G20 Monitor: Towards Hangzhou and Hamburg

Tristram Sainsbury[1]

The 21st edition of the G20 Monitor highlights important considerations for the G20 ahead of the 4–5 September 2016 G20 Leaders’ Summit in Hangzhou, and examines some of the broader governance challenges that may feature prominently at the 7–8 July 2017 G20 Leaders’ Summit in Hamburg, Germany.

With the Hangzhou Summit now mere weeks away, Ye Yu reviews the Chinese 2016 G20 Presidency. Ye points out that China has pursued a more balanced approach towards global growth and that it has used the opportunity afforded by its G20 Presidency to outline a long-term vision for trade, investment, and sustainable development. Its approach clearly aligns with the Chinese domestic reform agenda, and China is eager to exhibit its strong commitment to global cooperation and hosting the G20 in light of ongoing geopolitical and territorial conflicts in the Asia-Pacific. But Ye also highlights that this year’s G20 processes have demonstrated the limitations of the Chinese global leadership role in an increasingly diversified world. As such, she cautions against overly optimistic expectations of policy miracles from Hangzhou, and indeed for any single G20 Summit, in an era of international power diffusion and regionalisation as the world ‘muddles through’.

Trade issues have been of keen interest to the Chinese G20 Presidency, and Australian G20 Sherpa David Gruen and Sam Bide write on what governments can do about the global trade slowdown. They examine the global trade outlook and the factors depressing trade growth such as the weak investment environment, China’s rebalancing away from export-led growth, the diminishing contribution of previous rounds of trade barrier reductions, and the rise of protectionism. Gruen and Bide argue that better informed policy development and enhanced public support can accelerate the momentum for meaningful trade reform. They point out the G20 has been taking steps in this regard, including the recent July G20 trade ministers’ meeting in Shanghai in which the G20 asked for greater collaboration between key international organisations on collaborative and strategic trade modelling, and in communicating the benefits of trade and investment. In addition to these efforts, they point to the need for stronger leadership in describing the benefits of a cooperative, rules-based system, underpinned by better analysis that overcomes protectionist arguments, and build constituencies for trade reform.

This G20 Monitor also canvasses three topics that are possibly of interest to the 2017 German G20 Presidency but that are largely outside the G20’s existing bandwidth. Fergus Hanson examines the scope for the G20 to get involved in rule-setting on the digital economy. State-sanctioned commercial cyberespionage and cyberattacks impose significant economic costs: they have a direct negative financial impact on business, undermine intellectual property regimes, carry the risk of retaliatory action, and are a threat to civilian life. There are various attempts across the world to address these challenges, but the global architecture remains deficient and attempts to address institutional gaps have serious shortcomings. The G20’s political leadership is well-placed to fill the gap, if it chooses to do so, and Hanson points out that an ambitious German 2017 G20 Presidency could spearhead the necessary political impetus required to promote a more cohesive global regime. He makes the case for a ‘non-exhaustive’ multi-year agenda that is focused on three areas: commercial cyberespionage, state conduct in relation to cyberattacks, and the free flow of data. He also highlights the similarities between the current state of the world on ‘digital rules’ and the G20’s recent tax agenda, in terms of the potential for the G20 to agree to minimum global standards and to the voluntary exchange of relevant information on cyberattacks among G20 members.

Hugh Jorgensen and I focus on another area where the G20’s leadership has been criticised in recent years: global migration governance. The Syrian refugee crisis has highlighted that global governance arrangements are failing both migrants and states, and despite vocal calls for more action from across the community, as well as a handful of G20 members playing a leading role to respond to the crisis, the G20 has so far done little to ameliorate the deficient global response to refugee-related issues. Migration is not a natural fit for the G20; the economic case for migration is knotty, there is a fragmented network of migration-focused bodies and processes and no centralised governance framework with a universal mandate to manage cross-border flows of people; and the G20 membership is disproportionately made up of migration destination, rather than source, countries. Jorgensen and I argue that the G20 needs to be strategic in this complex policy space and recognise the importance of ensuring that all key groupings’ perspectives are held. In Hangzhou, G20 Leaders should give their full support to the leader-level summit on ‘large movements of refugees and migrants’ that will be held ahead of the UN General Assembly in New York. During the German Presidency, the G20 should emphasise its role as a ‘steering committee for global governance’ and add political momentum to existing processes set in place by the United Nations, in particular, the Global Migration Group, the Global Forum for Migration and Development, and the 2030 Agenda for Sustainable Development.

John Kirton and James Hospedales focus on the G20’s potential role on global health governance in 2017. Yet another health epidemic — the Zika virus — is in global headlines in 2016, once again exposing the flaws in the global architecture set up to deal with cross-border health pandemics. More troubling, while the standard soul-searching process has taken place since the Ebola epidemic, and the institutional lessons learned from that experience, the necessary actions to improve the system (and required resources to implement them) have not eventuated. Moreover, there is a ticking time bomb in national health systems that no government is set up to deal with. The ‘fiscal math’ is relatively straightforward: the largest risks to global health security emerge from non-communicable diseases such as heart diseases, stroke and cancer, and the healthcare costs of such longer-lasting diseases are rising faster than the growth in GDP that is needed to sustain them. With political impetus in this space lagging, and seemingly outside the core focus of China’s G20 host year, Kirton and Hospedales call for G20 Leaders to act on an ambitious global health agenda ahead of the Hamburg Leaders’ Summit in 2017, set up during the Hangzhou Summit, in five areas, namely: fix the health governance gaps that surround the World Health Organisation (WHO); support the International Health Regulations (IHRs) and integrate antimicrobial resistance actions into national development plans; apply the Chinese innovation agenda to health matters; support a stronger regionalised approach towards meeting international health commitments; and provide political drive behind global efforts to prevent and control non-communicable diseases.

Finally, this Monitor looks at an issue that is firmly on the G20’s agenda but where the forum’s recent efforts are disappointing. Reducing the disparities between women and men offers a rare prospective good-news story for the G20; an agenda that can lead to positive macroeconomic outcomes and at the same time demonstrate how G20 countries are taking real, substantive actions to reduce inequality. In Brisbane in November 2014, G20 Leaders recognised this when they committed to reduce the gap in participation rates between men and women by 25 per cent by 2025. If realised, this could lead to as many as 100 million more women in jobs over a ten-year time span. However, the G20’s subsequent efforts on this important space have been disappointing. Although the G20 established the Women 20 (W20) engagement group in 2015, the forum is yet to outline a coherent public road map for how it intends to meet the ‘25 by 25’ target and G20 members are yet to clearly demonstrate what actions they are actually taking to improve women’s lives. Against this backdrop, Australia’s W20 delegates Sue Harris Rimmer and Anne Fulwood examine the opportunities and dilemmas of the W20 in advocating for a more active G20 agenda that takes women more seriously and improves women’s lives. Harris Rimmer and Fulwood argue that the W20 is an idea with a lot of potential. But now, two summits in, it needs to suggest concrete policy solutions aligned to the current state of G20 negotiations. And for the W20 to be influential, it needs to speak in a way that resonates with hard-headed G20 Sherpa and finance track delegates.

Background

The September 2016 Hangzhou Summit comes at an interesting time for the global economy. The International Monetary Fund (IMF) recently downgraded its growth forecasts by 0.1 per cent to 3.1 per cent in 2016 and 3.4 per cent in 2017.[2] IMF Chief Economist Maurice Obstfeld has said that one prominent recent event, the British referendum to leave the European Union (Brexit), threw a spanner in the works of their world economic forecasts.[3] The Fund has also warned of significant economic, political and institutional uncertainty, which could lead to future downgrades.

