Washington, D.C. — The headlines for the upcoming G-20 meeting in Los Cabos, Mexico, from June 18 to June 19 will focus on the financial crisis in Europe, but the role the G-20 plays in the U.S.-Chinese relationship—and vice versa—is important to watch. In “Watching the U.S.-Chinese Relationship in Los Cabos,” CAP Senior Fellow Nina Hachigian explains that the actions and interactions of these two economic heavyweights will greatly influence how successful the G-20 can be over the long run in steering the world’s economic ship.
At G-20 meetings, the United States makes the argument that as China grows, so too do its duties to the international system of laws, norms, and institutions. That system drove the globalization of world trade and enabled China’s explosive growth over the past three decades. China’s record as a responsible member of the international community has improved greatly over the past 30 years but their international posture is best described as a “selective stakeholder,” to use Secretary of State Hillary Clinton’s term. Beijing chooses to contribute in some areas such as peacekeeping but not in others such as intellectual property protection.
We can hope that the G-20 process will help push China further along the curve in taking up the burdens of a modern pivotal power for several reasons:
- For the economic issues at the core of the G-20’s mandate, China has become a “systemically important” player in the global economy with the world’s highest foreign currency reserves and the second-biggest economy.
- Every discussion at the G-20 reinforces the truth of our interdependent world that "what I do affects you."
- The G-20 is the first major international organization where the People’s Republic of China was in on the ground floor, unlike the International Monetary Fund, the World Trade Organization, the World Bank, and others, where China was a fairly late addition.
Over time China’s sense of ownership of the G-20 could help encourage a greater willingness to shoulder the burdens of economic problem-solving. Indeed, China has been an active and often constructive player at the G-20. China coordinated with the United States to jolt the world economy with a significant stimulus measure, is participating in the ongoing Mutual Assessment Process (whereby countries reveal their economic plans to their peers and get feedback about the effects those plans will have on others) and signed on to the Framework for Strong Sustainable and Balanced Growth, which involves commitments to rebalance the world economy by increasing American exports and savings, as well as Chinese imports and consumption.
In the lead-up to the G-20 meeting in Los Cabos, China has announced that it will join the rest of the G-20 in boosting the International Monetary Fund’s resources by $430 billion. This marks a meaningful first step in China’s helping to contain the European debt crisis in the interest of sustaining the world economy. The G-20 forum even seems to have had an effect on a particularly thorny issue in the U.S.-Chinese relationship—the value of the renminbi. The United States successfully introduced the question of China’s undervalued currency to G-20 discussions about global economic imbalances. Since then, Beijing has raised the value of the renminbi before almost every G-20 meeting (though not the upcoming one). The G-20 has also helped the United States and China find common ground on less high-profile issues such as food security and anticorruption.
In the future the G-20 forum might help dampen flare-ups in the U.S.-Chinese rivalry because the other nations represented will be affected by whatever steps Washington and Beijing take to punish the other. Borne out of the 2008 financial crisis, the G-20 symbolizes one of the bigger goals the United States and China share—global financial stability and economic growth. Reminding everyone in both countries about that shared interest, especially during a period where both countries face uncertain leadership transitions and deepening distrust on security issues, is useful in and of itself. Giving it a practical framework is even better.
To speak to Nina Hachigian, please contact Madeline Meth at 202.741.6277 or [email protected].
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