China’s president was less than impressed with Japan’s treatment of the leaders of five emerging economies invited to a G8+5 meeting beside scenic Lake Toya in Hokkaido eight years ago.
Two sources who attended the G8 summit in the summer of 2008 said then president Hu Jintao, representing what at the time was the world’s third-biggest economy, noted differences in the way his Japanese hosts treated Group of Eight leaders and other invitees.
The G8 leaders’ lodges were in better locations, while the leaders of the five “special guests” – China, Brazil, India, Mexico and South Africa – had to stay “quite some way away”, one source said. The G8 countries comprised the seven leading industrialised countries – the United States, Britain, Germany, France, Japan, Canada and Italy – plus Russia.
That was around the time China began searching for a new global governance role to match its growing economic weight and influence on the world stage. But the G8 club of rich, mainly capitalist countries was not an option as Beijing viewed itself as a big, developing, socialist country.
So when Hu walked into the National Building Museum in Washington four months later for the first G20 leaders’ summit, called to address the impact of the global financial crisis, he did so with a sense of confidence. In a long speech he urged all members to work together to save the global economy and reminded them that China had, a few days earlier, announced an unprecedented 4 trillion yuan stimulus package.
“For Beijing, the G20 offers the chance, for the first time in history, to sit at the table as an equal partner with all major powers in the world in talking about the global economy,” said Zhu Jiejin, an international relations expert at Shanghai’s Fudan University. “It’s like membership of the board of directors of the world economy … for China it’s precious.”
As China prepares to host this year’s G20 summit in Hangzhou, the most high-profile meeting of world leaders in the country’s history, it is pulling out all stops to ensure that everything goes flawlessly. To take one example, there will be more than a million volunteers – 20 times as many at the two-week Olympic Games in Rio de Janeiro – associated with the two-day summit on September 4-5. However, only a few thousand volunteers will gain access to the summit venue, the Hangzhou Olympic and International Expo Centre.
The no-expenses-spared preparation for the summit is testament to China’s ambition. President Xi Jinping, who lived in Hangzhou for five years when he served as Zhejiang’s Communist Party secretary, wants to use the forum to stake out a greater role for Beijing in shaping governance of the world economy.
Beijing’s embrace of the G20, along with its creation of the Asian Infrastructure Investment Bank and its push for a bigger say in existing institutions such as the International Monetary Fund, reflects a rising economic power’s desire to shape and even dictate the global agenda.
Half a century ago, party chairman Mao Zedong often met representatives of Third World guerilla movements during his frequent stays in Hangzhou, encouraging their fights against American imperialism. Half a century later, Xi is taking aim at weak economic growth and trade protectionism.
He told US National Security Adviser Susan Rice in Beijing in late June that the US and China – the world’s biggest and second-biggest economies – should work closely to “jointly promote the G20 summit in Hangzhou to produce positive results”.
Stanford University historian Ian Morris, the author of Why the West Rules – For Now, said forums such as the G20 would be “the arenas where the great struggles over the regional distribution of economic power will be played out”.
“Up till the 2010s, most of these institutions have been dominated by Western Europe and North America – as Asian nations have become richer, that has started to change,” he said. “But there will be many manoeuvres and struggles within the organisations as the process continues.”
Tristram Sainsbury, a research fellow at the G20 Studies Centre at Australia’s Lowy Institute for International Policy, said that amid a backlash against globalisation in rich countries, China’s efforts to make G20 relevant should not be read as “China taking leadership away from the West” but as “a way of China working cooperatively with other G20 countries to promote collective good”.
“It’s interesting to see that an emerging market country might need to provide leadership on globalisation,” he said. “This summit offers quite an opportunity to display the leadership of China and the leadership of Xi Jinping.”
China, the G20 president this year, is holding high the banner of free trade as global economic growth stagnates and protectionist sentiment becomes more popular, with US presidential candidate Donald Trump even threatening to impose trade sanctions on Chinese products if elected. It convened a meeting of trade ministers in Shanghai in July at which it expressed its support for free trade and intention to fight protectionism.
China is also linking this year’s G20 agenda to the UN’s development goals for 2030 and is implanting the concept of structural reform, a catchphrase of Xi’s economic thinking, into G20 documents.
After July’s meeting of G20 finance ministers and central bank governors in Chengdu, Finance Minister Lou Jiwei hailed agreements on key areas, guidelines and even a measurement system for structural reform as a “milestone” in the forums’ evolvement into a long-term governance mechanism.
Sainsbury said Xi and his counterparts, building on those ministerial preparations, could announce new measures to boost confidence in the world economy and the globalisation process at the Hangzhou summit. Xi has a track record of delivering something tangible at big events – at last year’s military parade celebrating the 70th anniversary of victory over Japan, he announced the People’s Liberation Army would shed 300,000 non-combat personnel.
“It’s an opportunity too good to be missed,” Zhu said. “China has always been complaining about the West dominating the global agenda, and now the baton is in your hand and it’s your turn to impress the world with what you can do.”
Xu Hongcai, an economist at the China Centre for International Economic Exchanges, a government-backed think tank in Beijing, said the G20 summit would provide China with the opportunity to defy “protectionism, populism and isolationism”.
He said China had “changed from a relative outsider to a central player” in the G20.
China’s increasing involvement in the G20 has evolved gradually, with its post-crisis stimulus more a result of domestic pressure than global coordination. Then premier Wen Jiabao repeatedly said China’s biggest contribution to the world would be getting its own house in order.
Like any new member of a club dominated by the old boys, in the G20’s case the seven rich industrialised countries and their allies, China tried to form its own alliance with Brazil, India, Russia and South Africa, a grouping dubbed BRICS by former Goldman Sachs economist Jim O’Neill. However, the BRICS club shared little in the way of common interest apart from resentment towards the West.
And even today, China’s efforts to hold the G20 together and make it effective are subject to many factors beyond its control.
“History is replete with such initiatives that fall by the wayside … believing that a ‘club’ comprised of as many as 20 countries can actually generate, let alone effectively enforce, aspirational decisions in this realm is … a bit fanciful,” said Harry Broadman, chief executive at Proa Global Partners, an emerging markets business strategy and investment advisory firm based in Washington.
Be that as it may, there’s one thing is for certain.
Beside an equally scenic body of water in Hangzhou – the famed West Lake – it’s now China’s turn to decide who will enjoy the better spots and who will be kept some way away.