In recent years, the global economic scenario has been characterised by low growth, high unemployment, a corporate sector that continues to face incentives to redistribute earnings rather than invest, rising risks, and persistent and unresolved inequalities. This is certainly not a new story, and it is remarkable that the latest forecasts mark the sixteenth downgrade in the IMF’s global growth outlook since January 2012.[4] In recent years, though, the generic sense of heightened risk has gradually transitioned towards clear, specific, near-term, and increasingly realisable risks. The Hangzhou Summit will be taking place amid a backdrop of economic, political, and financial uncertainty including: managing the ongoing fallout of Brexit and what it implies for popular sentiment among the advanced countries; Presidential elections in the United States; rising trade protectionism; Turkey’s attempted coup; terror attacks; a potential Italian banking crisis; ongoing questions about the Chinese economic transition; and ongoing commodity price uncertainty during a period of transition in global energy markets.

At a time when multilateralism is in decline and many countries are turning inward, there have been high expectations that the 2016 Chinese G20 Presidency will prove to be a pivotal moment for both the G20 and China. For China, the ‘big picture’ opportunities are threefold: the 2016 Leaders’ Summit is a chance for China to highlight the constructive role it can play in the global economic and financial architecture; it marks an important symbolic juncture in the fundamental shift in global governance to be more inclusive of the perspective of both emerging and advanced economies; and it offers the chance to demonstrate the G20’s ability to act effectively during a ‘peacetime’ setting, at a time when the G20’s effectiveness is being increasingly questioned.[5] Expectations were elevated when China provided the necessary strong political signals that the G20 host year would be a key foreign policy priority, and it consulted widely and thought deeply in devising its agenda. In the lead-up to Hangzhou, the outstanding questions are on the issues China will stake its reputation on delivering, the degree of leadership China is willing to project, and how China handles the soft power elements of a forum built on voluntary cooperation and where leading from the front is of limited effectiveness.

In classic style, China has pursued a technical, bureaucratic, and long-term agenda. China’s G20 Presidency has long promised a vast array of blueprints, action plans, guiding principles, indices, strategies and cooperation initiatives. Such action has been a hallmark of recent statements by energy, agriculture, labour and employment, and trade ministers.[6] These outcomes are entirely consistent with an approach of ‘incremental change’ and a mentality that — in a situation outside a crisis setting — what is needed from policymakers is a steady hand to finish the job on implementing agreed reforms. The contributions are undoubtedly positive. The May 2016 G20 Monitor highlighted that the two most recent meetings of finance ministers and central bank governors have shown encouraging signs of progress in areas as broad as financial safety nets, climate finance, international tax, tax transparency, and financial regulation and investment.[7] Hangzhou will need to be seen as delivering on the platform established at all of these meetings, and contribute to the ten major results that Chinese Foreign Minister Wang Yi foreshadowed would be delivered to Leaders in Hangzhou.[8]

However, a technical agenda of positive incremental change on long-term challenges is not likely to be enough to convince a growing number of commentators, including former UK Prime Minister Gordon Brown, of the G20’s longer-term relevance.[9] As with all G20 meetings, the Hangzhou Leaders’ Summit needs to be seen to make tangible progress on the G20’s key challenge of increasing economic growth, while at the same time increasing its resilience. So far in 2016, there has been a mixed message coming from the forum on these fundamental objectives.

The G20’s resilience goals continue to be advanced. Mark Carney, Governor of the Bank of England and Chair of the Financial Stability Board, has noted that the global economy and financial system has weathered two spikes in uncertainty and risk aversion so far this year.[10] This is partly due to the actions that G20 members have taken to safeguard the financial system over the past seven years. Moreover, if a global economic or financial crisis were to emerge, the G20 remains the key venue for providing global leadership and coordinating the collective global policy response. In the meantime, a technical, longer-term agenda on cross-border financial and economic issues, particularly related to financial regulation, international taxation and the reform of international organisations, continues to be advanced. The decisions made in these areas affect people’s lives.

In contrast, the IMF’s latest revisions highlight how the G20’s goals to boost growth have remained frustratingly elusive. Moreover, the Brexit vote revealed how governments have failed to address the challenges arising from globalisation. Capitalism needed saving in the aftermath of the global financial crisis, but in bailing out financial institutions with taxpayer money, governments transferred the stresses from financial markets to politics.[11] The G20 was meant to be a key valve for resolving the political risk that governments took on. It was intended as an informal dialogue on economic and financial policy to help achieve stable and sustainable global growth, and in the words of former Canadian Prime Minister Paul Martin, “focus on translating the benefits of globalisation [and the global flows of information, goods, services, people, and finance] into higher incomes and better opportunities for people everywhere.[12]

The G20’s record, particularly in recent years, remains sparse on these core matters of globalisation.[13] Despite a migration crisis, G20 leadership has been absent on the flow of people across borders. Capital flows remain a controversial and technical matter plagued by competing philosophical positions. Progress in trade liberalisation has been glacial, and the issues divisive, though the G20 has at least made an important contribution to resisting outright protectionism. But it is the G20’s inability to address weak economic growth and inequalities that are the most jarring.

Headline G20 rhetoric on macroeconomic policy is currently based on the collective pledge, repeated for the past 12 months, to use fiscal, monetary, and structural policy tools, individually and collectively, to achieve strong, sustainable and balanced growth. However, in practice there remains a stalemate at the G20 about the need, or ability, of countries to place fiscal policy more prominently in the policy mix, and the communiqués from finance ministers and central bank governors have lacked a sense of coordinated action to give teeth to the high-level rhetoric. The resulting emphasis, as the University of Toronto’s John Kirton argues, appears to be “the familiar old formula to put monetary policy first, structural reform second and fiscal policy last”.[14] Some G20 countries are acting individually. Notably, Canada pledged C$60 billion (US$46 billion) in new infrastructure spending in March 2016, and Japan launched a ¥4.6 trillion stimulus package (US$45 billion) at the start of August.[15] Notwithstanding these announcements, the global policy response remains individual and slow, and for most G20 countries, fiscal policy remains merely to fine-tune existing policies rather than implement a more substantive shift in policy direction.

In recent years the G20 has fallen into a practice of endorsing bureaucratic plans to improve growth and jobs and implement difficult structural reform. These plans have warm agreement around the G20 table. However, the implementation of such plans has lacked political backing, with the general public typically unaware of what happens behind the forum’s closed-door negotiations. Further, although there has been important progress on tax avoidance by multinationals, the G20 has failed, even at an aspirational level, to substantively address the disconnect in returns going to different segments of society.

The sense, expressed by former Australian Treasurer Wayne Swan, is that global policymakers are determined to sleepwalk into ‘a burning house’ of the next crisis.[16] Moreover, the overall impression is that the G20 ‘elites’ — politicians and policy experts at the highest table for economic cooperation — recognise that more needs to be done, but decision-makers are either unwilling or unable to take the necessary action. The idea that economic elites don’t have the best interests of citizens at heart has already had consequences in terms of popular sentiment and the ease with which those campaigning for Brexit were able to dismiss the advice of ‘experts’. The problem is of global consequence, given the risk of populist platforms in advanced economies to lead to policies that reduce the scope for future income gains across the globe.

