G20's 'same-boat' spirit

Summit leaders commit themselves not just to managing crises but to reforming the world's economic institutions

The seventh G20 summit, which has just ended in Los Cabos, Mexico, looked at many tough issues the world has been facing. They included economic stabilization and structural reforms for growth and employment, reform of the financial system, improving the international financial architecture, tackling problems related to food security and commodity volatility, and with sustainable development, green growth and climate change.

The international community can be relieved that summit leaders once again demonstrated a "same-boat spirit" and declared that they were joining hands not only in crisis management, but also in promoting growth, jobs, trade, investment, development, environmental protection and the reform of international economic institutions, among other things.

On economic stabilization and global recovery, summit leaders agreed to make sustainable and balanced growth the top priority and coordinate policy measures to bolster demand, support global growth, restore international confidence, and effectively deal with short- and medium-term economic and financial risks.

On sustainable development, the summit leaders included eradicating poverty and achieving strong, inclusive, sustainable and balanced growth as the core objectives of the G20 development agenda and committed to helping the latter achieve inclusive green growth, within which economic growth, environmental protection and social inclusion could complement and reinforce each other. The leaders reaffirmed their commitment to sustainable development in line with the 2012 United Nations Conference on Sustainable Development and the United Nations Framework Convention on Climate Change, among others.

In terms of social protection networks, the summit leaders encouraged countries to establish social protection standards in line with their national situation, and to foster inter-agency and international policy coordination and cooperation. The summit leaders also pledged to help low-income countries build their institutions and their capacity.

On commodity prices the leaders agreed to coordinate policies to ensure ample market supply and effectively manage the volatility of prices that would seriously affect the sustainable development of resource-rich countries and of those not so well endowed.

As for the imbalance in the global economy, summit leaders agreed that countries with current account surpluses should increase domestic demand and called on those with large current account deficits to increase national savings.

The summit leaders reaffirmed their commitment to expedite the process of establishing market-based exchange rate systems and avoid persistent exchange rate misalignments, and refrain from competitively devaluing currencies. They also welcomed China's progress in financial and monetary reform, especially in reforming the renminbi exchange rate regime.

With regard to trade and investment, the leaders were firmly committed to mutually beneficial trade and investment, expanding markets and resisting protectionism in all its forms, in order to promote the conditions for a sustained global economic recovery, jobs and development. They agreed to establish an open, predictable, rule-based, transparent multilateral trading system and ensure the centrality of the World Trade Organization.

Meanwhile, they also agreed to promote international direct investment, maintain a supportive business environment for investors, and to roll back any new protectionist measures such as export restrictions and measures inconsistent with the WTO to stimulate exports.

On job creation the summit leaders approved the Los Cabos Growth and Jobs Action Plan, which calls on member countries to carry out structural reforms, fully respect fundamental principles and rights to work, and strive to lift economic growth to generate labor market opportunities, mobility and jobs. They also committed themselves to step up efforts to strengthen cooperation in education, skills development and training policies.

With regard to the international financial structure, they committed to minimize the negative spillover effects for other countries of policies implemented for domestic purposes, and reaffirmed their shared interest in a strong and stable international financial system.

The summit leaders supported more stringent oversight of global liquidity, capital flows, capital accounts, foreign currency reserves and monetary and currency policies that would produce negative spillover effects for other economic and trade partners.

With the international financial architecture, the summit leaders agreed to build effective global and regional safety nets by increasing resources available to the IMF totaling $450 billion on top of the quota increase under the 2010 Reform Plan. The summit leaders also agreed to carry out further reforms of the World Bank and IMF before 2014.

As for reforming the financial sector, they agreed to foster financial inclusion, designate the Financial Stability Board as the instrument of oversight for the commitments made by the G20 leaders on financial stability, and step up oversight on international investment banks and cross-border trading of over-the-counter derivative products, and more.

On the burning issue of the sovereign debt crisis, the G20 leaders gave high hope to eurozone members about safeguarding the integrity and stability of the euro area, fixing the financial markets, addressing the Greek debt crisis and preventing more countries from falling into the same quagmire. Summit leaders also assured countries caught in such a situation that the IMF would always be there to help.

The author is vice-president of China Institute of International Studies.