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Seek balanced recovery

(China Daily)
Updated: 2009-09-28 07:58

The third summit of G20 leaders since the global financial crisis erupted a year ago has ostensibly distinguished itself as a forward-looking one.

While the previous meetings, in Washington and London, were forced to focus on fighting market turmoil and arresting a global recession, the latest one concluded last Friday in Pittsburgh has particularly inspired us by attaching unprecedented and necessary importance to a comprehensive, balanced and sustainable global recovery.

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If history is any guide, the global financial and economic crisis is going to end in one way or another. While emergency acts are indeed important in dealing with the crisis, forward planning on how we will redesign the global economic and financial architecture matters even more for the long-term socioeconomic development of the world.

G20 leaders released a joint statement stressing that "ensuring a strong recovery will necessitate adjustments across different parts of the global economy, while requiring macroeconomic policies that promote adequate and balanced global demand."

Such a consensus is badly needed at a time when initial signs that the world economy may have put the worst behind it are creating unjustified complacency among some policymakers.

Understandably, enacting the proposals will never be easy considering the enormity of the challenges for different countries.

Chinese President Hu Jintao's call for greater efforts in stimulating economic growth, reshaping the international financial system and promoting balanced growth underscored a realistic approach to deliver G20's promise.

The dangers the world economy faces are obvious. Any premature withdrawal of economic stimulus plans in one country will only affect its own growth and undermine international efforts to cement the global recovery.

Slow progress in the reform of the international financial system to reflect the economic realities of the 21st century has so far failed to propel significant regulatory overhaul to clean up Western countries' toxic assets, which may still torpedo the current economic rebound.

And failure to accelerate a shift toward domestic demand in export-reliant economies, and more importantly, to diminish excess borrowing in debt-laden countries like the United States, risks laying the ground for future crises.

The third G20 Summit has now given fresh impetus to our pursuit of a balanced recovery.

Yet, while translating it into concrete domestic acts, policymakers should also keep in mind that trade protectionism is no less toxic than those financial derivatives that brought down the global economy in the first place.

The world does not deserve nor can afford a protectionism-triggered double dip.

(China Daily 09/28/2009 page4)