Among a large body of public commentary in recent months, Nouriel Roubini has argued that anti-globalisation sentiment can be contained and managed through policies that compensate workers for the collateral damage and costs of globalisation.[17] Harvard’s Larry Summers has argued that the key now is about responsible nationalism.[18] Most of the policy responses to the issues of globalisation are primarily national in nature, and only national governments can persuade their citizens and electorates that they can also benefit from globalisation. For example, providing social safety nets, strengthening health systems, targeted industry assistance, supportive labour market policies, and education and retraining are all domestic policies that address inequality. These policies are key parts of the social contract between governments and their citizens, and arrangements vary significantly across the G20. The appropriate policy response similarly varies considerably across the G20, although governments are faced with the common dilemma that financing increased efforts on inequality frequently involves a trade-off in terms of higher taxes, lowering other spending, or accepting ballooning sovereign debt levels.

The G20’s scope to provide a substantive collective policy response on such domestic matters remains limited. Nonetheless, at Hangzhou, Leaders will be under pressure to demonstrate what ‘responsible nationalism’ means in the context of their own nations, and also make progress in tangible areas that will address underlying popular concerns. The Financial Times’ Martin Wolf has pointed to some broader ‘G20 policy’ areas such as reforming capitalism, greater demand support, prosecuting an enhanced tax agenda, and fighting the quacks.[19] The G20 needs to highlight what its member governments have done in these areas and project a vision for how governments have emerging challenges in hand.

Heading into a condensed 2017 German Presidency centred around a July Leaders summit, a positive and proactive G20 agenda can also demonstrate global leadership in areas canvassed in this G20 Monitor such as trade, information flows, health governance, and migration. In such areas the G20’s focus should be on gaps and deficiencies in the global architecture, and efforts should be targeted at complementing existing global initiatives where possible, and on providing political leadership on global challenges that cannot be solved by countries acting alone. It is important for the G20 to start laying the platform for Hamburg in Hangzhou.

At a time when confidence in experts and public institutions is low, politicians need to find a better way to speak to the sense of disillusion from those who feel that they have been left behind.[20] There is an important norm-setting role for the G20, but the G20 needs to step up its communications if it is to fulfil this function effectively, as foreign ministers recognised at their July meeting.[21] Partly the G20’s norm-setting is about being more robust, direct, and clear in official communiqués. More broadly, though, political leaders need to be more active in describing the benefits of the liberal economic order in contributing to global prosperity and security. It is important that G20 Leaders take the opportunity of the ‘bully pulpit’ provided by the Hangzhou and Hamburg Summits to speak plainly and directly to their citizens about what the G20 is doing to improve their lives. They also need to defend the role performed by multilateral organisations underpinning the liberal economic order, particularly the IMF and the World Trade Organization.

Ye Yu[22]

With the G20 Hangzhou Summit fast approaching, Hangzhou, a charming city with cultural appeal and innovative dynamism, is ready to deliver to the world “a uniquely impressive summit” on 4–5 September 2016.[23] In contrast to some previous summits, local citizens are embracing the opportunity to host the “most important home diplomacy of China this year” warmly. There is prestige in being a G20 Summit host city. It also brings better infrastructure and public service that improves daily lives.

Outside of the benefits to the citizens of Hangzhou, what are the “uniquely impressive” achievements that the 2016 G20 Leaders’ Summit can be expected to deliver? The problems are basically old, although efforts are new. In a world facing continuous sluggish growth, a rise in populist sentiment and a stalemate in multilateralism, the G20 continues to act as a platform for economic cooperation. The forum facilitates the building of trust among its members, progressing minimum standards and otherwise seeking the best international economic advances possible by voluntary cooperation.

Perhaps the most unique outcome from this year’s G20 Presidency will be for China itself to shift in its psychology and take more ownership of global economic governance. But with the world muddling through in an era of international power diffusion and regionalisation, it would be overly optimistic to expect policy miracles from any single G20 Summit. It seems unlikely that Hangzhou will break the mould, although there is likely to be progress on a range of issues. This paper focuses on the advances in terms of macroeconomic policy cooperation and the G20’s ongoing evolution from a ‘crisis’ committee to a ‘steering’ committee.

A more balanced approach to monetary, fiscal and structural policies

Given rising volatilities and uncertainties, economic policy cooperation remains one of the core functions of the G20, and is arguably its most important role While monetary policy cooperation under the G20 has been well managed so far in 2016, the G20 has had more muted success in its efforts to enhance growth through structural reforms.

This year’s G20 continues to monitor the major systemic risks that could harm the world economy, such as financial and commodity market volatility, rising inequalities and environmental threats, geopolitical conflicts, terrorism, and refugees. In the first half of 2016, the G20’s focus has been on the spillover effects associated with divergent monetary policy adjustments of major economies, principally managing the impact of rising interest rates in the United States at the same time that other major economies were moving in the opposite direction. Chinese financial sector volatility and exchange rate policy movements also attracted great attention, a development that was a little embarrassing for the Chinese Presidency.

Central banks across the world continue to be driven by a domestic mandate, but take international events into consideration when making decisions. Ahead of the first finance ministers and central bank governors meeting in Shanghai in late February, there was speculation that China, the United States, and other major economies would reach a grand ‘Plaza-style’ accord on exchange rates. However, China had largely put issues around the yuan to bed when People’s Bank of China Governor Zhou Xiaochuan outlined China’s approach to exchange rate management.[24] Rumours of a secret ‘Shanghai agreement’ have been officially denied by Chinese officials. It appears clear that a grand bargain on exchange rates was not a realistic proposition.[25]

The events in the lead-up to the Shanghai meeting reflect a more outward-looking attitude and more active participation of Chinese decision-makers in global economic governance. Governor Zhou followed February’s speech with a candid and thorough elaboration of the unique rationale, goals, and approaches of Chinese monetary policy as the Chinese economy transitions, at the IMF in June.[26] The groundbreaking speech is also an example of the ever-closer relationship between China and the IMF in the seven years following the global financial crisis. It contrasts sharply with the alleged strife between China and the IMF on the exchange rate prior to the crisis.[27]

Then, on 23 June, global market attention shifted to Europe and the uncertainties arising around the Brexit referendum. After the announcement that the United Kingdom had voted to leave the European Union, the G20 was not as swift as the G7 finance ministers and central bank governors in issuing a common statement to reassure markets that they were monitoring movements and financial stability. This was a firm reminder of the need for all G20 members to remain prepared to manage the complex array of consequences, predictable and unpredictable, associated with global risks.

A related core issue for the G20 is how to drive growth and create jobs. G20 members have been divided in views on whether they should use fiscal policy more actively with current global public debt levels.[28] With fiscal space more constrained, G20 growth efforts have been overly reliant on actions by central banks, and extraordinarily accommodative monetary policy settings have not been able to effectively revive the real economy on their own. It has not been surprising that China has focused its efforts on structural reform for improved long-term growth, an area the G20 has been able to reach a constructive consensus in recent years. When China assumed the G20 Presidency, it built on the comprehensive growth strategies that Leaders adopted in Brisbane in 2014 and renewed in Antalya in 2015, but with an emphasis on so-called ‘supply-side’ reforms that resonate well with its domestic fiscal agenda.

