China’s first G20 Summit was, as promised, a big show. But, right down to the unanticipated delay in releasing a communique for several hours, it will not go down as a smooth one. For many, the event will also cement the G20’s reputation as a modern-day talk shop, and a forum unable to address the challenges posed by rising anti-globalisation sentiment.
First, the process. As the Wall Street Journal has noted, security was so tight that media officers found it difficult to brief reporters about the proceedings. Australian reporters found it difficult to reach the media centre, at least until the final afternoon, due to the hour-or-longer journey to get from their hotel through the security arrangements. It was easier to stay with the Prime Minister and accompany him to his meetings.
Only three ‘head of delegation’ press conferences scheduled to take place at the media centre went ahead: those of President Xi, IMF Managing Director Christine Lagarde, Turkish President Recep Erdogan. Others took place at the delegations’ hotels, which were inaccessible to many. This was a frustrating constraint for an organisation that needs to improve the way it communicates.
But what of the leaders' discussions? What progress was made at Hangzhou? The summit was the usual mix of bilateral and multilateral discussions. These conversations are undeniably valuable in that they foster cooperation, and this year was an important advance for Chinese engagement in global economic discussions.
Perhaps surprisingly, albeit consistently with China's preferred approach to negotiations, it was bilateral conversations that dominated this Summit. There was an abnormally high degree of intrigue and speculation about snubs, counter-snubs, red carpets and other distractions.
The emphasis on bilateral meetings is partly a function of the global political context; many G20 countries face significant domestic challenges. This is President Obama’s last G20 and the US election remains an ongoing risk to global trade and cooperation. It is far from guaranteed that the current leaders of Spain, Italy and France will attend the Hamburg summit in nine months' time, and Germany, the host, will hold an election shortly after the summit. The Brazilian President is in his first week on the job, and the UK Prime Minister would have spent a lot of time in sideline meetings explaining Brexit and talking with key partners about new trading arrangements to come.
The communique weighed in at nine pages, 48 paragraphs and 7000 words, not including attachments. It may not be the 27 pages of the Russian summit, but it was undeniably long. The language is impenetrable to the average citizen – even experienced G20 observers and wonks needed a few attempts to digest the contents – and adds to the lack of direct interaction with G20 delegations. The G20’s communications challenges have clearly not been addressed.
It also appears the leaders present made no personal contribution to a draft that was finalised before they gathered yesterday. This is a remarkable development, and the lack of direct ownership by leaders represents a significant missed opportunity. Leaders have not directly led here.
So how much has the world moved on this year?
If you were feeling generous, you would argue that there have been subtle changes in the way the world approaches fiscal policy, and important strides have been made away from the philosophy behind the austerity doctrine. This is an important battle that needs to keep playing out.
Further, in a peacetime setting, we should not expect policy miracles out of the G20. There is evidence of incremental technical progress over a range of areas. Moreover, as Mark Carney has pointed out, the financial system has proven robust amid recent bouts of financial instability, and 2016 saw important progress continue on tax, financial regulation, anti-corruption and the international financial architecture.
The summit also touched on classic G20 themes of growth, international financial governance, fossil fuel subsidies, trade, investment and protectionism. But in each of these areas, the language is rather soft. The G20 is doing a lot of believing, recognising, and taking things into account. As predicted, the outcomes are bureaucratic, with many consensuses, initiatives, agendas, indicators, frameworks and reports listed.
China and the US did both ratify the Paris climate accord, of course, and this was big news in Hangzhou, although even here the achievement was tempered by a lack of co-ordination from the US and China, and by reports India opposed a G20 commitment to ratify the agreement by the end of 2016.
If you were feeling less generous, you would observe we have been in a sluggish growth environment for several years now, and this summit did not change the impression that governments are talking the talk but not acting. Leaders have proclaimed that 'once we agree, we will deliver'. The logic is right, but a sceptical global audience no longer believes the delivery phase will come.
We are in more of a political crisis than an economic or financial one. Hangzhou has confirmed how inward-focussed major countries are, and that global forces have not been significant or urgent enough to force countries to raise their sights, to embrace a significant positive agenda of economic cooperation, and to aim to meet the aspirations of citizens.
As CIGI’s Kevin Carmichael observed yesterday, the IMF’s message this year was there should be no more excuses, and that more forceful and comprehensive co-operation between countries was needed to meet economic challenges.
But, collectively, G20 countries aren't changing economic course quickly enough and there remains a disconnect between those who can spend (but won’t), and those who can’t. As a result, the low growth, high unemployment and mounting risk scenario will likely endure.