CSIS on China and the G20
Center
for Strategic and International Studies
“China and th G20”
Wednesday, July 20, 2016
Key Topics & Takeaways
·
Cybersecurity Law Hinders Innovation: Albright Stonebridge
Group’s Amy Celico expressed concern that China’s draft Cybersecurity Law will
disrupt its efforts to promote innovation and limit market access for foreign
companies. She explained the introduction of these regulatory hurdles and data
localization requirements “run contrary” to China’s stated goals to promote
innovation.
·
Market Economy Status: Deputy National
Security Advisor Adeyemo explained that the Commerce Department will determine
whether China should be treated as a “market economy” based on the criteria set
forth in congressional statutes. Still, he explained that the Administration
will continue to urge China to follow through on its commitments to move toward
a market-based economy, such as by reforming state-owned enterprises (SOEs),
reducing excess capacity in commodities and other sectors, and modernizing its
bankruptcy regime.
Speakers
·
Wally O. Adeyemo, Deputy National
Security Advisor for International Economics, The White House
·
Gian Maria Milesi-Ferretti, Assistant Director,
Research Department, International Monetary Fund
·
Amy Celico, Principal, Albright
Stonebridge Group
·
Scott Kennedy, Deputy Director,
Freeman Chair in China Studies, CSIS
Keynote Speech
Wally O. Adeyemo, Deputy National Security Advisor for
International Economics, The White House
Adeyemo
noted the progress made by Group of 20 (G20) leaders in promoting global
financial stability since the “dark days in 2009,” but explained that there is
more work to be done to achieve robust, sustainable, and balanced economic
growth. Noting the rising sentiment that globalization is “not working” for the
working class, Ademeyo stated that the G20 must aim to ensure that the benefits
of global growth are shared more broadly. To do so, he called for: 1) reforming
the economic system to create a level playing field for workers; 2) modernizing
the tax system; 3) strengthening anti-corruption efforts; 4) tackling excess
capacity; and 5) ensuring governments do not use exchange rate policies to gain
a competitive advantage against other economies.
Adeyemo
argued that the Trans-Pacific Partnership (TPP) and Transatlantic Trade and
Investment Partnership (TTIP) would allow the U.S. to set the rules of trade
for economies accounting for approximately 60 percent of global gross domestic
product (GDP), and cautioned that “others will” establish the global trading
norms in the absence of U.S. leadership. For instance, he stressed that China
is actively pursuing a Regional Comprehensive Economic Partnership (RCEP) with
a goal of completion by the end of 2016.
Questions & Answers
Fiscal
Policies to Stimulate Demand
In
response to a question on promoting growth, Adeyemo explained that
there seems to be
consensus between G20 members about the need to boost investment in the global
economy, but mentioned that there are different views as to how to stimulate
private sector growth. He encouraged countries to use “what fiscal space they
have” to stimulate growth, and stated that European leaders should use more
tools to support job creation.
Adeyemo explained that the Commerce Department
will determine whether China should be treated as a “market economy” based on
the criteria set forth in Congressional statutes. Still, he explained that the
Administration will continue to urge China to follow through on its commitments
to move toward a market-based economy, such as by reforming state-owned
enterprises (SOEs), reducing excess capacity in commodities and other sectors,
and modernizing its bankruptcy regime.
Environmental Goods Agreement
Adeyemo stated that the G20 Trade Ministers’ statement on the
Environmental Goods Agreement (EGA) shows the level of ambition of all
countries to conclude the agreement by the end of 2016.
U.S.-China BIT
Adeyemo stated that the U.S. would like to
conclude the U.S.-China Bilateral Investment Treaty (BIT) during this
Administration but would only do so based on the substance of the terms. He
mentioned that the BIT fundamentally fits with China’s goal to shift toward a
market-oriented economy but argued that Chinese leaders must show “appropriate
ambition” to successfully conclude negotiations during President Obama’s
tenure.
Rising Economic Populism
In
response to a question regarding rising economic populism, Adeyemo noted that
calls for protectionism and isolationism would lead to slower growth, higher
unemployment and decreased economic prosperity. Instead, Adeyemo called for the
G20 to focus on stimulating more inclusive economic growth, and on ways to make
it clear that the global economic system works for working people, such as by:
1) reforming the international tax system; 2) enforcing existing trade laws; 3)
deepening anti-corruption efforts; and 4) boosting investment in key sectors
(such as infrastructure and green finance). He cautioned against resorting to
“beggar thy neighbor policies” under the guise of stimulating domestic growth.
