All member states unanimously denounced protectionism, called for the resumption of the Doha trade negotiation, a boycott of currency devaluation measures, and vowed to extend the promise of the Washington G20 summit "not to set up new protectionist measures for a year" to the end of 2010.
However, a few disputes remain.
Member states did not achieve consensus on reforming the international financial system.
The stability of the global financial system, the arteries and veins of the world economy, is the core issue for economic recovery and development. The Washington summit emphasized that one of the origins of the credit bubble and the financial crisis was the lack of international financial regulation. It vowed to strengthen financial regulation and reform the international financial system. Fixing the leaks, getting rid of toxic assets, and recovering the health of the financial system, are undoubtedly the premises for overcoming the crisis and reviving global finance.
Before the summit, the US proposed a policy funded by both public and private money to deal with the toxic assets. However, it hesitated in offering more bailouts to the financial institutions. When handling the ailing enterprises in the real economy, the US government did not set up an "industrial revival" regime to facilitate the bankruptcy and restructure of enterprises. The protection measures to keep the dying enterprises alive made the cancer cells rampant in the real economy. In Europe, the euro zone economies refuse to bail out the Central and Eastern European countries, which are battered by financial chaos. The inaction may bury landmines in the European banking system.
The US, Europe and Japan all want to preserve their own strategic superiority and maximize self-interests in the international monetary system. Thus the summit did not achieve a consensus on international financial regulation.
German Chancellor Angela Merkel argued that, if a decision could not be made then to beef up international financial regulation, it would not be made in five years. Germany and France advocated strengthening the regulative power of the IMF, and exerting stricter regulation on financial tax havens. Though the US agreed to the registration of hedge funds and surveillance on financial derivatives, it opposed "regulation that may handicap the freedom and efficiency of the market". Japan ambiguously argued for encouraging the "financial elites", seeking "smart regulation", restructuring the Financial Stability Forum to add a seat for Japan, and building a "self-disciplined regulatory system".
Since the financial crisis broke, the cohesion and power of the G7 financial minister conference have been in decline. The G20 summit, which incorporates emerging economies, now serves as the main stage of the world economic order.
The rise of emerging markets and the relative decline of developed countries indicate the reorientation of global economic order. Developed members at the summit had to listen to claims proposed by China, Brazil, India, Russia, and other emerging economies. The promise of China to inject fluidity into the IMF and curb protectionism generated a righteous aura. As the power of the emerging economies grows and their voices become louder, new hope of a fairer and more just international order looms on the horizon of the global economy.
The author, Liu Junhong, is a researcher with the China Institutes of Contemporary International Relations.
(China Daily April 7, 2009)
