failed in its core mission. Indeed, the prospects for global economic growth have never looked so gloomy - Larry Summers recently suggested that we are stuck in "secular stagnation."
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European Commission President Jean-Claude Juncker, right, is shown the way by a Chinese official as he arrives at the G20 Summit in Hangzhou in eastern China's Zhejiang province, on Sept. 4, 2016. European Union leaders have called for China to take action on its bloated steel industry and defended an order to Ireland to collect back taxes from Apple, highlighting the trade strains looming over a global economic summit. (Associated Press/Ng Han Guan)
The G20 process is stalling. It needs a big kick in the butt. Host countries should deliver it at future G20 meetings.
What's the proof that the G20 is stalling? Simple: the global economy is stalling. Since the first G20 summit, held in 2008 with the explicit mission to "work together to restore global growth," it has failed in its core mission. Indeed, the prospects for global economic growth have never looked so gloomy - Larry Summers recently suggested that we are stuck in "secular stagnation."
Why is the G20 failing? The conventional answer is that the G20 is divided – the fiscal deficit countries (like the US) want the fiscal surplus countries (like China and Germany) to do more to stimulate domestic demand. In short, differences of opinions on the correct economic responses are causing the G20 process to stall.
But such conventional answers are dead wrong. The G20 is not stalling for economic reasons. It is stalling because geopolitical considerations are interfering with rational economic responses. The zero-sum calculations that plague geopolitical thinking are preventing rational economic cooperation among G20 nations.
A good example is provided by China's proposal to set up the Asian Infrastructure Investment Bank (AIIB). The G20 countries agree that stimulating greater investment in infrastructure would boost global economic growth. As the leaders' communiqué that followed the Brisbane G20 summit in November 2014 explicitly said, "Tackling global investment and infrastructure shortfalls is crucial to lifting growth, job creation and productivity." Yet, when China launched the AIIB, the US campaigned fiercely against it, and an anonymous US Treasury official expressed US feelings well when he said in response to the British decision to join the AIIB, "We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power."
The honesty of this official is commendable. His statement brings out well the zero-sum attitudes of geopolitical "strategic thinkers." The real tragedy here (and it's a tragedy that cripples the G20) is that these so-called "strategic" thinkers can't think strategically and can't see the big strategic picture of how our world has evolved. Most of the people advising the G20 on "strategic" issues are guns-and-bombs people whose mental concepts are stuck in the 19th century. They wrongly assume, as the US official revealed, that China's rise can only be negative for the US.
This may or may not have been true in the 19th century, but it's certainly not true in the 21st century. We now live in a small, interdependent world. If our priority is to restore global economic growth, it is now in China's national interest to see a strong thriving US economy – and vice versa. It is vital to emphasize that global interdependence is not just growing in the economic sphere. It is equally true in our battle to combat global warming, pandemics like Ebola and Zika and the so-called Islamic State. In short, as I explain in "The Great Convergence," all 7 billion occupants on Earth are sailing on the same boat. It is the fundamental responsibility of the G20 to take care of our fragile global vessel.
The Hangzhou G20 meeting can demonstrate that the G20 leaders now understand better their global responsibilities by taking a few small but significant steps. President Obama can take the lead. He has nothing to lose, since he is stepping down soon. He can demonstrate that the US has liberated itself from zero-sum thinking by announcing that the country will join the AIIB instead of opposing it. Congressional approval can come later, but the symbolic gesture would create a new positive chemistry for the G20.
China can reciprocate by announcing that it is prepared to share its high-speed rail technology with the US on preferential terms to help jumpstart the US economy. Eventually, if China is allowed to build a high-speed railway from the Pacific to the Atlantic coast of the US, it will have an enormous positive effect on US-China relations. China can make a start by proposing to build high-speed railways in California (from San Francisco to Los Angeles) and in the Northeast (from Boston to New York and Washington). Such symbolic projects will show that G20 leaders now understand that concrete cooperation is preferable to issuing meaningless communiqués.
One point is worth emphasizing here. A China-US partnership on infrastructure will be a match made in heaven. America needs new infrastructure; the American Society of Civil Engineers has projected a $1.44 trillion investment funding gap in the US between 2016 and 2025 and warned of a mounting drag on business activity, exports and incomes. China has the financial and institutional capacity to build such infrastructure.
An unusual US-China partnership on infrastructure development could be complemented by another equally unusual partnership between Europe, Japan and India to build infrastructure in Africa. The long-term strategic nightmare for Europe is clear. Over time, with the population explosion in Africa, the influx of illegal migrants from Africa will only grow. The recent surge of boats crossing the Mediterranean provides a clear warning of what is coming for Europe. I have warned about this coming human flood in an essay for the National Interest in 1992. Europe needs to build dikes. The only truly effective dike would be the promotion of economic growth and development in Africa. Europe can try to do this on its own, but its colonial history in Africa still creates psychological obstacles. Working with India and Japan, more realistic projects will be conceived and launched in Africa.
In short, if the G20 is to demonstrate that it is serious about its mission of promoting global growth, it has to snap out of its current mold of issuing long communiqués and launch concrete projects that demonstrate that real economic cooperation is taking place. This is why it would be good to start with infrastructure. It is clearly visible. People will see the benefits. Faith in the G20 will be restored.
Faith in the G20 also needs to be restored for another reason. Many people in advanced developed countries now see globalization as a threat and not as an opportunity. This is why the British voted against their own economic interests in opting for Brexit. Similarly, the emergence of Donald Trump reflects a strong desire among the American body politic to build new walls and cut the US off from the world. Abstract economic arguments cannot change such attitudes. Another bestselling book by Tom Friedman arguing that the world is flat will not do the trick.
Instead, what the public needs to see are concrete projects of cooperation that yield both jobs and benefits. The initial projects have to be high profile and be seen to make a difference to the lives of people. Symbolic steps can also help: the G20 should endorse both the Trans-Pacific Partnership and the "One Belt, One Road" initiative. In short, if G20 leaders could demonstrate that they have liberated themselves from 19th century geopolitical zero-sum thinking, they would revitalize the G20 process.
Even small things like photo opportunities could help to send the world a signal that their thinking is changing. At their traditional photo shoot, the G20 leaders in future should take two pictures instead of one. In the first picture, they should all wear their national hats, demonstrating that they are national leaders. In the second photo, they should wear a common hat, perhaps a blue hat with the United Nations logo, to demonstrate that they also share a common responsibility of managing our small, fragile planet. As they say, a picture is worth a thousand words.
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Kishore Mahbubani is a Singaporean diplomat who currently teaches public policy at the Lee Kuan Yew School of Public Policy at the National University of Singapore. Previously, he served as President of the United Nations Security Council. He is a member of the Berggruen Institute's 21st Century Council. The article was previously published at the Berggruen Insights.
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