Panel Discussion
Gian Maria
Milesi-Ferretti, Assistant Director, Research Department, International
Monetary Fund
Milesi-Ferretti noted that due to the outcome
of the UK referendum on EU membership, the International Monetary Fund (IMF)
had to downward revise its global growth forecast. Noting the “angst” and
uncertainty stemming from the vote outcome, he explained that the growth
projection reflects uncertainty about how the UK will define its relationship
with the EU. Milesi-Ferretti also noted that the outlook for emerging economies
remains “extremely differentiated” across the globe. He pointed to many
downside risks, such as risks stemming from China’s economic rebalancing, as
well as those that may arise if European banks become more stressed.
Milesi-Ferretti stated that policymakers must be ready to respond to these
downside risks.
Amy Celico, Principal,
Albright Stonebridge Group
Celico noted that challenges to the global
trading system continue to grow, creating further pressure on the G20 to
demonstrate that it can deliver concrete outcomes. She noted that the
challenges include rising populism and protectionism, skepticism of global
governance and trade liberalization, and regulatory hurdles that hinder
innovation. Celico argued that the G20 could achieve concrete trade outcomes
this year, namely: 1) the Environmental Goods Agreement; 2) implementation of
the expanded Information Technology Agreement (ITA); and 3) collective efforts
to address global industrial over-excess capacity particularly in their steel
industry.
Celico expressed concern that China’s
draft Cybersecurity Law will disrupt its efforts to promote innovation and would
also limit market access for foreign companies. She explained the introduction
of these regulatory hurdles and data localization requirements “run contrary”
to China’s stated goals to promote innovation.
Scott Kennedy, Deputy
Director, Freeman Chair in China Studies, CSIS
Kennedy noted that several domestic priorities
could impede China’s ability to achieve concrete outcomes during its leadership
of the G20. For instance, he pointed to the following factors as issues that
would distract Chinese leaders during its chairmanship of the G20: 1)
anti-graft campaign; 2) leadership reshuffle during the upcoming 19th
Party Congress; and 3) disagreement between ministries about how to stimulate
economic growth and reform the financial system. Kennedy concluded that the
demands on Chinese leadership are high and that any reforms will likely be
taken in an incremental approach.
Additional information about this event can be
accessed here.
,Blog Tags:,Blog Categories:,Blog TrackBack:,Blog Pingback:No,Hearing Summaries Issues:International/Trade,Hearing Summaries Agency:Special Event,Publish Year:2016
Center
for Strategic and International Studies
“China and th G20”
Wednesday, July 20, 2016
Key Topics & Takeaways
·
Cybersecurity Law Hinders Innovation: Albright Stonebridge
Group’s Amy Celico expressed concern that China’s draft Cybersecurity Law will
disrupt its efforts to promote innovation and limit market access for foreign
companies. She explained the introduction of these regulatory hurdles and data
localization requirements “run contrary” to China’s stated goals to promote
innovation.
·
Market Economy Status: Deputy National
Security Advisor Adeyemo explained that the Commerce Department will determine
whether China should be treated as a “market economy” based on the criteria set
forth in congressional statutes. Still, he explained that the Administration
will continue to urge China to follow through on its commitments to move toward
a market-based economy, such as by reforming state-owned enterprises (SOEs),
reducing excess capacity in commodities and other sectors, and modernizing its
bankruptcy regime.
Speakers
·
Wally O. Adeyemo, Deputy National
Security Advisor for International Economics, The White House
·
Gian Maria Milesi-Ferretti, Assistant Director,
Research Department, International Monetary Fund
·
Amy Celico, Principal, Albright
Stonebridge Group
·
Scott Kennedy, Deputy Director,
Freeman Chair in China Studies, CSIS
Keynote Speech
Wally O. Adeyemo, Deputy National Security Advisor for
International Economics, The White House
Adeyemo
noted the progress made by Group of 20 (G20) leaders in promoting global
financial stability since the “dark days in 2009,” but explained that there is
more work to be done to achieve robust, sustainable, and balanced economic
growth. Noting the rising sentiment that globalization is “not working” for the
working class, Ademeyo stated that the G20 must aim to ensure that the benefits
of global growth are shared more broadly. To do so, he called for: 1) reforming
the economic system to create a level playing field for workers; 2) modernizing
the tax system; 3) strengthening anti-corruption efforts; 4) tackling excess
capacity; and 5) ensuring governments do not use exchange rate policies to gain
a competitive advantage against other economies.