Still, the G20’s emphasis on structural reforms should not be over-read. An important message that the G20 China Presidency has sent has been of the need for a more balanced approach to growth, especially a clear and explicit endorsement of the role of fiscal policy. In Shanghai in February, G20 finance ministers and central bank governors reiterated their calls six months earlier to use all policy tools — monetary, fiscal, and structural — individually and collectively to achieve their goals of stronger growth and employment outcomes. Moreover, they argued that:

“we will use fiscal policy flexibly to strengthen growth, job creation and confidence, while enhancing resilience and ensuring debt as a share of GDP is on a sustainable path. We are also making tax policy and public spending as growth-friendly as possible, including by prioritizing expenditure in favor of high-quality investment.”[29]

The G20 consensus of “collectively” using all policy tools and their detailed elaboration about the role of fiscal policy reflects a subtle shift in attitude of those members that have been most cautious about using fiscal policy in support of growth.[30] Fundamentally, the change recognises the challenges that have been embodied by continued downward revisions to world economic growth projections by major international organisations. The endorsement by G20 members of a more balanced approach towards growth may not have translated into a collective action plan as in 2009; but China’s Presidency has overseen a positive consensus emerge about how to promote mutual interactions of fiscal and structural policies. Similar debates continue to evolve within China. When people abuse the term ‘supply-side reform’, serious economists have strongly argued for the legitimacy and necessity of quality public investment for infrastructure, and for an ambitious structural reform agenda to be implemented smoothly in modern China.[31]

Infrastructure investment continues to be an area of G20 focus, with the 2016 agenda prioritising the role of multilateral development banks. Upon request, 11 multilateral development banks, including the new Asian Infrastructure Investment Bank and the BRICS New Development Bank, made a joint declaration of aspirations on actions to support Infrastructure Investment, which included quantitative and qualitative measures. A Global Infrastructure Connectivity Alliance is to be launched in Hangzhou, to increase synergies and cooperation of regional and national infrastructure initiatives.[32]

Moving from a crisis committee to a steering committee

There has been much made of the G20’s transformation from a contingent ‘crisis committee’ to a strategic ‘steering committee’ for the world economy, although this transformation is still incomplete.[33] The Chinese Presidency has been very keen to leave its footprint in promoting the G20 transformation from dealing with “cyclical issues” to addressing “structural issues”.[34] This can be clearly seen in China’s  four I’s framework,[35] and the recent announcement by Foreign Minister Wang Yi about the “ten major results” for Hangzhou. The ten major results include the following actions: [36]

•       develop a blueprint of innovative growth

•       formulate action plans to implement the UN 2030 Agenda for Sustainable Development

•       identify priority fields, guiding principles and index system for structural reform

•       draft strategies for global trade growth

•       set out guiding principles for global investment policies

•       deepen the reform of the international financial architecture

•       establish three-in-one cooperation on anti-corruption[37]

•       launch a cooperation initiative to support the industrialisation of Africa and the least developed countries

•       draw up entrepreneurship action plans

•       promote the early entry into force of the Paris Agreement on climate change.

All ten items are long-term issues, and China aims to build on the G20’s success in updating financial regulatory rules, strengthening bilateral and multilateral economic surveillance, reforming global financial institutions, and the Base Erosion and Profit Shifting (BEPS) international taxation package. Such measures are being implemented or will be due in the next several years. If they are fully implemented, global financial and tax governance will be clearly improved, although their impact on global development needs to be carefully monitored.

The “ten major results” from the Hangzhou Summit reflects a clear intention of the Chinese Presidency to achieve tangible advancements across a broad spectrum of issues. I will now focus on the advances on four prominent areas: the implementation of the UN 2030 Agenda for Sustainable Development; a map for structural reform and blueprint for innovative growth; trade and investment; and energy cooperation.

Implementation of the UN 2030 Sustainable Development Agenda

The path-breaking 2030 Sustainable Development Goals (SDGs) approved by the UN General Assembly, along with the Addis Ababa Action Agenda and the Paris Agreement on Climate Change, provide a comprehensive framework to foster transformation of our world economy and its governance. While the United Nations will continue to lead in monitoring national achievement of sustainable development and climate change outcomes, China’s goal is for the G20 to ‘lead by example’ on the SDGs and commit to a collective action plan. It has encouraged the G20 Development Working Group to work closely with other G20 working groups to ensure a holistic approach towards the SDGs. China will also publish its own national action plan integrating SDGs with its domestic strategy. But the implementation of the 2030 Agenda is such a comprehensive work task, it’s success depends on ongoing support from the G20. Future presidencies need to carry on work identifying practical priorities for the G20 that align with the accumulated G20 agenda.

A map for structural reform and blueprint for innovative growth

Structural reform has long been prominent in the G20’s agenda. The Growth Strategies the G20 Leaders committed to in Brisbane included a thousand structural reform measures. Implementation is slow, however. The Chinese Presidency seeks to raise structural reform to a new level, with the aim of providing G20 members with high-level guidance for a more focused and measurable structural reform action plan on a voluntary basis.[38] The goal is for an increasingly evidence-based G20.[39] There is some concern about the Chinese Presidency’s ambitious plan, since it requires tackling major domestic policy obstacles that hamper total factor productivity growth. In the long-run, the outcome document may prove to be a convenient map for G20 members and other countries to monitor progress.

“Innovative growth” is specifically highlighted as a fundamental goal of China’s G20. Three task forces were established: on innovation in general; the fourth industrial revolution; and the digital economy; with the purpose of drawing a “blueprint” for innovative growth. The blueprint may include commitments to increase research and development expenditure as a share of G20 GDP, and enhancing science cooperation between G20 countries. But this is only a start for G20 members to share their interests and concerns in this area. Thorny global issues, such as intellectual property protection, technology transfer, access to the internet, and protection of privacy, will eventually need to be seriously discussed at a multilateral level.

Trade and investment

Aside from G20 members committing not to introduce new trade restrictive measures, and then doing so, G20 trade discussions have not been one of the G20’s strongest areas of focus. In particular, minimal progress has been made on the Doha Development Agenda or advancing reform of the multilateral trade architecture. China has worked hard to raise the profile of the G20’s trade agenda. The Chinese G20 Presidency has encouraged a regular G20 Trade Ministers Meeting and established a Trade and Investment Working Group (TIWG). On 9 and 10 July, G20 trade ministers issued a joint statement and three annexes detailing the terms of Reference of the TIWG, a general strategy on global trade growth, and guiding principles for global investment policymaking.[40]

There were many aspects to these documents. In the joint statement, trade ministers maintained the G20’s standstill commitment on trade protectionism until 2018 and repeated previous G20 Summit language on the Doha Development Agenda. Trade ministers also committed to rectify the WTO Trade Facilitation Agreement by the end of this year[41] and aimed to conclude an ambitious, future-oriented Environmental Goods Agreement (EGA) at an EGA ministerial meeting at the end of 2016. They encouraged future regional trade agreements by G20 members to be open to accession and include provisions for review and expansion. The statement also included an acknowledgement to promoting e-commerce.[42]

The Trade Ministers Meeting was also notable for what it delivered on investment. Nine general Guiding Principles for Global Investment Policymaking were approved, which includes relatively balanced languages accommodating diversified interests. However, the document did not indicate a follow-up work plan, and should not be interpreted as an effective step by the G20 to restart the decades-long journey towards a global investment regime under the auspices of a global international financial institution. Major economies are struggling to finish investment agreements, such as the US–China Bilateral Investment Treaty and Transatlantic Trade and Investment Partnership. However, the expansion of the G20’s trade agenda into investment should help to promote the coherence of trade and investment policies. This year’s G20 also raised the issue of global excess capacity in steel, a source of trade friction, with discussion deferred to a September meeting of the OECD Steel Committee.

