World has a new order, but tough tasks remain

• Source: Globaltimes
• [02:20 September 27 2009]
• Comments

During the current crucial moment of tenuous economic recovery, "20" is believed by many to be a more magic number than "8" – the conventional wisdom that the G8 is the best global forum for coordinated action is starting to give way to the belief that the G20 is more effective.

"It worked," cheered the Leaders' Statement released Friday at the G20 Pittsburgh Summit, referring to collective economic recovery efforts undertaken by the G20's member nations.

The communique said the measures "to ensure recovery, to repair our financial systems and to maintain the global flow of capital" have proved effective. The G20 is thus replacing the West-dominated G8 as "the premier forum for our international economic cooperation."

Not everyone is convinced of the magic of the G20, though.

While a few miss the bygone glories of the old elite club of wealthy nations, others think the G20 is really just a cumbersome formality, with the two nations that really matter being the so-called "G2" – China and the US.

But the real magic of the new world order hinges on the fact that fast-growing economies are given equal standing with developed nations, in keeping with their rising economic clout.

The financial crisis has furthered the shift of economic gravity from the West to the East, and the dynamic emerging economies, including China, are too crucial to world growth to be left out of such important talks.

In that sense, the G20's supplanting of the G8 comes as no surprise. But as its leading role in coordinating global economic policies is legitimized at the Pittsburgh Summit, the G20 should stay cautious as tough, if not tougher, tasks remain.

While more than 100 massive stimulus plans have been enacted by member nations through coordinated efforts of the G20 in the past year, it remains to be seen whether it can continue to do well in coordinating global actions on the path to continued economic recovery.

As the traditional wisdom goes, "Sharing sorrows is easier than sharing happiness." The more economic "green shoots" grow here and there, the harder it will be for the G20 to get any collective task implemented.

If the G20 wants to continue to build its credibility, it must stand the severe tests of its short- and long-term goals, as enumerated in its communiques.

But the commitment to fight protectionism and build a "framework for strong, sustainable and balanced growth," all require more than lip service.

Tough tasks remain for China, too. A higher-profile role in the G20, reflecting the growth of China's economic strength, indicates both opportunities and challenges for the Asian giant.

Not only is it tested by finding a new engine for sustainable growth, but also better skills and more political wisdom are needed to navigate new, multilateral systems like the G20.

Be it the G7, G8, G2 or G20, the real magic of the world's new "G" order doesn't lie in numbers.

It is mutual trust, equal standing, systematic coordination, and concrete joint efforts among the emerging economies and the developed nations of the G20 that can propel economic recovery.