G20’s fate rests with America

Chen said the G-20 represents 90 percent of global GDP, 80 percent of world trade and two-thirds of the world's population. Its economic weight and broad membership gives it a high degree of legitimacy. “I believe the meeting will have a huge impact on the world economy in the future,” noted Chen.

But she added that whether the G20 would replace the G8 remained up to America. In 2005, the G8+5 group, which groups the G8 and five leading emerging economies was formed, and has since acted as the primary forum for conversation between developed and developing countries.

But in practice the G7, the club of wealthy nations, still plays the dominant role. Chen said the absence of president-elect Barack Obama was a pity, since he would be making the key decisions on the future of the G20.

Emerging economies demand a bigger say

Some emerging economies took the summit as an opportunity to demand a bigger say in the world financial system. One promising development was the agreement to give emerging economies a voice on the Financial Stability Forum, where top bank regulators evaluate banking and market risk. In the medium term, the G20 also opened the door to the big prize – more seats for developing countries at the IMF and World Bank.

However, emerging countries should bear in mind that America and Europe still held the leading position and it would take a long time to establish a fair, inclusive and orderly international financial system.

What matters is the follow-up

“The summit not only discussed principles but also dealt with concrete matters,” Chen said.

The key issue now is implementation of the G20 decisions. The statement agreed by the participants lists specific measures in an attached Action Plan, including high priority items to be completed by March 31, 2009.

The G20 leaders will meet again at the end of April 30, 2009 to review progress in implementing the principles agreed at the November meeting.

But nothing has been implemented so far, and the future role of developing countries in the world financial system remains unclear.

Chen hoped the next summit would pay more attention to concrete matters like how to reform the IMF.

“Lack of supervision in the international financial system was one of the root causes of the crisis, so a supervisory mechanism is urgently needed, whether inside or outside IMF,” Chen said.

(China.org.cn by Xiang Bin, November 20, 2008)