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G20 in China should aim at global free trade treaty

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True globalization and free trade economy have been the top agenda of world economies for quite some time, but, however, practically achieving very little. Both globalization and global trade are being effectively mismanaged and thereby controlled by USA and Europe and to some extend by Russia and China to their advantages. Rest of the world has to bear the negative consequences of restricted globalization and refusal to enact global free trade.

G20, the world’s top economies, is the extended version of G8, the western top economies, incorporating medium/developing economies as well to debate and make decisions on the future goals of world economy. The 2016 G20 Hangzhou summit will be the eleventh G20 meeting. It is planned to be held on 4–5 September 2016 in the city of Hangzhou, Zhejiang. It is also the first ever G20 summit to be hosted in China and the second Asian country after 2010 G20 Seoul summit was hosted in South Korea.

Sandwiched between events like the Brexit vote and the US presidential election, leaders of G-20, the world’s major economies meet this weekend in China presumably to take stock of the Brexit impact on world economy. But the world economies at G20 need to mount a realistic defence of the free trade and globalization they have long championed. At stake is the post-World War Two concord on globalization that proponents say has helped lift so much of the world out of poverty. China, the host of the Group of 20 meeting, has itself been one of the biggest winners from free trade, becoming the world’s leading exporter.

Britain’s shock vote in June to leave the EU and the rise of protectionist Donald Trump in the USA has shaken that accord ahead of the G20 summit in Hangzhou that starts on Sunday.

Hangzhou in China

China as the Olympic host this year, has left no stone unturned, no wall unpainted and no sewer unsealed in getting ready Hangzhou for the G20 Summit, an annual gathering of the leaders of the world’s 20 leading economies. Public offices will close for a special seven-day holiday. Private businesses have been urged to do the same, even though the summit itself only runs for two days. Hangzhou residents will receive 10 billion yuan ($1.5 billion) in tourism vouchers to visit other cities in Zhejiang province (of which Hangzhou is the capital) during the G20. The mayor boasts that a 760,000-strong volunteer force stands ready to serve the G20. One persistent rumor is that the city is spending 160 billion yuan ($24 billion) on the G20. If true, this would be remarkable, eclipsing Rio’s $5 billion expenditure on the Olympics. Many public organizations, however, criticised the government for wasting money in the name of a summit and disrupting ordinary people’s lives against communist principles.

Just 40 minutes west of Shanghai by bullet train, it is one of China’s wealthiest cities. The misty waters of West Lake at its heart, fringed by rolling tea fields, have inspired poets for centuries. In recent years, it has become an entrepreneurial hub, most famously as the hometown of Alibaba, an e-commerce company.

The G20 summit, to be held on September 4th and 5th, will be the first in China in the eight-year history of such meetings and a hugely important diplomatic occasion for President Xi Jinping. He clearly hopes that the event will highlight how central China has become to solving the world’s problems

It came as a surprise when China announced that Hangzhou, a second tier city in the eastern province of Zhejiang, would host the 2016 G-20 leaders’ summit, the political equivalent of the Olympics or the World Cup.

Over the past decade, China has hosted a series of high-profile international events mainly in its first-tier cities, such as the 2008 Summer Olympics and the 2014 APEC in Beijing and the 2010 Expo in Shanghai, in order to showcase the break-neck pace of China’s economic developments since it adopted the Open Door in 1978. Hangzhou, the ancient capital of the Southern Song Dynasty (1127-1279), was traditionally hailed as one of the most beautiful cities in China. The city has been transformed into a home for many high profile tech firms such as e-commerce giant Ali Baba, setting an example of how China’s splendid and rich culture and history in the past can still live on in a modern city with an innovative economy.

China, the economic giant

It’s an image that China wants to promote this weekend to the world’s top leaders, breaking away from its image as the world’s cheap labor factory. For China, it is beginning to catch up with the rest of the world in spending every year on research and development. The percentage is about 2.4% of the GDP, right now. That is close to what the United States is spending. And also, it’s growing at a fast pace. To make that case, Hangzhou is an obvious choice as a G-20 summit venue.

