Op-Ed Contributors

Global mandate for G20

By Jin Baisong (China Daily)
Updated: 2010-06-17 07:55

China should play bigger role in joint efforts by major powers to reform the global financial apparatus

Beginning with the collapse of Lehman Brothers, the global financial crisis soon spread across the world. Many of us still remember 2008 as the year when the financial tsunami and the global downturn were well within sight.

At that critical juncture, the Group of 20 (G20) assembled to take joint action. Having reached consensus on several key issues such as opposing trade protectionism and saving the global economy from collapsing, they successfully restored order and security to the world economy.

Since then, a coordination regime has been established, with every G20 summit throwing up constructive proposals for world development.

With the fourth summit of the G20 scheduled to take place in Toronto on June 26-27, analyzing this regime from the standpoint of economic globalization is necessary.

An important lesson should be drawn from the crisis of 2008: The crisis has become globalized in the context of an interdependent world economy.

Many nations have held trade liberalism as a sacred principle; that has helped weld different economies together, but, at the same time, made them very fragile.

Just over one single night, the collapse of giant financial institutions in America negatively influenced all corners of the world.

That is a key characteristic of economic globalization - any problem with its key parts could turn disastrous for the whole system.

Yet, the 2008 crisis also brought new opportunities to deepen globalization.

All major powers, including developed nations like the US and Britain, and emerging economies like China and India, suffered great losses, but they realized that combating the crisis all alone was futile. The downturn's abrupt beginning has stilled the debate on whether it is necessary to establish a global coordination regime.

Those struck by the crisis have but one choice, and that is joint action by major powers to save the world economy from decline. A global coordination regime has become the shared wish of all.

And, that is how the G20 became a reality.

Compared to other economic downturns, this financial crisis was much more influential and destructive. In this inter-connected world, a small vibration in the financial world is likely to be magnified across the whole system, thus causing trouble beyond the control of any single government. Hence, super-sovereign coordination is necessary to cope with such aberrations.