China determined to dominate G-20 agenda

Another G20 meeting is set to kick off this weekend at Hangzhou in China. Since the first one in 2008 in Washington, immediately in the aftermath of the global financial meltdown, these have become just another occasion for the leaders to meet. The Group of 20 (G20) is the collection of the twenty largest economies in the world. They also happen to be the most assertive powers. If the first two or three were important for steering the global economy out of the deep financial crisis and the recession that followed, the latter ones have become a ritual. 

But the one set to start in Hangzhou is sought to be projected differently. This is China’s moment of glory. China is unarguably the burgeoning power, with its economy steaming full ahead. At around 7 percent annual growth, it is adding several countries’ economy to its girth every year. It has started asserting itself in the region and far afield. And as recognition of the economic punch and trade weightage, its currency is set to enter the reserve currency basket of the International Monetary Fund. 

For the G20 Summit in Hangzhou, the host country has made every preparation to demonstrate its overbearing importance in the global arena. It is putting its best foot forward to impress the world leaders who matter. China has temporarily shut down all factories and industry around 100 km to present the summiteers a clear blue sky.

In messages to the world leaders of the twenty top countries, China has expressed its preferences: that the Summit should be devoted to economic issues. But it looks that although G20 was formed expressly for the purposes of co-ordinating world’s economic policies, this one in China would be hijacked by geopolitics. Since its formation, though, G20 had been held mainly around economic issues. 

The fact is that several developments recently are not too favourable for China as a mature and stable nation. China is showing scant respect for the rights of other countries in their exclusive economic zones in their coastal seas. To cite examples, there have been occasions when Chinese fishing trawlers have barged into the territorial waters of Indonesia and the Philippines. The fact of the case is that an increasingly prosperous China is demanding resources, including seafood, which is increasingly unavailable in its territorial waters. 

This time around, the meet is being held in the shadow of some more fundamental developments. Three of these developments are noteworthy. First, China’s ill-tempered rejection of a World Court verdict on South China Seas, Russia-Japan understanding on Kurile island, and strategic contacts between USA and India have created a level of discomfort for China.    

Diplomats and observers believe that the Chinese moves on South China Seas and more particularly its open rejection of a judgment from the World Court rejecting China exclusive claims on the wide swathes of the South China Sea would creep into the deliberations. At least, it would very much influence the tone of the discussions and positions taken by the different major players. 

In economic diplomacy, China is overly harping on rules-based free trade among nations. In solving regional issues and territorial differences, China is seen to believe in gunboat diplomacy. 

Significantly, the US delegation for the G20 Summit arrives in China a little ahead.  The two sides are set to discuss many issues, amidst which one pertinent point is the Chinese interest in the seas and US insistence on keeping the South China Sea as international waters. The US is citing the UN convention of the laws of the sea (UNCLOS) as the sole basis for deciding what belongs to who and how the resources in the waters are to be utilised. China is also building an artificial island in the area which has been contested by the Philippines and the country had gone to the World Court on this. These are being contested by regional nations as well as the United States.

China has also been rather quick to react. Maybe, coincidentally, the Indo-US initiatives on sharing of army, navy and air force bases, an agreement between the two countries on holding joint naval exercises in far off seas (including the Pacific) and all the other announcements have been taken by China with a suspicious note. China retaliated to Indo-US initiatives with the immediate announcement of supply of naval submarines to Pakistan. 

Another development could create a diplomatic flutter. Russia and Japan have not been exactly the best of friends since the end of the Second World War. Russian Soviet occupation of Kurile Islands prevented the two countries from signing a peace accord till now even though the war had ended seventy years ago.  Many of the outstanding issues between the two countries have remained in cold storage and unresolved. 

But now, in the current week Russian President Vladimir Putin and Japanese Prime Minister, Shinzo Abe are meeting in Vladivostok to discuss among others the resolution of the disputed islands. The islands are too small for both the countries and could be of little consequence. But they had remained a thorny pain. Now Putin might be a little more willing come to an understanding in return for Japanese economic collaboration. 

All these might have been of much consequence. But there is an underlying feeling that China had now become too self-important and it is seeking to tell the world what to do. That includes how the global economy should be managed, how the global institutions should behave, how monetary policy be conducted to how the markets should function. It has advised the immediate neighbours in the south-east Asian regions. It has told time and again that India should mind its own business and not mine oil in Vietnam. It is telling how globalisation should work, though outsiders hardly have free access to the Chinese market or foreign companies can get free play. 

China had taken full advantage of the free market system, without being itself a free market economy. That is the irony of the situation.