Since its inception in 1999, the G20 has become one of the world’s primary forums for debating economic issues: the 19 countries plus the EU account for over 80% of the global economy. Of those 19, China is the largest trading partner of Australia, Brazil, Germany, Indonesia, Japan, Russia, Saudi Arabia and South Africa, and the second largest of Argentina and Canada. An important discussion point will surely be China’s economic slowdown.
China’s domestic economy is showing strain in a number of areas: the bubble in the residential housing market appears to have burst;[1] youth unemployment is at a record high of around 20%;[2] Chinese stock markets are falling (with the Hong Kong Index falling more than 20% since January);[3] and in August the economy slipped into deflation.[4] Achieving consensus on collective measures to mitigate a global economic slowdown will be difficult. There are disagreements over sanctions applied by Western states following Russia’s invasion of Ukraine, moves by China and Russia towards the de-dollarisation of global trade, as well as on-going attempts by some US and European economic actors to diversify supply chains.
While UK Foreign Secretary James Cleverly’s recent visit to Beijing indicated an attempt to ‘re-set’ Sino-British relations, Western delegates may be less optimistic. First, the expansion of the BRICS grouping has been widely interpreted in Western media as part of a dilution of the web of Western-led global institutions – including the G20 – and a further shift towards a Beijing-centric world order. And second, that President Xi is rumoured to be skipping the G20 this year, having recently attended the BRICS summit in person, has been interpreted by some as underlining Beijing’s preference for non-Western multilateral platforms.[5]
One area likely to elicit consensus among delegates will be to approve, as expected, the inclusion of the African Union (AU) into the G20 – the first new member since its creation. This overdue move will tilt the bloc towards the interests of the Global South more broadly, of which China considers itself a leading figure. And it may benefit China’s external economic relations: China is the largest trading partner of several African countries, including South Africa, Nigeria and Angola, and a major creditor of several more, including Angola, Ethiopia and Zambia.
A second major issue area for China will be climate, one of the summit’s key themes highlighted by India’s presidency. Only this summer, the heaviest rains in 140 years ravaged parts of Beijing and China’s highest ever temperature was recorded in Xinjiang. China itself has a quixotic approach to addressing climate breakdown. On one hand, it produces more than half of the world’s coal, and Western leaders have criticised Beijing for allegedly stymying an agreement on climate issues in a G20 meeting in July.[6] On the other, China has also made leaps in solar and wind power, and is on target to achieve its renewable energy goals five years ahead of schedule.[7] However, as environmental economists repeatedly demonstrate, addressing the climate crisis stands in stark contrast to growing the economy. Real solutions to the climate crisis are therefore unlikely to materialise in New Delhi.
That said, despite the complex and inter-related global problems of economic slowdown and climate breakdown, Beijing’s concerns are currently more domestic than international. China’s leaders will be more concerned with seeking remedies for the domestic economy, than for advancing its pre-pandemic projects, such as the Belt and Road Initiative (BRI). In the short term, at least, China’s approach on the world stage is less likely to be underpinned by loans and infrastructural investments, and more by ideological and political engagement – an approach that is almost certainly cheaper, but by no means less impactful.
Dr Catherine Owen is a Senior Lecturer in International Relations at the University of Exeter’s Penryn Campus. Prior to that she was British Academy Postdoctoral Fellow, also at the University of Exeter.
[1] Cheryl Arcibal and Chuqin Jiang China’s home prices decline in July as property crisis worsens, South China Morning Post, August 2023, https://www.scmp.com/business/article/3231274/chinas-home-prices-decline-july-property-crisis-worsens
[2] BBC News, China suspends youth unemployment data after record high, August 2023, https://www.bbc.co.uk/news/business-66506132
[3] Phil Rosen, Hong Kong’s benchmark stock index just closed in a bear market as China’s economy wavers, Markets Insider, August 2023, https://markets.businessinsider.com/news/stocks/china-stocks-economy-hang-seng-bear-market-hong-kong-deflation-2023-8
[4] Graeme Wearden and agencies, Chinese economy slips into deflation as recovery falters and demand slows, Guardian, August 2023, https://www.theguardian.com/world/2023/aug/08/chinese-economy-expected-to-have-slipped-into-deflation-as-recovery-falters
[5] Martin Quin Pollard, Laurie Chen and Liz Lee, Xi to skip G20 summit in India, China to send Li instead, Reuters, September 2023, https://www.reuters.com/world/china-says-premier-li-will-attend-g20-summit-2023-09-04/
[6] David Stanway, China denies reports it obstructed G20 climate discussions, Reuters, August 2023, https://www.reuters.com/business/environment/china-denies-reports-it-obstructed-g20-climate-discussions-2023-08-02/
[7] Amy Hawkins and Rachel Cheung, China on course to hit wind and solar power target five years ahead of time, Guardian, June 2023, https://www.theguardian.com/world/2023/jun/29/china-wind-solar-power-global-renewable-energy-leader