China needs to push G20 coordination to invigorate world economy: expert

BRUSSELS - In an economy where global value chains are increasingly pervasive, the upcoming G20 summit in China needs to work for an optimal allocation of the key factors of production to invigorate the world economy, a foreign policy expert told Xinhua in a recent interview.

Balazs Ujvari, research fellow at the Egmont Royal Institute for International Relations, said structural reform and policy coherence in the "trade-investment nexus" is more important than ever, facing the sluggish growth in cross-border trade and investment flows.

There are an increasing number of free trade agreements, regional free trade agreements, but the world economy remains in the precarious state, and protectionism in a way is increasing, the expert noted.

"While regional trade agreements do facilitate commerce among the countries they cover, they also hamper the optimal allocation of key factors of production at the global level through the diversions they often cause," he pointed out.

Responding to the increasingly fragmented global trade, what China's G20 presidency aims with invigoration is essentially an optimal allocation of the key factors of production, according to the expert.

Noting that China has acted on this domestically, Ujvari, whose research area concentrates on global governance and the approaches of key international actors to multilateral issues, said national action need to be followed by international ones.

"The G20 in Hangzhou may serve to co-ordinate national efforts and share best practices," he said, "it is an opportunity for China to push participants to come to joint approaches."

Meanwhile, the expert stressed that, "for Beijing, a reinvigorated world economy must also go in hand with the reform of international trade, investment and finance regimes."

Trade liberalization has essentially shifted from the multilateral track to the regional level, risking to bring about a structural slow-down in the global economy, according to the expert.

On this regard, the expert suggested China to push G20 asking WTO to assess the impact of mega-regional trade and investment treaties on developing countries.

Changes of global regimes in trade, investment and finance should not lead to the detriment of the developing world, as is happening post-crisis through fragmentation, the expert said.

In his view, China has been using its G20 presidency to try and push trade talks back to the multilateral level.

Ujvari noted, Beijing's efforts to place trade firmly on the G20's agenda have already led to the formation of the G20 trade and investment working group, followed by the meeting of G20 trade ministers in July in Shanghai.

This latter resulted in the adoption of joint broad principles for stimulating trade and guiding investment policy making.