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Analysis

A Summit of Significant Success:
G20 Leaders at the 2016 Hangzhou Summit

John Kirton, Co-director, G20 Research Group
September 7, 2016

On September 4 and 5, 2016, in Hangzhou, China, G20 leaders produced a summit of significant success. They set out 29 major initiatives, action plans and other major agreements across a broad range of issues, with several breaking new ground. They strengthened G20 solidarity by articulating a core set of common values, shared by the global community as a whole. They showed that China's G20 leadership had reached a new stage, with the bigger, bolder, better initiatives from summit host President Xi Jinping, followed by his fellow leaders in a fulsome way. They thus set an innovative direction and firm foundation for the future, to be improved at Germany's G20 summit in Hamburg in 2017. Yet relative to Xi's initial and ultimate ambitions and the many clear and present global demands and dangers, the leaders stopped short of making Hangzhou a summit of strong success, let alone the historic one that the global community needs at this time.

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The Concluding Communiqué's Advances

The concluding communiqué opened by clearly declaring that the G20 was now the centre of global governance across all financial and economic, social and sustainable development, and political-security demands. Geopolitical developments such as "increased refugee flows as well as terrorism and conflicts also complicate the global economic outlook," the G20 leaders said.

In their first section on "Strengthening Policy Coordination" the leaders presented their "Hangzhou Consensus" with its far-reaching vision. They promised to transform their economies "in a more innovative and sustainable manner and better reflect shared interests of both present and coming generations." They thus began with the principle of intergenerational equity, the principle at the centre of ecological sustainability since the Brundtland Commission report many decades before. They also affirmed the core principles of innovation and openness, recognizing that they needed more public support and inclusiveness to make economic growth serve the needs of everyone — "in particular women, youth and disadvantaged groups." In this way in 2016 they affirmed the distinctive foundational mission of the G20 since its start in 1999: to make globalization work for the benefit of all . They also pledged to strengthen economic and macroeconomic policy co-ordination. This was a major change from the 2009 Pittsburgh Summit when China only reluctantly accepted the G20's new framework for strong, sustainable and balanced growth.

The second section on "Breaking a New Path for Growth" outlined the summit's intended initiative, the signature "G20 Blueprint on Innovative Growth." It was to be enriched by a "G20 taskforce supported by the [Organisation for Economic Co-operation and Development]." This again showed that the G20 accepted as its de facto secretariat this international organization that had once been the preserve of rich countries, along with the Financial Stability Board it had created in 2009 to support its first distinctive mission of promoting financial stability. This provided considerable promising detail about what the much-heralded theme of innovation contained.

In the third section, "More Effective and Efficient Global Economic and Financial Governance," the leaders advanced familiar issues, including significantly stronger actions on tax justice and especially corruption. Indeed, at the leaders' table German chancellor Angela Merkel and Indian prime minister Narendra Modi said, with considerable accuracy, that nothing erodes public confidence in our governance more than tax evasion and corruption.

The fourth section, on "Robust International Trade and Investment," made incremental advances on the familiar agenda focused on the World Trade Organization. It did recognize the Business 20's initiative of an Electronic World Trade Platform. It wisely sidestepped the irritant of over excess steel capacity by creating a capital global forum to deal with it.

The fifth section, "Inclusive and Interconnected Development" accepted G20 responsibility for implementing the new 2030 Agenda for Sustainable Development. It welcomed the Hangzhou Comprehensive Accountability Report G20 Development Commitments, and it launched the G20 initiative on the industrialization in Africa and least developed countries (LDCs).

The sixth and final section on "Further Significant Global Challenges Affecting the Global Economic" addressed the blow from Brexit, noted the need to bring the Paris Agreement on Climate Change into formal international legal force, and then highlighted the issues of migration, terrorism and antimicrobial resistance. It ended with a ringing affirmation of accountability, declaring "Once we agree we will deliver."