Energy cooperation: More about the market

The G20 Energy Ministers Meeting concluded in Beijing in early July with a communiqué and three affiliated documents on energy access in Asia and the Pacific, renewable energy, and energy efficiency.[43] However, the G20 energy ministerial was poorly attended, with several ministers not making the meeting a priority, and it produced a remarkably weak statement. Energy ministers only agreed to “endeavor to make further progress in moving forward” towards the 2009 commitment to phase out inefficient fossil fuel subsidies.[44] Although they did commit to “increasing substantially the share of renewable energy in the global energy mix”, it was without the quantitative target that the Chinese Presidency initially aspired towards. Interestingly, natural gas seems to have been the real winner, with the first “G20 Natural Gas Day” held as a side event of the Energy Ministers Meeting, which gathered about 300 participants.[45] Crucially, this year’s Energy Ministers Meeting did not respond to the strong call from think tanks for bolder steps by the G20 towards more inclusive global energy governance.[46] In a period of energy transition, there appears to be a lack of incentive for key energy actors to pursue reform of the formal global energy architecture.

Conclusion

The Chinese G20 Presidency of G20 has pursued a more balanced approach to global growth in 2016, along with a long-term vision for trade, investment, and sustainable development. The structural reform agenda has been enhanced, while the role of fiscal policy has been highlighted. Trade and investment issues have been given a higher profile compared with previous summits. The implementation of the 2030 Sustainable Development Agenda and Paris Agreement on climate change will be key topics of discussion in Hangzhou, and these two items also seem particularly well aligned with what the German presidency may pursue in 2017.

The 2016 Chinese G20 Presidency approach clearly mirrors China’s domestic reform and growth agenda. China is eager to exhibit its strong commitment to global cooperation by hosting the G20, at a time when it feels cornered in Asia-Pacific geopolitical and territorial conflicts. China will likely continue its commitment to the G20 in the future, given the forum matches its own economic interests in the long run. However, this year’s G20 process has shown the limitations of China’s global leadership role in this increasingly diversified world. Leading by example is still the best China can do.

David Gruen and Sam Bide[47]

In the two decades before the global financial crisis, international trade grew at roughly twice the rate of economic growth. Since then it has barely kept pace. Trade is a key driver of economic growth and one of the few clear paths to development. The flow of goods and services across borders also increases global integration, which tends to bring increased investment, diffusion of ideas, new technologies, and poverty alleviation. As the world’s pre-eminent forum for global economic cooperation, trade is an important item on the G20’s agenda.

Many reasons have been put forward to explain slowing trade growth. Along with structural changes in global value chains and weak capital investment post-crisis, rising protectionism is a fundamental driver and a future risk. The G20 recognises the risks to economic growth posed by protectionism, and has identified the need for governments to improve how they communicate the benefits and the challenges of an open global trading environment to their communities. Undertaking work to better understand and communicate the benefits of trade can help to address protectionism and encourage community support for reform. Further, work that identifies the expected outcomes of specific trade reform options will help to ensure that measures with the greatest benefit are prioritised.

This paper examines the global trade outlook and the factors contributing to slow trade growth, and explores the benefits and distributional consequences of trade. It then outlines the case for building a stronger evidence base to help communicate the reasons for trade reform.

Global trade outlook

For much of the second half of the twentieth century, growth in the international exchange of goods and services has consistently outpaced growth in global output (Figure 1). There were many reasons for this, including successive multilateral and bilateral trade agreements acting to reduce trade barriers,[48] advances in technology, transport and logistics that led to expanded globalised supply chains, and the successful integration of emerging Asian economies (most notably China) into the global economy. The 1990s were the ‘boom times’, with trade growth slowing in the 2000s, although it still outpaced GDP. The global financial crisis then saw trade growth fall by rates not seen since the Great Depression.

Figure 1: Average global GDP and trade growth

Source: IMF World Economic Outlook, September 2011 and April 2016

Since the global financial crisis, trade growth has been subdued (Figure 2). A recovery to pre-crisis rates of trade growth appears unlikely in the near term, and for the first time in decades, trade growth is lagging slightly behind global output. Some of the perceived slowdown may be attributed to difficulties in measuring international trade in services, which is accounting for an increasing share of global trade.[49] In particular, the relative difficulty in measuring services compared with merchandise trade may mean a greater proportion of actual trade volumes is not appearing in trade statistics. However, even when including services in trade volumes, the global trade slowdown post-GFC remains pronounced (Figure 3). The magnitude of the recent slowing in trade growth indicates that other factors are at play.

Figure 2: World merchandise trade volume (2005=100, seasonally adjusted)

Source: World Trade Organization and UNCTAD

Figure 3: World export volume growth (Goods and services, per cent change)

Source: IMF World Economic Outlook, April 2016

What is slowing world trade growth?

The clearest explanation for slowing international trade growth since the global financial crisis is weakness in global growth. The sharp drop in trade during the crisis was primarily due to a short-term collapse in global demand.[50] Despite global output subsequently showing a modest recovery, trade growth continues to lag behind. This suggests aggregate demand does not solely explain the softness of trade in recent years, and that other factors are playing a significant role. Constantinescu et al (2015) consider long-term structural factors to be a key element behind falling trade growth (Figure 4).[51]

Figure 4: Components of the global trade slowdown

Source: World Bank (unpublished data)

A second explanation is that slow trade growth reflects weak investment. In the last five years, capital investment as a proportion of global GDP has flatlined, especially in developed economies, which typically have more trade-intensive investment.[52] Since capital investment is more trade-intensive than other components of GDP (Figure 5), this trend has affected global trade volumes.[53] However, investment trends are unlikely to be the dominant factor behind previous trade growth or the recent global trade slowdown.[54] Investment as a share of GDP was relatively steady during the rapid trade growth of the 1990s, and trade growth began to slow relative to GDP growth in the 2000s, despite investment as a share of global GDP increasing (Figure 6).

Figure 5: Investment Share of Global GDP

Source: IMF World Economic Outlook, April 2016

Figure 6: Investment and consumption shares of global GDP and goods imports, 2014

Sources: UN COMTRADE, World Bank

Another explanation is China’s rebalancing away from export-led growth. China’s re-entry into the global economy in the late twentieth century contributed to increased trade volumes during the 1990s.[55] China’s export-led growth and development model involved importing raw commodities, knowledge and technology-intensive inputs from around the world, adding value via low-cost labour, and exporting the outputs. Since the mid-2000s, however, China’s economy has rebalanced to become increasingly focused on serving the needs of its growing middle class, with a lot more of that production generated at home. Growth in Chinese production is relying less on foreign economies for inputs[56] and in some areas, low-value production is shifting to lower-wage economies in the region.[57] Chinese domestic demand is also increasing as wages rise, meaning China will continue to export a lower proportion of the goods and services it produces. In sum, China’s export elasticity is falling as its economy advances.

A fourth explanation is that previous rounds of trade barrier reductions have finally played out and may even be reversing in some areas. Industrial tariffs in many developed countries are now very low and further rounds of trade-enhancing reforms are politically difficult, with challenges exacerbated by protectionist sentiment gaining traction in many countries. For a time after barriers are removed, trade will grow faster than incomes as gains are realised. But there is no reason why trade across borders should grow faster than trade within borders once a longer-term equilibrium is reached. The factors driving the expansion of global supply chains in past decades were largely one-off improvements that increased the baseline level of trade, but did not indefinitely contribute to ongoing trade growth.[58] Global supply chain maturity is being reached in many countries, as businesses increasingly find that it is inefficient to fragment their production processes any further.[59]

Political support for trade liberalisation has waned

Until the early 2000s, there was high-level political support for multilateral trade liberalisation. Milestones such as the conclusion of the Uruguay Round of multilateral trade negotiations and the subsequent creation of the World Trade Organization (WTO) in 1995, China’s accession to the WTO in 2001 and the expansion of the European Union in 2004 from 15 countries to 25 all served to promote open trade at a global level. However, support has waned in recent years, most visibly through the stalemate in the Doha Round of WTO negotiations, which now appear unlikely to conclude.

