Op-Ed Contributors

Global mandate for G20

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

Several sessions of the G20 have ensured precisely such a global coordination strategy.

Strictly speaking, the functions of the G20 have far exceeded financial coordination. In a sense, the G20 meetings have become more like a regime regulating the development of world economy.

In the upcoming session of the G20, many more problems will be discussed. The sovereign debt crisis in Europe should be a hot topic. Bailout plans of the various economies would be discussed along with talks on a possible outline deal for the reform of the International Monetary Fund (IMF). Besides, the Copenhagen Climate Conference and its results may also figure in the meetings.

Of course, the summit may also propose measures to establish more institutions to raise the efficiency of a global economy.

China has never played a more essential role in world economic affairs during the past 30 years than it is doing today. We are still in want of experience, both in attending world economic summit meetings and coping with financial crises.

Despite the difficulties, China is definitely playing a crucial role at the summit meetings.

During the first session, it was President Hu Jintao who called on world leaders to shoulder their responsibilities and not resort to protective measures. What China did subsequently has only underscored his point.

Through a series of firm and efficient actions, China not only revived its own national economy, but also helped many other nations by expanding imports. At the same time, China also took a more active part in IMF reforms by helping countries in need.

China has the potential to render even more service in future by properly reallocating resources. For instance, we could reform the exchange forming mechanism of the renminbi, and float the currency within limits. Through such actions the national economy will run more smoothly, and the yuan can also be internationalized.

China should play a more active role in propelling the reform of the world financial regime during the forthcoming G20 meet.

The current world financial system, with its central emphasis on the US dollar, will only help the US pursue its national agenda. This is not without structural deficiencies, which are in urgent need of revision.

In my opinion, we should strive toward the goal of setting up a World Central Bank. As revealed by IMF chief Dominique Strauss-Kahn, the Special Drawing Rights (SDR) regime must be strengthened; that is similar to my proposal of introducing a World Dollar on the basis of the SDR.

That would internationalize the yuan, and achieve satisfying results in both IMF reform and pursuing our national interests.

Economic globalization has been a widely accepted concept for many years, but a global governance and coordination regime is still far from becoming a reality.

Although the 2008 financial tsunami caused heavy losses to the world economy, it also made economic leaders realize the necessity of such a regime.

With the development of the G20, we are witnessing a global regime being formed. During the past two years, the three sessions have saved the world economy from collapse, stimulated its structural transformation, and provided firm support for the Copenhagen conference. We welcome the achievements of the G20 in stimulating economic globalization, and expect this global regime to render yet more service in future.

The author is a research fellow and vice-director of the Department of Chinese Trade Research at the Chinese Academy of International Trade and Economic Cooperation.

(China Daily 06/17/2010 page8)