China’s demand for services can spur trade growth

Anabel Gonzalez [Photo provided to chinadaily.com.cn]

Global economic cooperation key to promote reforms that are needed, says World Bank’s Anabel Gonzalez in an interview with China Daily website.

In a wide-ranging interview with China Daily website, Anabel Gonzalez, Senior Director, World Bank Group Global Practice on Trade and Competitiveness, discusses her expectations from G20 Summit scheduled to be held in Hangzhou in September, the problems small industries face in securing finance and China’s current economic transition.

Here are the excerpts:

1, What are your expectations from China, which holds the rotating presidency of G20 this year? What would you like the G20 Summit in Hangzhou in September to focus on? Although China has denied that it will further depreciate yuan to boost exports, are you worried about the possibility of competitive depreciation happening among emerging economies?

The countries that make up the G20 have a central role to play in global trade and investment, and they can do more to contribute to the G20’s overall objective of strong, sustainable and balanced growth. For this reason, the World Bank Group fully supports the effort of the G20, under China’s leadership, to establish a new Working Group to focus on trade and investment. Specifically, we welcome the proposal by the Chinese Presidency to develop a Global Trade Growth Strategy that will help reduce trade costs through the collective actions of G20 members.

On your second question, there is always a possibility that countries resort to non-cooperative trade or macro policies in difficult times. This is true for all G20 countries, developed and developing, and it is not specific to China. Improving the institutional setting in which countries operate would facilitate cooperative solutions. A way to do this within the G20 is to enhance the independent role of the IMF, World Bank Group and WTO in the monitoring and analysis of economic policies by G20 members.

2, The member states of G20 belong to different Regional Trade Agreements, and there definitely exist a divergence of interests among them. How can we let the G20 Summit perform as an unofficial dialogue platform to encourage bilateral trade agreements and Regional Trade Agreements and strengthen, instead of weaken, the global trade governance under the WTO?

Regional trade agreements are a good example of a policy area where the G20 with the assistance of international organizations, could do more. These trade agreements can do a lot to move international integration forward. For instance, they can go deeper than multilateral negotiations that involve a larger number of different countries in terms of development, needs, and preferences. Take for example, investment or competition policy where an agreement would often not be feasible at the broader level. On the other hand, there is concern that regional trade agreements could eventually fragment the multilateral trading system and increase trade costs. A solution is to give international organizations within the G20 a mandate to monitor and analyze the impact of these agreements on members and non-members. The World Bank Group is doing innovative work in this area. The goal should be to help countries identify what works best for them and for others, but realize the potential of “multilateralizing” certain provisions, so that regional trade agreements complement and reinforce the multilateral trading system.