The information economy, championed as a new driving force for economic development in the era of “new normal”, accounted for 23 percent of Hangzhou’s GDP, contributing to over 45 percent of GDP growth in 2015, according to Hangzhou city. It was only natural that questions were raised as to why this relatively obscure city was chosen to host the summit meeting of the world’s 20 largest economies, representing two-thirds of the global population and 85% of the global economy.

President Xi Jinping achieved one of the highest GDP growth rates in China during the period when he held the Communist Party’s top post in this Zhejiang province between 2002 and 2007. World especially the West is eager to know whether China is capable of tackling problems stemming from slowing economic growth and overcapacity, wants to keep the focus of this year’s G-20 summit on economic growth. The summit will look at ways to build “an innovative, invigorated, interconnected and inclusive world economy,” he said.

China remains the world’s major growth engine. Despite all the hand-wringing over the much vaunted China slowdown, the Chinese economy remains the single largest contributor to world gross domestic product growth. For a global economy limping along at stall speed – and most likely unable to withstand a significant shock without toppling into renewed recession – that contribution is all the more important.

The Chinese economy accounts for fully 18 percent of world output – more than double India’s 7.6 percent share. Excluding China, world GDP growth would be about 1.9 percent in 2016 – well below the 2.5 percent threshold commonly associated with global recessions. More broadly, China is expected to account for fully 73 percent of total growth of the so-called BRICS grouping of large developing economies. . Chinese growth would have a much greater effect on an otherwise weak global economy than would be the case if the world were growing at something closer to its longer-term trend of 3.6 percent.

If Chinese GDP growth reaches 6.7 percent in 2016 – in line with the government’s official target and only slightly above the International Monetary Fund’s latest prediction (6.6 percent) – China would account for 1.2 percentage points of world GDP growth. With the IMF currently expecting only 3.1 percent global growth this year, China would contribute nearly 39 percent of the total.

Despite all the hand-wringing over the much vaunted China slowdown, the Chinese economy remains the single largest contributor to world gross domestic product growth. For a global economy limping along at stall speed – and most likely unable to withstand a significant shock without toppling into renewed recession – that contribution is all the more important.

Chinese domestic demand has the potential to become an increasingly important source of export-led growth for China’s major trading partners – provided, of course, that other countries are granted free and open access to rapidly expanding Chinese markets. There are of course the global effects of a successful rebalancing of the Chinese economy. The world stands to benefit greatly if the components of China’s GDP continue to shift from manufacturing-led exports and investment to services and household consumption.

A successful Chinese rebalancing scenario has the potential to jump-start global demand with a new and important source of aggregate demand – a powerful antidote to an otherwise sluggish world. That possibility should not be ignored, as political pressures bear down on the global trade debate.

Unlike the major economies of the advanced world, where policy space is severely constrained, Chinese authorities have ample scope for accommodative moves that could shore up economic activity. And, unlike the major economies of the developed world, which constantly struggle with a trade-off between short-term cyclical pressures and longer-term structural reforms, China is perfectly capable of addressing both sets of challenges simultaneously.

Concerns

This meeting should send a clear message that world leaders have heard people’s concerns about globalization and are taking steps to better understand and address them. The risk is that nothing much will be achieved. More platitudes about the benefits of global trade and investment will ring hollow.

While there have been recent concessions that not everyone wins out of globalization, the White House has also signaled a renewed push on the controversial Trans-Pacific Partnership (TPP) trade deal as President Barack Obama’s term winds down.

The G20 earned its spurs with a concerted reaction to the 2008 global financial crisis, but recently opposition to free trade seems to have gained purchase and a coherent defence has been lacking. Among the biggest sticking points is overcapacity in the global steel industry, a sore point for China as the world’s largest producer of the metal. Other concerns include barriers to foreign investment, and the risk of currency devaluations to protect export markets.

International Monetary Fund (IMF) Managing Director Christine Lagarde described the global economic outlook as “slightly declining growth, fragile, weak and certainly not fuelled by trade and said this week that G20 leaders need to do far more to spur demand, bolster the case for trade and globalization, and fight inequality. The Centre for Economic Policy Research estimates that in the first eight months of 2016 alone G20 governments implemented nearly 350 measures that harmed foreign interests. The jumps in G20 protectionism in 2015 and 2016 coincide ominously with the halt in the growth of global trade volumes.

