The global economy is being threatened by rising protectionism and risks from highly leveraged financial markets, Chinese President Xi Jinping said at the opening of a two-day summit of leaders from G20 nations.
His warning yesterday followed bilateral talks with Barack Obama that the US president described as “extremely productive”, but which failed to bring both sides closer on thornier topics such as tensions in the South China Sea.
With the summit taking place after Britain’s vote in June to exit the European Union and before the US presidential election in November, observers expect G20 leaders to mount a defence of free trade and globalisation and warn against isolationism.
The global economy has arrived “at a crucial juncture”, Xi said, in the face of sluggish demand, volatile financial markets and feeble trade and investment.
“Growth drivers from the previous round of technological progress are gradually fading, while a new round of technological and industrial revolution has yet to gain momentum,” he said.
G20 countries are set to agree in a communique at the end of the summit that all policy measures – including monetary, fiscal and structural reforms – should be used to achieve solid and sustainable economic growth, Japanese deputy chief cabinet secretary Koichi Hagiuda said.
“Commitment will be made to utilising all three policy tools of monetary and fiscal policies and structural reforms to achieve solid, sustainable, balanced and inclusive growth,” Hagiuda said on the sidelines of the summit.
Xi also called on G20 countries to match their words with actions.
“We should turn the G20 group into an action team, instead of a talk shop,” he said.
But some of the G20 leaders have begun drawing battle lines in disputes over issues ranging from trade and investment to tax policy and industrial overcapacity.
Yesterday, Xi held talks with Australian Prime Minister Malcolm Turnbull and said he hoped Australia would continue to provide a fair, transparent and predictable policy environment for foreign investors.
China was angered when Australia blocked the A$10-billion (R109-billion) sale of the country’s biggest energy grid to Chinese bidders last month.
China has accused Australia of bowing to protectionist sentiment in blocking the bid for Ausgrid, as well as an earlier one by a China-led consortium to buy cattle company Kidman & Co.
Beijing has also criticised Australia, a staunch US ally, for running surveillance flights over disputed islands in the South China Sea.
Meanwhile, European Commission president Jean-Claude Juncker said China must set up a mechanism to address its problem of industrial overcapacity, saying it was “unacceptable” that the European steel industry had lost so many jobs in recent years.
“Overcapacity is a global problem but there is a particular Chinese element,” he said.
Britain’s future after its departure from the European Union was also subject to discussion.
Obama reassured Prime Minister Theresa May that Britain’s closest political, commercial and military ally would stand by her.
But he did not shrink away from his stance that London would not be able to jump the queue to arrange a bilateral trade deal.