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Summit Shortcomings

Much good was thus done but much was also left out, especially after the very strong start set by Xi's visionary leadership just before the formal summit began. On the eve of the summit Xi Jinping and U.S. president Barack Obama took a major step, announcing that their countries would ratify the Paris Agreement, following France and Korea raising the G20-led global total of countries covering 39% of global emissions. Countries had promised also to do so, but no other G20 countries, including Japan, followed China's G20 lead. Moreover, the G20 leaders did not commit to ending the fossil fuel subsidies that they had agreed to do by now in 2009. There was no reference to the need to kill killer coal despite Xi's focus on his brave domestic actions in his opening address and even with Japan building new coal-fired plants. The G20's health agenda was reduced to the single subject of antimicrobial resistance from the much broader attention given in the two summits past and despite the current attack on Chinese, American and other G20 citizens by the Zika virus and Angela Merkel's intention to deal with a broader health agenda at the Hamburg Summit she will host next year. Attention to migration and displaced persons was similarly minimized from its prominence at Antalya, and leaders avoided any attention to the root cause from Syria's ongoing deadly war. However, in bilateral discussions on the margins, they successfully managed the geopolitical tensions between China and its Asian neighbours over territorial and other disputes, partly through a bilateral meeting between China's Xi Jinping and Japan's Shinzo Abe. Xi was less successful in his bilateral discussions with Korea's President Park Geun-hye in convincing her not to acquire a new air defence missile from the United States. Despite the leaders' brave concluding words on keeping their G20 commitments, there were few convincing accountability mechanisms added to ensure higher compliance and thus the effectiveness and legitimacy of the G20 as the centre of global governance for an intensely globalized world.  

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Dimensions of Performance

The significant success of the G20's Hangzhou Summit is confirmed by a systematic review of its record on the major dimensions of governance by which any G20 or similar summit should be assessed.

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Domestic Political Management

The first dimension of domestic political management recognizes that country leaders go to summits abroad to boost their political standing and policy priorities back home. On the core measure of attendance, performance was perfect. All 19 country leaders came to Hangzhou. This included Michel Temer, the new leader of Brazil, immediately following the impeachment of his predecessor on the summit's eve, and President Tayyip Recep Erdogan of Turkey, who was still cleaning up from an attempted military coup he had survived just seven weeks earlier.

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Deliberation

The second performance dimension is deliberation, both the public results that the leaders collectively express in their concluding communiqués and the private conversations they have among themselves at the summit table.

The core communiqué of nine pages had 48 paragraphs and 7,174 words. It was accompanied by several supporting documents issued in the leaders' name, notably sustain annex written in the first person. There was also the "G20 Blueprint for Innovative Growth." This was one of the more substantive set of conclusions issued by the 11 G20 summits so far.

The private deliberations were less consequential. In a sharp contrast to St. Petersburgh in 2016, the opening dinner for leaders alone was interrupted by a ceremonial dinner with leaders and their spouses, and artistic performances plus a boat ride on West Lake. Obama did not participate in the latter, after the Chinese hosts refused to let his secret service agents accompany him. It was another slight in a series that had begun as soon as the president's aircraft had arrived.

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Decision Making

In its decision making, performance was strong. Hangzhou's core, collective concluding communiqué contained 139 precise, future-oriented, politically binding commitments. This was a substantial increase form the 101 commitments made in the comparable communiqué at the G20's Antalya Summit in 2015.

By issue area, the commitments were led by trade (and investment) with 24 and the new area of innovation (including information communications technologies) with 21. Then after a large gap came macroeconomic policy with 12, financial and tax with eight each, and corruption with six. In a third tier came labour and agriculture with four each, macroeconomic structural reform, exchange rates and migration with two each, and gender with one. At the start of his G20 presidency in December 2015, Xi had put innovation first and sustainable development second. At the end, in the concluding commitments his summit made, innovation had slipped to second place and sustainable development was near the bottom of a long list. On this key dimension of performance, Hangzhou would be remembered more as an old trade summit rather than a new innovation one.

Ecological values were, however, contained in 18 or 13% of these commitments. They are there from the very start, in the first three commitments made among the five in the introductory chapeau of the communiqué. In the following sections, policy co-ordination had none, growth had one, governance had seven, trade and investment had one, development had three, and the concluding section on "Significant Global Challenges" had three. This pattern showed that ecological values were integrated into almost all of the policy areas of the communiqué, including all of the G20 summit's newer ones. Only in the first hard-core area of economic policy co-ordination was it absent.

Entrepreneurial values were also strongly represented. They came in six or 4.3% of the commitments. This was a six-fold surge from the one commitment, or 1%, of the total in the Antalya communiqué last year. Three of Hangzhou's entrepreneurship commitments dealt with innovation, the fourth industrial revolution and the digital economy, which was the first priority and theme of the summit as a whole. One each directly affirmed the value of young entrepreneurship, entrepreneurship for employment and agricultural entrepreneurship respectively.

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Conclusion

Xi Jinping admirably began the Hangzhou Summit by telling the world's business leaders that "green mountains and clear water are as good as gold and silver." But the G20's concluding communiqué left little grounds to expect that his summit priority of ecologically sustainable development or his domestic vision of an ecological civilization would be brought from Hangzhou and China to be shared by the world as a whole.