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Every year, the leaders from 19 countries and the European Union (EU) gather at the G20 Summit to discuss and recommend policies toward robust global economic growth and other timely issues such as development, climate change and energy, health and counter-terrorism.
Collectively, G20 economies account for 80% of the global GDP and large share of global trade and investment. Therefore, the outcomes from this premier forum will help to stimulate global economic growth and global stability.
Before the official summit, theme ministerial meetings are organized throughout the year to discuss the key related issues such as trade, investment, innovation and agriculture, and to prepare the Agenda for the official G20 Summit.
It was my privilege to participate in the G20 Agenda conference in the capacity of an Economist and Scholar, which was held in Tokyo over 2 days (6-7 June, 2019). In attendance, were key policy makers including; H.E Tarō Asō - Deputy Prime Minister and Minister of Finance, Bank of Japan Governor - Haruhiko Kuroda, Mark Carney - Governor, Bank of England and H.E. Ahmed Alkholifey - Governor, Saudi Arabian Monetary Authority.
In addition, the chief executives from the leading financial services companies and bankers also attended the conference to provide views on the current business environment, including; Goldman Sachs, Fitch Ratings, Citigroup, Asian Development Bank, World Trade Organization and the Bank for International Settlements, among others.
The major topic that participants discussed was the implications of an extended trade war between the U.S. and China and how it may disrupt global supply chains, trade and economic growth. In addition, the prospects that the U.S and China trade tension may ignite other countries to adopt protectionist trade measures and cause the shift toward de-globalization.
Then the point was directed at the root of causes for the current trade tensions. This is amid the world economy continuously expanding, global trade is rising, poverty is reducing and humankind is enjoying the highest level of property ever.
The participants then raised the facts: despite the fact that global GDP is expanding, the imbalance in trade between major economies (i.e. the U.S and China) are widening, developed countries-especially the U.S have to borrow heavily from overseas, mainly from China to fund their imports and to maintain their current level of spending and lifestyle.
The debts are sustainable only if the incomes from the developed countries keep increasing. However, the facts show otherwise. While millions of people in developing countries have been pulled out of poverty, millions of manufacturing jobs have been lost in advanced economies and in the U.S. Whilst opening markets for trade boosts growth, and increases welfare over the long run, in the short term, it creates losers.
In addition, the developing countries are catching up quickly with the developed countries in science and technology, especially new technologies in AI, big data and new energy, which effectively reduce the monopoly power (and economic power) of the developed world. In fact, the Huawei corporation of China has successfully developed the 5G network (the future of digital economy) ahead of the U.S.
Furthermore, the Trump administration has started the "reconsideration" of its trade treaties with its major trading partners, including; China, Mexico and Canada, among others. His hope was to bring back manufacturing jobs to American workers, at the cost of disruption to the global economy.
However, the top policy makers believed that the trade tensions will be short-lived because it goes against the globalization trends, amid the world economy is deeply interdependent. The U.S, China and other global economic powers such as Japan and the E.U will find ways to balance their national benefits and costs and the stability of the global economy.
Participants also discussed other topics such as how big and small companies can embrace technological innovations like AI and big data to find new sources of growth. To do this, they need to prioritise investment funding into green technology measures. This will help deal with demographic challenges/aging, better regulations for the flows and security of data across borders (i.e. the back-born of the new digital economy) and better coordination between countries to reduce market fragmentation and its negative effects.
The official G20 Summit will be held in Japan on June 28-29, 2019 where leaders from 20 largest countries will meet, including Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Republic of Korea, Republic of South Africa, Russia, Saudi Arabia, Turkey, United Kingdom and United States of America. In addition, leaders of invited guest countries and representatives of invited guest international organizations participate in the summit along with leaders from the G20 members.