The Washington-based U.S. Chamber of Commerce fired a broadside at what it saw as creeping protectionism in the information and communications technology sector, releasing a report citing aggressive new measures from China to Russia to the EU. National security was the reason given by Australia’s government when it rejected Chinese bids for an electricity grid last month, a decision that Beijing labeled as “protectionist”.

West is opposed to free trade   with developing nations. When EU Commission President Jean-Claude Juncker and EU Council President Donald Tusk set out their priorities for the Hangzhou meeting this week, free trade was next to last. It was preceded by the refugee crisis, jobs growth, financial stability and tax transparency. While the challenge was recognised, no solutions were offered.

The G20 might discuss how to reverse the slowdown in the growth of trade and foreign investment and to communicate the benefits of trade to citizens while addressing their concerns. The critics argue the benefits of globalization are too often over-hyped by politicians, leading to public disappointment.

Obama has promoted the TPP deal as an engine of job creation yet it might add all of 0.5 percent to economic growth after 15 years. The 12-nation TPP is the number one legislative goal of Obama’s remaining term, yet is under assault at home and abroad. Both the main candidates in the November election, Republican Trump and Democrat Hillary, have come out against it, blaming past deals for destroying Americans jobs. If anything, the TPP highlights the divisions within the G20. It was sold as the economic pillar of Obama’s broader plan to shift U.S. foreign policy toward Asia and counter the rising might of the hosts of this very meeting, China.

Observation

As China, among other advancing economies are making big strides in capitalist development actions, the G7 leaders USA and EU have brought them also into what is now called the G-20. One of the reasons is to curb fast climate disorder with the help of these developing economies that are also responsible for rising sea levels, threatening the existence of island nations, like Sri Lanka, Maldives, etc.

An officially communist country, China heavily subsidizes capitalist economy of USA, finances the NATO imperialist wars, has been sympathetic to fascist aggression of Palestine by fanatic Israel, would not appreciate Kashmiri struggle for freedom from Indian yoke primarily because China also occupies a part of Kashmir, taken from Pakistan as a stolen gift.

The G20 needs to do better in communicating the benefits of free trade, while giving the political push that’s needed to unlock stalled multilateral trade liberalization. Delivering a successful G20 summit in Hangzhou means tackling big global challenges successfully through practical actions benefit the world.

Hopefully, the G20 would seriously consider global free trade mechanism so that all under developed nations also benefit from G-20. It is urgent the G20 nations evolve a strategy for a global free trade treaty.

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Bringing cultural and creative industries back in the game

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The lockdown and social exclusion interventions have highlighted the value of arts and culture for people’s mental wellbeing – and, likely, health, due to the increasingly recorded psychosomatic effects of cultural access. But their benefits do not stop there. In terms of economic impact and jobs, the cultural and creative fields are important in and of themselves. They encourage creativity all around the economy and lead without any doubt to a variety of other socially beneficial networks, such as education, inclusion, urban regeneration just to name a few. Despite their vital role in our societies, culture and creatives industries are among the hardest hit since the outbreak of the Covid-19 pandemic, with major cities also having the highest concentration of work openings.

In these unprecedented times, with multiple crisis emerging almost on a daily basis, one after another, people – and local actors are for most, all round the world, turning to public support, desperately hoping for strong actions. Economy recovery plans announced by governments have been a first very encouraging sign. But despite all efforts, following a review of the overall landscape of the cultural sector across the globe, policies to help businesses and employees during the pandemic may not be well-suited to the sector’s non-traditional business models and modes of employment. Policies should harness the economic and social impacts of culture in their wider recovery packages and efforts to transform local economies, in addition to short-term funding for artists and businesses from both the public and private sectors.

According to the OECD report ‘’Culture shock: COVID-19 and the cultural and creative sectors’’, Cultural and Creative Sectors (CCS),including tourism, are among the most impacted by the present situation, with job losses varying from 0.8 to 5.5 percent of total employment across the creatives sector. It has been witnessed that social distancing policies have the greatest impact on venues-based industries (such as museums, performing arts, live music, concerts, cinema, and so on). The sudden decline in sales has put their financial stability in jeopardy, resulting in lower-wage earnings and layoffs, with ramifications for their suppliers’ value chain, both innovative and non-creative.

