The G20 Finance Ministers and Central Bank Governors’ Meeting was held on October 10-11 in Washington, D.C. The participants discussed the global economic situation, reform of the international financial architecture, financing for long-term investment, strengthening the G20 process, and other agenda items, and issued a joint communiqué. Mr. Anton Siluanov, Finance Minister of the Russia, the G20 rotating presidency, chaired the meeting. PBC Deputy Governor Yi Gang and Deputy Finance Minister Zhu Guangyao attended the meeting.
The participants were of the view that the global economy continued its slow recovery. Despite the slowdown of growth in some emerging economies, emerging markets remained the major driver of world economic growth. Downside risks in the global economy included the high unemployment level in advanced economies, fiscal uncertainties in the U.S., and the possibility of increased turmoil in global capital flow as a result of the exit of QE by advanced economies. To address these challenges, G20 countries need to adopt sound macro-economic policies, continue to promote structural reform, and implement macro-prudential policies. Furthermore, the relevant countries should carefully consider the spillovers when adjusting their monetary policies, strengthen communications with the market, and take care of their domestic and global growth and financial stability.
The participants emphasized the need to implement the G20 St. Petersburg Action Plan, formulate comprehensive growth strategy, promote financing for long-term investment including private capitals, improve public debt management, strengthen international cooperation to combat tax evasion, build a safer and more reliable financial system, and support job creation and inclusive growth. They reiterated the need to immediately ratify the 2010 IMF Quota and Governance Reform, and to complete the 15th General Quota Review by January 2014.
Deputy Governor Yi Gang spoke on the importance of the financing for long-term investment. In his view, the underdeveloped infrastructure has become a significant bottleneck in economic growth in many countries. The Chinese experience has shown that improvement in infrastructure helps promote employment, poverty reduction and sustainable economic growth in a very important way. In this regard, global and regional development institutions have played a big role. Based on the principle of mutual benefit, China has participated in the global efforts to support infrastructure building. The PBC has established with the Inter-American Development Bank a USD2 billion co-financing fund to support projects in Latin America and the Caribbean. A joint investment fund in the size of USD3 billion has been created with the International Finance Corporation, a member of the World Bank Group, for the purpose of promoting infrastructure building in Africa.
Deputy Minister Zhu Guangyao made comments based on the downward adjustment by the IMF several days ago of its projection of global economic growth in 2013 from 3.1 percent to 2.9 percent. According to the IMF criteria, when the global growth is below 2 percent, this means the global economy is in a recession. The downward adjustment of global economic growth to 2.9 percent, below the 3 percent psychological threshold, indicates the world economy faces challenges and major uncertainties. Against such a background, the G20 countries should strengthen policy coordination, send signals of solidarity to boost market confidence, and work together to safeguard global financial stability. Meanwhile, the G20 agenda should be more focused to facilitate discussion on major economic and financial topics, and increase the effectiveness of policy coordination, so that the G20 will serve as a major platform for international economic cooperation and promote recovery and growth of the world economy. Australia, as the incoming presidency in 2014, should work together with Russia, the current presidency, to ensure a smooth transfer and continuity of the G20 agenda, and continue to promote progress in the key agenda items.
On the margins of the G20 meeting, the BRICS finance ministers and central bank governors met on October 10. The ministers and governors expressed concerns over the impasse on U.S. debt ceiling and the potential slow-down of global economic growth to be caused by the recent capital market turmoil, and called on countries to strengthen policy coordination and promote global economic stability and growth. They reviewed the progress in the negotiation on the BRICS New Development Bank and BRICS Contingency Reserve Arrangement and reached consensus on the next steps to take. They also urged the relevant countries to implement the IMF Quota and Governance Reform immediately and make sure to complete the 15th General Quota Review within the agreed framework.