The global financial crisis, perhaps unsurprisingly, led to an increase in protectionism worldwide, most notably via trade remedies such as anti-dumping action. However, protectionist measures failed to unwind as global growth began to recover, despite original intentions that these measures would be temporary. One possible explanation could be dislocation caused in the industrial sectors of many developed economies by China’s rapid rise as a dominant global manufacturer, and reduced demand for low-skilled and unskilled labour in developed economies in recent decades.[60] These factors may be placing pressure on governments to protect vulnerable industries through additional trade restrictions.

G20 members have made a series of commitments to wind back protectionist post-crisis measures. But as of June 2016, less than a quarter of the 1583 trade-restrictive measures introduced by G20 countries since 2009 have been eliminated.[61] Indeed, restrictive measures continue to accumulate. Between October 2015 and May 2016, G20 members introduced 145 new trade-restrictive measures, by far outnumbering the 100 trade-facilitating measures introduced over the same period.[62] Import-restrictive measures, in particular, distort a high proportion of global trade. Since 2008, import-restrictive measures introduced by G20 countries alone have affected 6.4 per cent of G20 country imports and 5 per cent of global imports.[63]

Global value chains are heavily affected by even ostensibly minor trade barriers, due to the multiple steps of cross-border trade required in production processes.[64] In a global economy that has become increasingly interlinked in recent decades, the effect of these trade-restrictive measures should be of great concern to leaders. Among various long-term factors behind recent trends in global trade growth, the G20 is particularly well-positioned to address protectionism. It is therefore clear why addressing protectionist barriers and encouraging progressive trade reform is a key G20 priority. To help achieve this, the forum can do much more to communicate both the potential economic and social benefits of trade, and also how the potential costs and risks of trade reforms can be addressed most effectively.

Trade supports growth and development

Even relatively open economies stand to gain from further trade liberalisation. The IMF recently suggested that through removing remaining tariff barriers, advanced economies stand to boost productivity by around 1 per cent, and that further productivity benefits can be found if non-tariff barriers are addressed.[65]

Along with increased incomes resulting from economic growth, trade can directly influence human development by expanding opportunities and choices. Consumers are offered additional choice through an increase in the quantity and variety of goods and services made available to them. Furthermore, human capital goods such as educational materials and medicinal products are made more available by trade, increasing the welfare of and expanding the opportunities available to individuals. Trade also facilitates the exchange of information, ideas, technology and best practices between economies as traders, retailers and service providers interact with other markets.[66]

Trade liberalisation is also strongly linked to alleviating poverty. One notable recent example is China’s rapid increase in living standards since opening its borders in the 1980s. Open trade is one of the factors that has led to a substantial fall in poverty levels worldwide, by allowing people to maximise their productive potential, and insulate themselves against domestic shocks.[67] Trade has also contributed to numerous measures of living standards and wellbeing, including life expectancy and education levels.[68]

However, we also know that the competitive pressures introduced through trade can lead to business closures and job losses. Significant economic and social dislocation can then be concentrated in certain cities and regions. For example, Autor, Dorn and Hanson argue that in response to China’s momentous economic reform, employment in industries in the United States that are more exposed to foreign competition has fallen.[69] However, contrary to textbook undergraduate economic theory, this has occurred without the expected offsetting employment gains materialising in export-oriented or ‘non-tradable’ sectors. The challenge for policymakers, therefore, is to realise the benefits of trade liberalisation in terms of boosting aggregate living standards, while at the same time assisting those who ‘bear the burden of adjustment’ to remain attached to the workforce.

Better policy comes from understanding the benefits, costs and risks of trade reform

Trade policy outcomes are assisted by work that identifies both the benefits and the possible costs and risks of trade reform options. Such work helps to ensure that measures offering the greatest net benefit are prioritised to the extent feasible. It also assists in highlighting where effective structural adjustment policies can manage potential risks and facilitate a smooth transition to an open trade environment. Such work is specialised, and time and resource intensive, and despite emerging and developing economies standing to benefit the most from trade reform, they are likely to have the least ability to do this work. The G20 therefore stands to play a vital role in driving efforts to improve analysis of the benefits and costs of trade.

At their meeting in July 2016, G20 Trade Ministers recognised the importance of communicating the benefits of trade policy when they stated that:

“… We resolve to step up our efforts to better communicate the benefits of trade and investment openness and cooperation to a wider public, recognizing their important contribution to global prosperity and development. We welcome the continuing inputs from relevant international organizations, which have provided strong analytical support to members, and from the B20 and T20.”[70]

G20 Trade Ministers also welcomed greater collaboration between key international organisations, seeking to leverage the OECD’s advanced economy focus, the World Bank’s developing and emerging economy experience and the WTO’s deep technical expertise in trade. Collaborative and strategic trade modelling can help prioritise reforms that offer the greatest economic and social benefits, ensure the fair consideration of options that do not have the lowest costs, and facilitate better understanding of the costs and risks of trade reform. An ongoing commitment from the G20 and relevant international financial institutions will ensure that future assessments of the benefits of trade — including through economic modelling — are best equipped to consider a range of possible economic circumstances and policy options.

The G20’s focus on improving the evidence base could yield benefits to the broader G20 structural reform agenda. Structural reforms were a focus of the G20 even before it became a leaders’ forum. Improvements in corporate governance, competition policy, regulatory harmonisation, and infrastructure can reduce the short-term costs of transitioning to open trade and increase the potential benefits of trade.[71] A clear understanding of the costs and trade-offs associated with any given reform will highlight when the benefits of a potential trade reform outweigh these costs, including trade-related reforms behind the border. It could provide a better evidence base to encourage nations to implement unilateral structural reforms that complement outcomes from bilateral and multilateral trade agreements.

One example is that policies promoting an adaptable labour market can help to mitigate job losses associated with declining, inefficient sectors, which will support the transfer of people to faster-growing sectors and can lead to higher-quality jobs. More generally, identifying where risks and costs exist will enable governments to proactively implement measures to address them, and could see the benefits of trade openness being larger and realised sooner. Analysis highlighting the expected benefits of complementary domestic reforms can also encourage governments to implement structural reforms proactively, so that they are in place in time for them to be the most effective.

In addition to contributing to better trade and structural reform policy development, better cost-benefit analysis can help to overcome protectionist arguments, build constituencies for trade reform, and allow governments to more clearly communicate the tangible benefits of open trade and investment. In general, the public benefits of open trade are often not well communicated to businesses and communities. In a survey across eight developed economies, only 44 per cent of the public believed trade creates jobs and only 25 per cent believed that trade raises wages. United States citizens were particularly cynical about trade — only 20 per cent believed that trade leads to more job opportunities. This is despite 84 per cent of those in developed economies believing trade is conceptually good.[72] Supporters of protectionism argue that while trade has some benefits, these benefits are not distributed fairly across the community. Globalisation and free trade have been blamed for job losses and wage stagnation in developed economies.