Because of a variety of factors, the consequences can last a long time. In the coming months, if not years, the effects of the recession and a decline in cultural sector investment might have an impact on the development of cultural products and services, as well as their diversity. Lower levels of international and domestic tourism, a drop in purchasing power, and reductions to public and private funds for arts and culture, especially at the local level, may accelerate this worrying growth in the medium term. And unfortunately, this is only the tip of the iceberg.

And it goes without saying that the downsizing of cultural and artistic industries would have a detrimental effect on cities and regions in terms of employment and revenues, levels of innovation, public well-being, and the richness and inclusion of communities in the absence of responsive public funding and recovery strategies. This though is inspiring dread. With vaccination programs promising us to get our ‘’normal lives” back in a near future, can we imagine actually living in a place with less theatres, less museums, less creativity? At a time when some major cultural institutions are on the verge of bankruptcy, having to choose between keeping their loyal employees or selling a master piece, this horror script is closer than ever. On top of that, the crisis has brought to light the financial vulnerability of some of the sector’s producers. Indeed, microbusinesses, non-profit organizations, and artistic practitioners make up the majority of the cultural and creative industries, which are frequently on the edge of financial viability. For the provision of innovative goods and services, broad public and private cultural institutions and companies depend on this diverse cultural ecosystem.

The dysfunctionality of public assistance programs that are inadequately applied to cultural and creative sectors business models and job opportunities has created more trouble for this sector. In view of the pandemic, national and local governments around the world have indeed adopted a slew of initiatives to support workers and companies, but many of them, especially those not aimed at CCS, are unsuited to the industry’s peculiarities. Jobs and state benefits programs are not always available or tailored to the modern and non-standard types of work that are more unstable and prevalent in the CCS. And this is how we fail at bringing back to life such a vital sector. From an economic point of view, but also societal.

But there is hope. There are solutions. Proposals. Specific policies, targeting the core of the problem, can be implemented at corporate and government level to enhance the cultural sector’s growth. Indeed, first of all, both private and public sectors need to work hands in hands if we want to give a chance to the creative industries to recover from this pandemic, and be part of the global recovery we are all craving for. In the short term, it should be made sure at government level that public support for COVID-19 relief does not discriminate against cultural and creative sector businesses and employees because of their non-traditional business models and job contracts. Furthermore, initiatives shall be taken to increase the effectiveness of policy initiatives, CCS network organizations, self-employed workers, small cultural and innovative enterprises, and sectoral employer organizations were consulted. By simplifying eligibility requirements and making them open to hybrid types of jobs, gaps in self-employment support systems can be filled. In addition, non-profit organizations should be included in funding programs aimed at helping small companies retain workers along with assurances that the funding for cultural organizations exceeds artifacts. On the medium and long term, private and government bodies should promote greater complementarities between culture and other policy sectors. For instance, advances in the cultural and creative sectors can also benefit education, especially in the use of new digital tools based on gaming technology for example and new forms of cultural material. Greater collaboration between health care and the cultural and artistic sectors will help to enhance well-being, prevent disease, or postpone its occurrence, encourage the development of healthier behaviors, and prevent social isolation. Development of new local cultural tourism strategies that resolve several large-scale or intensive tour operators’ socially and environmentally unsustainable practices. There is indeed a very wide range of possibilities. Endless possibilities within our reach. The potential is unlimited if only we decide to seriously consider it.

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Innovative ways to resume international travel

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International travel was predictably impacted as a result of covid 19 and the tourism industry suffered severe losses.

According to the UNWTO (United Nations World Tourism organization) barometer, the period from January-October 2020 witnessed a whopping 72% drop in tourist arrivals (international tourist arrivals dropped by 900 Million when compared to the January-October 2019 period). The loss in export revenues, year on year, from the tourist sector were a staggering 945 Billion USD. Tourist arrivals across regions witnessed a drop. According to the UNWTO barometer, the drop in tourism would cause a loss of 2 Trillion USD to the global economy.

Countries looking to resume international flights

During the midst of the pandemic, agreements were signed to facilitate essential travel between various countries (priority was given to workers, students or individuals who had to travel for emergency purposes).

