Asia-Pacific

A new beginning beckons global leaders

By Li Xing and Ding Qingfen (China Daily)
Updated: 2010-06-24 08:08

Confronting all these problems, countries have adopted different contingency measures to cope, even though their measures are seen as either going against previous G20 communiqus or contrary to the best interest of the region or the world.

Protestors walk up the street ahead of the G20 summit in Toronto on Tuesday. [Agencies]

Global Trade Alert, which gathers information and studies from seven independent think-tanks, on Monday released its latest report, saying that major countries are continuing to take protectionist measures, despite the promise by G20 leaders to keep markets open.

The report found that nearly 650 protectionist measures have been implemented since the first crisis-related G20 summit in November 2008, where leaders promised to avoid taking such measures.

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China's Ministry of Commerce has repeatedly said that the nation is a victim of trade protectionism. In a statement at the recent Doha round of negotiations in Japan, it said that further trade protectionism would derail the momentum of the global economic recovery.

Major exporting economies like Germany and Japan will also have to face accusations that they are responsible for the global economic imbalance. These countries will be asked to boost domestic consumption and spend more.

Meanwhile, China will be pressed to appreciate its currency, even though many economists, including Domenico Lombardi, president of the Oxford Institute for Economic Policy at Oxford University, argue that the "exchange rate is not the key to trade imbalances".

China has reasons to go slow on reforms in its currency regime. "Yeah, you have a Japan situation where you never get out of it. There is a risk of stagnation," Bosworth said. "And I think that that is a legitimate issue to discuss at the G20."

However, the problem is that "we hear every country wants fiscal consolidation for itself and fiscal stimulus by others," said the senior fellow at the Brookings Institute.

Lombardi expressed concern that the worsening debt crisis in the eurozone would trigger more protectionist measures and tensions between exporting and importing countries would escalate.

Economists recommend that the leaders make the best use of the G20 platform to exchange ideas and focus on ways to sustain global economic growth.

Efforts should be made to avoid further tensions that could lead to a double-dip recession, Zhang added.