China will host the G20 summit on 4-5 September in Hangzhou, in the midst of a joint public-private innovation effort to counter the economic crisis.
The Chinese government has made innovation the top priority for the G20 leaders’ agenda for this year. Against the backdrop of global economic turbulence, partly triggered by the slowdown of its economy, weaker global demand, and the rise of protectionist measures, Beijing structured its presidency of the restricted club of nations around the leitmotiv “Towards an innovative, invigorated, interconnected and inclusive world economy.”
The G20 summit, which opens this weekend in China, will see the EU in defensive mode, shaken by Brexit, the refugee crisis and on-going structural problems in the Eurozone, writes Fraser Cameron.
The leaders will gather in Zhejiang province, the birthplace of some of the most renowned Chinese companies such as Alibaba, amid alerts sounded by international institutions about the decline of the world economy.
On 1 September, the IMF warned that the G20 was off track of achieving its 2014 goal to boost collective growth by 2% within five years.
While the Washington-based organisation blamed weaker economic activity and “the waning pace of liberalisation”, analysts and policy-makers also pointed out that the stagnation in productivity is due to a decline in innovation support measures and research and development investment.
In contrast with this trend, and despite recent upheaval, China has kept the money flowing to these areas, registering the second largest expenditure on R&D as a percentage of GDP after the US, according to a report published last August by the World Intellectual Property Organisation, Cornell University and INSEAD.
“While the misallocation of capital over the past decades is manifest in excess capacity in a number of manufacturing sectors, the channeling of investment toward high tech and new industries is apparent,” Margit Molnar, senior economist with the OECD recently said.
The overproduction of Chinese factories in sectors like the steel industry have provoked a crisis in Europe. The issue has been a source of tension between the EU and China. Brussels reacted by imposing anti-dumping measures on Chinese steel products, and the issue could come up during the G20 meeting.
The European Commission is expected to further strengthen its steel trade defences, possibly as early as October, industry leaders say, as a global trade war in the alloy intensifies and imports keep flooding into the bloc.
However, the emphasis on innovation also comes with a change of tone from Chinese officials, as they want to appear more cooperative and less assertive in some issues, seen as crucial by their Western partners, particularly on monetary policy.
The vice-governor of the People’s Bank of China, Yi Gang, said on the eve of the summit that the country is willing to communicate and to coordinate more closely with other major economies regarding the yuan’s exchange rate.
This new cooperative spirit has been replicated by some of the flagship hi-tech companies that embody the innovation spirit the country champions for developed and developing nations.
Given the collaboration required for growing markets such as cloud computing and the digitisation of industries, the telecom firm and handset maker Huawei positioned itself as a reliable partner to build an “open and collaborative ecosystem”, their top executives summarised this week in Shanghai.
Huawei, the third largest mobile phone maker, aimed until recently to become the dominant player in different markets where it operates. But in an event hosted with 20,000 attendees, the company admitted that in such an ecosystem “it is impossible” to become the dominant player. EurActiv.com was invited to the conference.
In the context of the next mobile internet generation (5G), the so-called Internet of Things, connected cars and the digitisation of numerous sectors, the ‘cloud’ will become one of the main battlefields for tech firms to provide services to public authorities, companies and users in the years to come. Huawei will face some of the incumbents, such as Amazon and Apple.
Guo Ping, Huawei’s deputy chairman of the board and rotating CEO, “welcomed” and “encouraged” potential cooperation with Amazon in this field. But this cooperative approach at corporate and global levels faces numerous challenges in the months to come, including a victory of the Republican candidate Donald Trump in the US elections.
Trump has repeatedly criticised China during his campaign, as he accused the country of stealing jobs from US companies.
Asked by EurActiv whether he was concerned about the impact of a Trum- Administration on their cooperation with US companies, such as GE or Intel, Mr Guo preferred to remain silent.
The presidents of the European Commission, Jean-Claude Juncker, and the European Council, Donald Tusk, will represent the EU at the G20 summit. The leaders of Britain, Germany, France, Italy and Spain will also attend the meeting.
Although it is not part of the agenda, all eyes will be on British Premier Theresa May and whether she will shed some light on when she will trigger Article 50, to start divorce talks with the EU.
The G20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States and the EU. Spain has become a permanent guest country of the forum.
Together they represent around 90% of global GDP, 80% of global trade and two-thirds of the world’s population.
Other topics of the summit will be the refugee crisis, the fight against the financing of terrorism, financial regulatory reform, and sustainable development.
- 4-5 September: G20 Summit in Hangzhou (China)