Conclusion: A stronger evidence base helps communicate the reasons for trade reform

The G20 needs to show leadership in describing the benefits of a cooperative, open rules-based system. A key step in garnering public support for positive reform is showing reliable, transparent evidence that describes how such reform will support businesses and communities at a local level. A stronger link between trade-enhancing measures and economic outcomes can help to better inform trade policy dialogue. This will lead to more beneficial measures being pursued and increased support for meaningful trade reform, and will also highlight the importance of complementary unilateral structural reforms. Such work could also assist G20 members in pursuing structural reform. G20 Members are already making trade commitments as part of their growth strategies, including measures to reduce barriers in trade-enabling services such as transport, logistics and port services, and measures to reduce non-tariff barriers, and finalise or ratify free trade agreements. A stronger evidence base helps strengthen these efforts.

The G20 represents around 85 per cent of the world economy and more than three-quarters of global trade, and is uniquely positioned to lead world-class work that can produce novel ways to boost trade and growth. This is fundamental to the forum’s agenda to achieve strong, sustainable, and balanced growth. Better analysis will highlight the economic benefits of the many opportunities for trade liberalisation that still exist and inject momentum to capitalise on these opportunities.[73]

Susan Harris Rimmer and Anne Fulwood[154]

Introduction

The Women 20 (W20) represents a new space in economic governance. It is a collective of gender-focused organisations and individuals from G20 countries launched in September 2015 with the aim of promoting gender-inclusive economic growth and presenting policy recommendations to G20 Leaders. Therein lies a big opportunity — given time, the W20 could become the economic equivalent of the UN Security Council’s Women, Peace and Security agenda.[155] The W20 has the opportunity to contribute to the G20 agenda in three distinct ways: agenda-setting, providing new perspectives, and enhancing the socialisation and accountability of G20 commitments. There are also serious and particular challenges that the W20 must overcome in order to have an impact at the leader level.

This paper looks at the three distinct contributions of the W20, how far the W20 has come in progressing them, and the external support available to the group. It also canvasses some important challenges and highlights how Australia should contribute to overcoming them. Finally, the paper looks at the opportunities that the W20 should seek to take advantage of during the German 2017 G20 host year.

Opportunities: accountability, fresh perspectives, and a new agenda

As ‘womenomics’ took the world by storm in 2009, the G20, as the world’s premier economic forum, looked decidedly old-fashioned with its lack of female representation and neglect of gender policy.[156] Economic governance should reflect the citizenship of its member states, and it is proven that diverse teams make better decisions.[157] At the same time, G20 Leaders are looking for new pathways to growth, and the headline-stealing economic benefits unlocked by investing in women should make for a persuasive case to G20 decision-makers. The ‘size of the prize’ for G20 economies for investing in gender equality in growth terms is very large, as is the potential for more sustainable and equal growth. A new McKinsey report puts the figure at US$12 trillion extra GDP by 2025 by simply giving more women the same opportunities as men.[158] At the 2015 launch of the W20 in Ankara, Christine Lagarde called women’s empowerment an “economic no-brainer”.[159]

The W20’s clearest contribution to the G20 agenda will be in ensuring the G20 remains accountable for existing commitments to gender equality. The W20 mandate adopted by Turkey includes:[160]

•       helping achieve progress on the G20’s commitments to “women’s full economic and social participation”, which was made in the Los Cabos Leaders’ Declaration in 2012[161]

•       “women’s financial inclusion and education”, which was made in the St Petersburg Leaders’ Declaration in 2013[162]

•       “reducing the gap in participation rates between men and women by 25 per cent by 2025”, which was agreed on in the Brisbane Leaders’ Declaration in 2014.[163]

There is an opportunity for the W20 to monitor and ensure accountability for the G20’s past commitments to women in these areas. For future influence, the W20 will also need to solidify the commitment of national leadership to the group and begin to suggest and monitor concrete measures at the country level to align with country growth targets.

The W20 also has an opportunity to effect transformational agenda-setting at the G20, particularly in recognising unpaid labour in national accounts, incentives for women-owned businesses, and the need for investment in more social infrastructure. The W20 sees women as crucial actors in economic governance, not just as unrealised economic assets. As a result, the W20 offers fresh thinking and new solutions for the current G20 agenda, casting a gender lens over infrastructure, anti-corruption, trade, financial regulation, development, and tax. The group can challenge mainstream economic thinking in which the differentiated gender effects of macroeconomic and microeconomic policy are not sufficiently considered. It can also highlight the lack of female representation in national chambers of commerce, finance ministries, and other sectors.

Furthermore, the W20 provides ongoing opportunities to promote both women’s engagement in a broad spectrum of areas, and men’s engagement in gender-related issues. Increasing the representation of women in the private sector, particularly in global corporations, small and medium enterprises and among entrepreneurs, is a priority for the W20.[164] The few female or feminist leaders within the G20 can use the W20 to showcase their economic credentials. G20 countries can use the W20 to gain attention for the economic potential of their female population. While there are a few male W20 delegates, and male Ministers speaking, the audience and speaker list at typical W20 gatherings have been female dominated. There are benefits from involving more men in the W20, and at the same time highlighting women’s underrepresentation in most other G20 forums.

Progress: A long distance in a short time

A forum in Canberra co-hosted by the Australian National University and Chatham House in September 2014 was the first to explore the idea of a W20 and how it might operate.[165] A few months later, the G20 Summit in Brisbane made history by including a specific target to reduce the gender participation gap in formal labour markets in G20 economies by 25 per cent by 2025, while at the same time outlining country strategies to achieve growth.[166] This promise could bring more than 100 million women into the labour force, and yet, as one headline among many and with little detail to back up the Leaders’ statement, it garnered limited media and civil society attention. This goal could be seen as the first of concrete actions to overcome the “barriers hindering women’s full economic and social participation” called for in the Los Cabos Declaration in 2012.[167]

Under the 2015 Turkish G20 Presidency, the W20 engagement group was officially established to provide policy advice to G20 Leaders.[168] It was launched in Ankara on 6 September 2015 and the first summit took place on 15–16 October 2015. The Istanbul W20 communiqué made recommendations in areas of empowering women through strengthening linkages between education, employment and entrepreneurship; increasing the number of women in leadership positions; ensuring women’s access to finance; and supporting women’s networks and women owned enterprises.[169] The 2015 process was influenced by an open poll and delegate submissions, and proposed a monitoring system for future W20 Summits.

China continued Turkey’s investment in the W20 in 2016, chiefly through the W20 Summit in Xi’an where the representatives of G20 countries and invited guests agreed a communiqué to be presented to the G20 Leaders in the lead-up to the September 2016 Hangzhou Summit. China had some experience in this area having held a successful APEC Women in the Economy Forum in 2015 with discussions on women and green development, as well as women and regional trade. The All-China Women’s Federation hosted the 2016 W20 Summit with a keynote speech by China’s Vice President, Li Yuanchao. Li opened the summit in Xi’an on 26 May 2016 and his speech demonstrated the increasing legitimacy of the gender and growth agenda, which the Chinese term ‘She-Power’:

“It is all the more important to pool women’s wisdom and strength at a time when the global economic recovery remains fragile. As the Chinese economy moves into a New Normal, efforts are made to encourage mass innovation and entrepreneurship, and women are essential in this endeavour.”[170]

W20 delegates underlined the importance of seeing demonstrable progress by the G20 Employment and Labor Ministers, and the Employment Working Group. In debates during the Turkish Presidency, G20 members opted for self-reporting against a template on a biennial basis. The International Labour Organization (ILO) and Organisation for Economic Co-operation and Development (OECD) will compile a report on new policy initiatives, although it is unclear yet whether this will be made public. W20 delegates have urged member states to update and publish their strategies towards the target, and adopt transparent and rigorous monitoring processes. If necessary, G20 countries should use the technical support of international organisations to make data more comparable and more accessible to the public.