Adeyemo
argued that the Trans-Pacific Partnership (TPP) and Transatlantic Trade and
Investment Partnership (TTIP) would allow the U.S. to set the rules of trade
for economies accounting for approximately 60 percent of global gross domestic
product (GDP), and cautioned that “others will” establish the global trading
norms in the absence of U.S. leadership. For instance, he stressed that China
is actively pursuing a Regional Comprehensive Economic Partnership (RCEP) with
a goal of completion by the end of 2016.
Questions & Answers
Fiscal
Policies to Stimulate Demand
In
response to a question on promoting growth, Adeyemo explained that
there seems to be
consensus between G20 members about the need to boost investment in the global
economy, but mentioned that there are different views as to how to stimulate
private sector growth. He encouraged countries to use “what fiscal space they
have” to stimulate growth, and stated that European leaders should use more
tools to support job creation.
Adeyemo explained that the Commerce Department
will determine whether China should be treated as a “market economy” based on
the criteria set forth in Congressional statutes. Still, he explained that the
Administration will continue to urge China to follow through on its commitments
to move toward a market-based economy, such as by reforming state-owned
enterprises (SOEs), reducing excess capacity in commodities and other sectors,
and modernizing its bankruptcy regime.
Environmental Goods Agreement
Adeyemo stated that the G20 Trade Ministers’ statement on the
Environmental Goods Agreement (EGA) shows the level of ambition of all
countries to conclude the agreement by the end of 2016.
U.S.-China BIT
Adeyemo stated that the U.S. would like to
conclude the U.S.-China Bilateral Investment Treaty (BIT) during this
Administration but would only do so based on the substance of the terms. He
mentioned that the BIT fundamentally fits with China’s goal to shift toward a
market-oriented economy but argued that Chinese leaders must show “appropriate
ambition” to successfully conclude negotiations during President Obama’s
tenure.
Rising Economic Populism
In
response to a question regarding rising economic populism, Adeyemo noted that
calls for protectionism and isolationism would lead to slower growth, higher
unemployment and decreased economic prosperity. Instead, Adeyemo called for the
G20 to focus on stimulating more inclusive economic growth, and on ways to make
it clear that the global economic system works for working people, such as by:
1) reforming the international tax system; 2) enforcing existing trade laws; 3)
deepening anti-corruption efforts; and 4) boosting investment in key sectors
(such as infrastructure and green finance). He cautioned against resorting to
“beggar thy neighbor policies” under the guise of stimulating domestic growth.
Panel Discussion
Gian Maria
Milesi-Ferretti, Assistant Director, Research Department, International
Monetary Fund
Milesi-Ferretti noted that due to the outcome
of the UK referendum on EU membership, the International Monetary Fund (IMF)
had to downward revise its global growth forecast. Noting the “angst” and
uncertainty stemming from the vote outcome, he explained that the growth
projection reflects uncertainty about how the UK will define its relationship
with the EU. Milesi-Ferretti also noted that the outlook for emerging economies
remains “extremely differentiated” across the globe. He pointed to many
downside risks, such as risks stemming from China’s economic rebalancing, as
well as those that may arise if European banks become more stressed.
Milesi-Ferretti stated that policymakers must be ready to respond to these
downside risks.
Amy Celico, Principal,
Albright Stonebridge Group
Celico noted that challenges to the global
trading system continue to grow, creating further pressure on the G20 to
demonstrate that it can deliver concrete outcomes. She noted that the
challenges include rising populism and protectionism, skepticism of global
governance and trade liberalization, and regulatory hurdles that hinder
innovation. Celico argued that the G20 could achieve concrete trade outcomes
this year, namely: 1) the Environmental Goods Agreement; 2) implementation of
the expanded Information Technology Agreement (ITA); and 3) collective efforts
to address global industrial over-excess capacity particularly in their steel
industry.
Celico expressed concern that China’s
draft Cybersecurity Law will disrupt its efforts to promote innovation and would
also limit market access for foreign companies. She explained the introduction
of these regulatory hurdles and data localization requirements “run contrary”
to China’s stated goals to promote innovation.
Scott Kennedy, Deputy
Director, Freeman Chair in China Studies, CSIS
Kennedy noted that several domestic priorities
could impede China’s ability to achieve concrete outcomes during its leadership
of the G20. For instance, he pointed to the following factors as issues that
would distract Chinese leaders during its chairmanship of the G20: 1)
anti-graft campaign; 2) leadership reshuffle during the upcoming 19th
Party Congress; and 3) disagreement between ministries about how to stimulate
economic growth and reform the financial system. Kennedy concluded that the
demands on Chinese leadership are high and that any reforms will likely be
taken in an incremental approach.
Additional information about this event can be
accessed here.