Countries which have been successful in dealing with the pandemic have been looking to gradually resume international flights. Since October 2020, Singapore whose economy is significantly dependent upon tourism  had signed agreements with certain countries to ensure that travel for important purposes was less restrictive — either the quarantine period was reduced, or in some cases was not required at all.

New Zealand will be allowing quarantine free travel from Australia for the first time from April 19. New Zealand PM, Jacinda Ardern:

‘The Trans-Tasman travel bubble represents a start of a new chapter in our COVID response and recovery, one that people have worked so hard at’

Australia has been permitting travellers from New Zealand to enter most parts of the country without quarantine, though this has not been reciprocated.

A travel bubble has also opened between Taiwan (which has reported a little over 1,000 cases and 10 deaths) and the Island of Palau (which has reported 0 deaths) where travellers need not quarantine themselves (there are a number of other restrictions though).

Vaccine Passports, Digital Pass and differing perspectives

As countries get ready to open up travel, there has been a debate with regard to using ‘vaccine passports’ (these are documents which show that travellers have been vaccinated against Covid-19 or recently tested negative for the virus).

One country which is using this experiment domestically is Israel. It has issued a document known as ‘Green Pass’ to those who have been vaccinated or if they have developed immunity. This Green Pass can be used  for entry into gyms, hotels,  restaurants and theatres. The UK and US too are mooting the idea of introducing such an arrangement. This idea has faced fervent opposition in both countries. In UK, opposition parties Labour, Liberal Democrats and the Scottish National Party (SNP) have opposed the idea of such a covid certification document. The reasons cited for opposition are concerns with regard to ‘equity, ethics and privacy’.  The UK government has stated that a covid status certificate would not be introduced before June, and trials of various schemes to ensure safe opening up of the UK economy would carry on.

In the US, Republicans are opposing the idea of a vaccine passport saying that such an idea would be an attack on personal freedoms. Donald Trump’s son Donald Trump Jr urged Republicans to ‘vocally and aggressively’ stand up against vaccine passports.

If one were to look at international travel, International Airport Transport Association (IATA) has introduced a travel pass, a digital certificate, which will confirm a flyer’s COVID-19 test result and vaccination status. Singapore will be accepting travellers using this mobile digital pass from May 2021.While the pass has been tested by Singapore Airlines, 20 airlines (including Emirates and Malaysia Airlines) are in the process of testing the pass.

While one of the pitfalls of a covid status certificate or Vaccine passport is the impingement upon privacy, it has also been argued that developing countries will be at a disadvantage given the relatively slow rate of vaccination in the developing world. While remarking in the context of Africa,Dr. John Nkengasong the head of the Africa Centers for Disease Control and Prevention, said:

‘We are already in a situation where we don’t have vaccines, and it will be extremely unfortunate that countries impose a travel requirement of immunization certificates whereas the rest of the world has not had the chance to have access to vaccines.’

Conclusion

In conclusion, it is important for innovative ways to resume international travel. Safety needs to be balanced with equity, for this it is imperative that all actors engage in a constructive manner. A number of observers have suggested that vaccine passports/covid status certificates should be made optional, and that there is nothing wrong in using technology per se but it should not be thrust on anyone. The fight against the pandemic and revival of international travel are a golden opportunity for countries to reverse the increasing sense of insularity and inequity which has risen in recent years.

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Will the trade war between China and the United States come to end?

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USA China Trade War

Authors: Raihan Ronodipuro& Hafizha Dwi Ulfa*

The recent trade conflict between the United States and China has had a direct effect on some of the world’s economic players. These two countries are attacking each other with declarations and a trade war; the relationship between the two countries can be defined as a love-hate relationship because the two countries have a lot of mistrust for each other, but they still need each other.

The United States requires China as a global source of low-wage labor as well as a market for marketing American products, and China requires the United States as an investor in its companies as well as a market for marketing Chinese products known for their low-cost. What makes these two countries to be so cold to one another? To answer the question, let’s go back to when this trade war saga started.

Donald Trump is a successful businessman who owns enterprises and corporations all over the world. His candidacy for President of the United States in 2016 poses several concerns, including whether Trump is eligible to run for office. Trump replied by becoming the 45th President of the United States, succeeding Obama.

