G20 must promote global infrastructure, not protectionism
To promote global economic growth, G20 leaders should focus on encouraging global infrastructure development projects and avoid protectionism, according to Stephen Perry, chairman of the 48 Group Club, a group that promotes trade and cultural relations between the U.K. and China.
World leaders gather in Hangzhou, China, for the G20 summit. [China Pictoria /Xu Xun]
The G20 leaders need to understand far-reaching infrastructure development initiatives such as China’s “Belt and Road” initiative (BRI), which will create land and sea infrastructure across Asia and in to Europe. This infrastructure will provide jobs and investment in the involved countries. It will also provide the foundations for quicker intercontinental trade.
Asked what obstacles the global economy faces, Stephen says the biggest one is fear. “The biggest obstacle is fear that current challenges can only be managed by reversing to an earlier time with protectionism.”
The World Trade Organization (WTO) reported that 22 new trade-restrictive measures were implemented each month by WTO members between October 2015 and May 2016, up by an average of seven from the previous period.
Answering a question on protectionist rhetoric in the U.S. election campaign, World Bank President Jim Yong Kim said in a CNBC interview in June 2016, that we live in a context of slow growth and trade, and that low and middle-income people in the U.S. benefit from free trade as it supplies them with products they could not afford otherwise.
Stephen Perry says that protectionist approaches have never worked in world history. “Progress will be achieved by encouraging more infrastructure-based global development projects which lead to new consumer demand.”
One way China is helping to create growth is through the “Belt and Road” initiative — therwise known as One Belt, One Road. The G20 summit in Hangzhou, China, could give leaders a chance to understand the significance of the initiative.
BRI is a massive project that Chinese President Xi Jinping announced in 2013. China will work multi-laterally for win-win situations by creating infrastructure opportunities across Central and Southern Asia. The infrastructure projects will provide jobs, create investment opportunities, and facilitate the infrastructure for more efficient trade across countries and will include 4.4 billion people and 40 percent of global GDP.
“BRI is not understood and this G20 is a chance for major leaders to comprehend what it is,” said Perry . “The best chance for stimulating growth in the global economy is BRI, with a ticket of up to 40-50 trillion dollars over the next 30 years.”
Perry says that the EU and the U.S. need to find a formula for engaging in BRI, which will create win-win situations for all involved.
Aside from global infrastructure, the U.S. and the U.K. need to realise that national infrastructure investment can create growth on their own shores, and should not act suspiciously towards investment from foreign companies or nations.
“It is the time-honoured approach of investing in infrastructure during a recession which has been applied in China and the West can relearn from [them],” Perry says. “The U.S. building a high-speed network would create a lot of demand and solve carbon problems.”
XpressWest, a private U.S. company, ended plans with China Railway International to build a high-speed line from Southern California to Las Vegas. XpressWest stated that there were “difficulties associated with timely performance.”
The U.K. Prime Minister and Chinese President might also discuss plans for the nuclear power plant, Hinkley Point C.
During Xi’s 2015 state visit to the U.K., China’s State-owned China General Nuclear Power Corporation signed an investment agreement with French energy firm EDF to build the new power plant. This investment from China, along with others totalling 18 billion, signalled a “Golden Era” between China and the U.K.
The project is worth billions of pounds to the U.K. energy industry, will create over 25,000 jobs, according to EDF.
However, since 2015, the U.K. has changed prime minister, and approval for the power plant has delayed as Prime Minister Theresa May reviews the security of the project.
Asked if the G20 summit would be a good time to discuss the slow progress of finalising Hinkley Point C, Perry said: “The nuclear issue should not be a litmus test of the relationship [between the U.K. and China]. China and the U.K. need each other and can benefit significantly from each other.”