China has also taken an interesting step by linking the female labour participation debates to their headline outcome of a G20 Blueprint for Innovative Growth, to be released in Hangzhou in September 2016.[171] The Vice President noted with pride that 55 per cent of e-commerce is conducted by women in China, and that the majority of online purchasing power is also female-dominated. The Chinese focus on women in the digital economy also has implications for the G20 Skills Agenda. The W20 recommended that G20 Leaders should work to narrow and remove the digital divide, help women to gain equal access to the internet, provide effective digital skills training for women, set targets for women and girls to study STEM (science, technology, engineering and mathematics) subjects, and strengthen the capacity of women to undertake internet-based entrepreneurship and employment.

There is an opportunity for developing countries to improve gender equality in conjunction with their economic development, just as some developing countries have surpassed developed nations in modern infrastructure and moved straight to mobile technology or renewable energy. There must be the potential for increased female labour participation to move straight to reasonable quality work in the new skills economy, supported by adequate social protections. G20 members are currently debating how best to recalibrate GDP measurement to include activity in the digital economy, and this also presents an opportunity to systematically recognise and measure all forms of work and value, including creating a national income accounting that includes unpaid care work that is disproportionally done by women.

W20 delegates also recommended more focus on gender and trade. They called on G20 Leaders to support entrepreneurship and launch specific programs to help women overcome business start-up barriers, and grow and sustain their businesses, including through trade. In addition, G20 members can improve women’s access to credit and other means of production, and the provision of relevant training, information services and technical support. They can also take special measures to encourage inclusive sourcing policies by governments and by corporations to include more women as suppliers in local and global value chains. Further, they should establish baseline data, set targets and report on progress in increasing women’s access to procurement and trade opportunities.

External support for the W20

The OECD has been exceptionally supportive of the W20, as has UN Women (an entity responsible for promoting women’s empowerment and gender equality) and the ILO. For example, the OECD held a panel in June 2016 on the G20 labour gap target.[172] These organisations are also involved with a new initiative called the High Level Panel on Women’s Economic Empowerment, led by UN Women, funded by Canada and the United Kingdom. The inaugural meeting of the Panel was held on 15 March 2016 in the UN headquarters in New York. The Panel is expert and not country based. The UK think tank Chatham House has held annual policy forums and country-based consultations to provide some continuity and high-level policy advice to the W20 hosts.

There is some overlap with membership between both groups, including Elizabeth Vazquez, who is CEO and Co-founder of WEConnect International and the US W20 delegate. Sharan Burrow is a member of the Panel but she has also led the Labour 20 (L20) engagement group, and has been a strong advocate in the G20 for increased female labour participation. The panel will produce two reports for the UN Secretary-General based on research by Professor Laura Tyson (former Chair of the US President’s Council of Economic Advisers) later in 2016.

Challenges for the W20, and Australia’s contribution

The challenge for the W20 is to be strategic and add value to the diffuse and crowded G20 policy space. As the Lowy Institute’s Hannah Wurf has written, “The W20 will now need to work out how to elevate some of these issues from the domestic policy space to the G20 level”.[173] There is no reason the W20 cannot work with or enhance the policy work of the other engagement groups. The civil society group (C20) has had a strong gender focus over the last two years and the L20 has supported the G20’s female labour participation target. A joint proposal from the Business 20 and Think 20 outlined a global skills accelerator, which could also take into account the need to upskill women. The W20 should also be making better use of its extensive network of high-power female professionals to ensure that the young women involved in the Girls20 and Youth 20 feel there is a pathway for women into economic governance.

The other, related challenge for the W20 is in defining a distinctive space, one that builds the forum’s legitimacy as a valued, and valuable, part of efforts to overcome the structural exclusion of women from the global economy. Some governance scholars and economists can fall into the trap of talking of women simply as a resource to be better ‘utilised’, but others try to focus attention on women in economic governance. The World Bank, UN Women, and others point out the structural and cultural barriers to participation in the formal economy. Women experience more obstacles in accessing land, financial services, technology, information, and markets. In many countries, legal, social and cultural barriers to joining the labour market restrict women’s options for paid work. Women’s unpaid work in the care economy is not valued or measured by the mainstream economic theory. W20 delegates have to work much harder to influence mainstream economic leaders. There are very few trained economists as delegates to the W20, which in some ways is representative of the profession. Among tenured economists in Australia, Canada, Great Britain, the United States and Sweden, a 2008 study found only 5 per cent to 9 per cent are female.[174]

A further challenge is the rights basis of the W20 agenda, and the sometimes troubled relationship between the G20 and the UN.[175] The G20 agenda may undermine the Sustainable Development Goals, as there are possible tensions between ‘sustained’ and ‘sustainable’ growth under the new Goal 8 and the gender equality Goal 5. The Chinese Presidency wishes to formulate action plans to implement the UN 2030 Agenda for Sustainable Development to showcase their developing country leadership credentials.[176] The gender goal and associated targets are certainly some of the most controversial aspects of the current UN negotiations.

The Australian representatives of the W20 were chosen by the Australian Government but are completely self-funded and independent. As two Australian voices, we have attempted to make distinct policy contributions while also striving to improve the strength of the forum. We have argued that communication and financial literacy skills were the two most important pieces of the puzzle to progress the economic empowerment of women, and that the W20 must be able to communicate its business idea, its ambition, and its skills in order to participate. Further, women of all ages must be able to, confidently, know their financials, from school to CEO level — financial knowledge and independence is a necessity to empowerment.”[177] Beyond this, we have focused on women in STEM and the digital economy, the economic and social impact of current gender disparities, and the ability to gain the ‘future skills’ required by the global economy.[178] We have also highlighted how women, especially of regional and rural Australia, can drive engagement and participation by working closely with business, investors, the community and government.”[179]

Conclusion: The opportunity for Germany

The next W20 Summit will be hosted by Germany in April 2017 with the full support and attendance of Chancellor Angela Merkel. This may be the best opportunity the W20 has to influence the G20 Leaders’ Summit. Germany can begin the complex process of supporting W20 representatives to be more active in domestic advocacy on gender-related issues, and facilitating engagement opportunities.

To maximise the prospect of success, W20 delegates need to make use of the evidence of gender disparity and move towards policy solutions that are aligned to the current state of G20 negotiations at the working group level, and at the discussion point of the Sherpa and Finance tracks in the lead up to the German Summit. There needs to be more detailed and targeted research products to underline the calls for accountability to previous commitments. There is also the opportunity to work more collaboratively with other engagement groups, particularly the T20 and the B20, which have a proven record of influencing G20 communiqués.

Recommendations to the G20 Leaders should stress the importance of proper gender practices, starting with the G20 countries in their domestic actions. For instance, Chatham House has recommended undertaking a gender audit of public sector employees, prioritising finance ministries and central banks and continuing to all G20 delegations.[180] G20 Leaders have selected an economic governance group for the first time to focus on these crucial gender equality issues at the strategic level. Unlike other international groupings with a gender focus, this is a group dedicated to making the premier economic forum accountable to taking women seriously and improving women’s lives. The W20 remains an idea with a lot of potential.