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Inviting the Rich Neighbors In: China and the G20 Summit

The bustling streets of Hangzhou were silent. Row upon row of factories lay still, as they had for nearly a month, no longer pumping out their usual tide of wealth and pollution. Even the traffic jams, a daily facet of life, were gone. The residents of Hangzhou, spurred on by some combination of subsidies and government prodding, either remained in their homes or took a forced vacation. For the first time in months, the skies over the city were a clear blue. Every so often, planes descended into the airport, carrying world leaders, finance ministers, and diplomats, accompanied by the inevitable entourage of journalists and staffers for the G20 summit.  

The well-choreographed scene was interrupted when Air Force One landed. Instead of walking down onto red-carpeted stairs in accordance with protocol, President Obama and the rest of the U.S. delegation emerged from the belly of the plane. Once on the runway, a Chinese official attempted to stop American staff including National Security Advisor Susan Rice from joining the rest of the delegation in the motorcade, yelling, “This is our country. This is our airport.” With that inauspicious arrival, the G20 summit began in earnest.  

“It’s unfortunate that the tarmac dust-up took attention away from the truly big news story of the day: the United States’ and China’s historic ratification of the Paris climate change agreement,” said Jonathan Lowet SY ‘88, the Senior Director of Leadership Initiatives at the National Committee on U.S.-China Relations. “As the ratification shows, big things can be achieved even while underlying tensions persist,” he continued.  

Once President Obama arrived in Huangzhou, he and his Chinese counterpart, Xi Jinping, ratified the climate change accords at a formal ceremony. The announcement was touted as an achievement representative of U.S.-China cooperation.

“Someday we may see this as the moment when we decided to save our planet,” said President Obama at the ceremony. “History will judge today’s efforts as pivotal.”

But the tarmac scuffle, a hiccup in these otherwise orderly displays of diplomacy, received more attention. “The coverage of the former—in both countries’ traditional and social media—simply underscores that there continues to be a great deal of strategic distrust in our relationship, that each of our countries is quick to suspect the other’s motivations,” said Lowet.

Anders Aslund, a senior fellow on the Atlantic Council, said the incident was not an accident. “The Communist Party in China follow a very rigid procedure,” he said, “With that in mind, it’s hard to see this as anything other than a planned insult.” Whether or not the insult was part of a planned script, it served to shape the public perception of the U.S.-China relationship.

The discrepancy between coverage of policy and that of gossip raises the question: What is the purpose of the G20?

The G20 is a successor to a smaller group of developed nations, the G7, and was designed to be a forum for economic governance, as a means to shapes the growth of the world economy. The original group was formed after the OPEC oil crisis in 1975. The G20 proclamation is meant to provide a distinct, detailed, and binding roadmap for the future of the world economy.

“The G20 summit, unfortunately, is not up to expectations,” agreed Jean Pierre Lehmann, a professor of international policy at IMD, the International Institute for Management Development.

“It’s hard to remember a G20 summit since 2008 that has actually done something,” he continued. Aslund explained the group served to calm the international community the 2008 financial crisis.

This year’s summit was focused on working towards an “innovative, invigorated, interconnected, and inclusive” world economy. Unlike previous summits, which had primarily dealt with the fallout of the 2008 financial crisis and promoting short-term growth, this summit emphasized long-term initiatives.

The G20 summit involves bilateral meetings between leaders and a joint statement outlining economic policies produced at the end. The results of these two days of intensive meetings were published in 19 pages. Ross said, “I do not put too much stake in these joint statements, which frequently reflect the lowest common denominator, rather than real issues between states.”

Ross continued, “Each of these countries will have different needs. In this situation, a multilateral agreement is a high bar.”

The diversity of the countries in the G20 is one barrier to effectiveness. The member states range from Communist states to democracies. While some leaders embrace austerity, others promote government investment. Ross explained, “It is impossible for 20 different countries, with such different economy priorities, to come to a common economic objective.”  

Aslund agreed, saying, “The G20, as such, has no common bindings; of these countries, four are authoritarian, and several of them are among the worst protectionists.”

Adding to this difficulty, Lehmann noted, is that the leaders do not know each other well. “When it was the G5, or the G6, they were all on the same wavelength, Lehmann said. “But now, you have Saudi Arabia and China and the United States—they don’t know each other.”

The short length of the summit further hinders substantive progress being made—each summit is only two days long.

It is for these reasons, Ross said, that the main goal of leaders is not to make significant achievements but to leave the G20 summit unscathed. “To come home with conflict rather than cooperation wouldn’t serve any country’s interests,” said Ross.

The emphasis on performance over substance may damage other institutions. “It serves to undermine the more relevant international organizations like the IMF and the World Bank, and the G20 is sharply on the way out,” said Aslund.

In China, some business leaders are dubious about the G20’s effectiveness. Jack is the head of a state-run bank in China who asked that his full name and title be kept anonymous. He said Chinese business leaders “regard G20 as a political show, with no real near term economic impacts.”  

Lucan Liu, head of the fixed income department of China Asset Management Co., agreed, saying the G20 “is supposed to be a big political event, but in reality became an entertainment event.”

The same is true among regular people in China. My aunt told me a story about hearing a state-owned carmaker say that no one cares about the G20—everyone cares about a wage raise. Another young person in China complained that the government only cares about the environment and its citizens quality of life when representatives of other countries can see.  

But for the Chinese government, the G20 represented an important opportunity. Lehmann explained, “The setting is that China has emerged as a global power. They are now fumbling around and saying, ‘We are a great power, but how does a great power behave, what does it do?” Lehmann answered, “It hosts lavish meetings like the G20.”

This emergence onto the global stage raises the stakes for China. In order to ensure everything would be perfect, even the weather, the government shut down factories, stopped traffic, and heavily encouraged residents to go on vacation.

“The fact that nothing came out of Hangzhou meeting, I don’t thing really bothers them. It was more about the stage,” said Lehmann.

Hosting the summit was in itself an achievement for China. “Twenty years ago,” Lehmann said, “China was nowhere. Now they’re hosting the Olympics, hosting the G20 leaders.”

“China is like a poor family, with little power or status, who has finally made some money and decided to invite all the rich neighbors to their house to try and gain some status and have their voice heard,” said Jack.

Why keep the G20 if its purpose is to let one country show off every year? Beyond policy achievements, the G20 offers an important opportunity for twenty of the most powerful leaders in the world to interact. Ross said the most important contribution of the G20 summit is the starting of “dialogue among the leaders, in a single setting to simply establish contact.”

“The only relevant topic is that it brings leaders together for bilateral meetings,” said Aslund.

Out of these meetings sometimes comes tangible progress. Ross pointed to the Syrian ceasefire deal, which was negotiated between U.S. Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov during a bilateral meeting at the summit, as an example of the potential of such summits.  The U.S.-China agreement on climate change, though highly choreographed, will have substantial impacts as well. “I would be reluctant to see it abandoned,” concluded Lehmann.  

Despite the showmanship of the G20, a platform for leaders to meet is important. Even when Chinese officials berate Americans on a tarmac, that provides insight into two countries’ relationship. The consensus seems to be, as Lehmann stated unenthusiastically: “It’s no good, but it’s better than no G20 at all.”