G20 summit host China labelled as 'symbol of economic leadership'

GMT 07:56 2016 Tuesday ,24 May

Arab Today, arab today G20 summit host China labelled as 'symbol of economic leadership'

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Sydney - XINHUA

China will host the G20 summit for the first time in September 2016, labelled as a symbol of its economic leadership, according to an Australian expert.

The Group of Twenty (G20) is an international forum made up of the governments and central bank governors from the 20 largest economies worldwide.

The G20 summit was born out of the financial crisis of 2007-2008 and the Chinese city of Hangzhou in the province of Zhejiang will play host.

University of New South Wales J.W. Nevile Fellow in economics and former Austrade chief economist Tim Harcourt told Xinhua this week it would be good for the world to go to China and see the Chinese economy first hand.

"China was always this nation of shippers, exporting around the world and didn't have enough shoppers; now they call it a nation of shoppers and it has sort of made this switch from being this nation of shippers to a nation of shoppers," Harcourt said.

"Increasing consumption and investment domestically has been a good symbol of China's transition, and probably necessary as it has grown its middle class and developed a great consumer culture."

He said China's influence would increase in a global economy.

"I think in some ways it already has through global supply chains, through increased outward investment," Harcourt noted.

"A lot of China's economic development was about attracting foreign direct investment, now it's playing a role in outward foreign investment."

Harcourt believes climate change and terrorism will be among the key topics discussed at this year's event.

"I think the macro environment will be of concern, they'll some strategic issues that will matter locally and internationally with respect to terrorism and China's been quite a leader on climate change so I suspect they'll be some discussion of climate change too as there has been before," Harcourt said.

The theme of this year's G20 summit is "Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy."

Harcourt believes China selected the theme for a number of reasons.

"China's looking more to adaptability and flexibility as a way of showing it's not just a great story anymore and that probably makes it a more attractive market for international business," he said.

Innovation has been a hot topic for governments around the world and is a key theme of this year's summit.

"There has been innovation in China for thousands and thousands of years when China and India dominated the world economy up to 1700 so it's not a new thing for China," Harcourt explained.

"I think it's just something that the G20 wants to talk about to disseminate the message, I don't think leaders getting together creates innovation on its own, but I think it does help create an environment for it."

The financial crisis of 2008 caused immense problems for countries around the world.

Harcourt believes countries need to focus on their own domestic financial systems to safeguard themselves against future downturns.

"Getting away from austerity rhetoric would be good because that doesn't seem to have helped recovery in the post global financial crisis world economy," Harcourt said.

"There is probably some means for building new institutions given the rise of Asia and rise of China."

He noted the days where an American was running the World Bank and a European was running the IMF had to change.

"I think in some ways the G20 can play that role."

Harcourt noted trade as a good engine of growth in response to world economic growth rate figures slowing.

"A new trade round or at least some regional trade reform would actually add a bit more growth in a sluggish global economy."

Harcourt recommended China engage a more mature financial system to function better, as well as embracing open markets and professional services.

"I'd also think about being very open to professional services because that can improve your economy," Harcourt explained.

"I think Japan even when it was growing was pretty closed to professional services and that caused two decades of stagnant growth, even though Japan had had a lot of success.

"So I think China can actually, as it develops, open up its professional services market more and that could actually allow it to avoid the troubles that Japan has had in the last 20 years."

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