Trump adopted a protectionism agenda in order to shield the US economy from what he referred to as the “robber from China.” Trump has released a law stating that all steel and aluminum products entering the United States from Europe, China, Canada, and Mexico would be subject to 25% and 10% tariffs, respectively. Of course, China is outraged that the United States issued this order, as well as a related policy on all tribal products. Automobile components, as well as agriculture and fishery products, are manufactured in the United States.

In addition to the tariff battle, President Trump has expressly demanded that the TikTok and WeChat apps be prohibited from running in the United States. We know that these two technologies are very common in the larger population. Giant corporations, such as Huawei, have not survived Trump’s “rampage,” with the Chinese telecommunications giant accused of leaking US national security data to China through Huawei’s contract with US security authorities.

As a result, many US firms were forced to cancel contracts with Huawei or face sanctions. Google is one of the companies impacted by this contract termination, which means that all Huawei smartphone devices manufactured in 2019 and after will lack any of Google’s services such as the Google Play Store, Gmail, and YouTube.

Many of the world’s economic organizations predict a 0.7 percent drop in GDP in 2018 and a 2% growth in 2020. Coupled with the Coronavirus pandemic, the global economy has become increasingly stagnant, with global economic growth expected to be less than 0%.

Amid the tough trade negotiations between the United States and China, COVID-19 pandemic is also affecting their relationship. The United States domestic pressure to contain the pandemic, has led Trump to accuse China of being the virus spread source.  As a consequence, Trump put the US-China future relations at stake with his “China’s Virus” label. Besides, the United States absence from World Health Organization (WHO) during Trump administration along the pandemic, that become a new opportunity for China to expand its influence.  China uses the Covid-19 pandemic issue as an opportunity.

China’s successful in controlling the pandemic,  has also made China confident in facing the United States. Meanwhile, the United States is increasingly threatened by its position. Moreover, the United States dependence on overcoming Covid-19 which requires relations from many parties, including China, makes the United States’ position weak as a superpower.

This is what we hoped for when Biden took office. Many consider President Joe Biden to be willing to “soften” the United States’ stance on the trade war with China. After his inauguration on January 20, 2021, Biden has made many contacts with Beijing to address a variety of issues, one of which is the continuation of the trade war.

The United States and China agreed to meet in Anchorage, Alaska, on March 18-20, 2021, to discuss this issue. The meeting produced no bright spots in the escalation of the US-China trade war, but rather posed questions concerning the Middle East, Xinjiang, North Korea, and Taiwan.

The Biden administration stressed that it does not plan to abolish various regulations passed during the Trump administration’s term in the trade war with China, but it also does not intend to employ the same negotiation strategies as the Trump administration, which seemed to be very offensive. Besides, the Biden administration must be careful, If Biden prioritizes domestic challenges then China has room to push its agendas, including in the field of technology and territorial issues

Furthermore, the Biden administration’s policy has shifted from imposing tariffs on China to investing in industries that Biden believes are less competitive with China, such as nanotechnology and communication networks.

In conclusion, the trade war between the United States and China has ushered in a new age in the global economy, one in which China is going forward to replace the United States’ status as a world economic force, something that the United States fears.

The door to investment is being opened as broad as possible, the private sector is being encouraged to participate (under tight government oversight, of course), the cost of living is being raised, and the defense spending is being expanded. Today, we can see how the Chinese economy is advancing, becoming the world’s second largest economy after the United States, selling goods all over the world to challenge the United States’ status, and even having the world’s largest military after the United States.

The rise of China is what the US is scared of; after initially dismissing China’s problem as insignificant, the US under the Trump administration takes China and Xi Jinping’s problems seriously by starting a trade war that is still underway.

Will this trade war enter a new chapter in the Biden presidency, where the relationship with China will be more ‘calm’ and the trade war can be ended, or can it stalemate and maintain the stance as during the previous president’s presidency?

*Hafizha Dwi Ulfa is a Research Assistant of the Indonesian International Relations Study Center (IIRS Center) with analysis focus on ASEAN, East Asia, and Indo-Pacific studies.

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