Special Report: Global Financial
LONDON, March 29 (Xinhua) -- Amid a deepening
financial and economic crisis, leaders from the Group of 20 (G20) developed and
emerging economies are due to meet here on Thursday for global solutions.
Expectations are high that they would be committed to
a coordinated response to the crises, an overhaul of the global financial
architecture and restraint from protectionism.
CROSSROADS FOR WORLD
Nearly five months after the G20 leaders held their
first summit in Washington, there is still no sign the financial crisis is
fading away, while the world economy has been plunged into a recession due to
The International Monetary Fund (IMF) recently
painted a grim picture for the world economy this year. It forecast earlier this
month that the world economy is set to shrink by 0.5 percent to 1 percent, the
first-ever contraction in 60 years.
Billionaire investor George Soros warned on Saturday
that the upcoming G20 summit in London will be a crossroad for the world
"The G20 meeting is make or break because unless they
do something for developing world there will be serious collapse in that part of
the world," he said in an interview with British Broadcasting Corporation.
British Prime Minister Gordon Brown put the economic
crisis high on the G20 summit agenda, aiming to build a global consensus on the
But a transatlantic rift over the necessity of
further fiscal stimulus appears to complicate efforts of the summit.
In response to U.S. pressure on the European Union
(EU) countries to boost their fiscal stimulus, Czech Prime Minister Mirek
Topolanek, whose country holds the current EU presidency, slammed U.S. plans to
spend its way out of recession as "a road to hell."
Topolanek's blunt criticism exposed European
differences with Washington and signaled a hard job for Brown to achieve greater
Playing down the transatlantic rift, British Foreign
Secretary David Miliband said on Sunday Britain and the United States will not
push G20 leaders to announce specific spending pledges.
In a preparatory meeting two weeks ago, G20 finance
ministers and central bankers agreed to "take whatever action is necessary" to
support the economy. They pledged to continue coordinated and comprehensive
action to boost demand and jobs, adding the key priority now is to restore
lending by tackling toxic assets in the financial system.
NEW GLOBAL FINANCIAL
While turning a deaf ear to Washington's call for
more fiscal stimulus, the EU is pushing hard for concrete results in reforming
the global financial architecture.
The EU, led by Germany and France, has stressed that
financial reform should be the top priority at the London G20 summit, saying it
would not only help prevent recurrence of the current financial crisis, but also
help rebuild confidence.
German Chancellor Angela Merkel called on Saturday
for a "global financial market constitution" to improve regulation of the
"We need a global financial market constitution as
has not existed before, so that we can finally draw lessons from this disaster,"
Merkel said at a political gathering of her Christian Democratic Union.
In an interview with the Financial Times on the same
day, Merkel said she expected "good results" from the London summit.
The EU hammered out a joint front at the London
summit earlier this month, calling for regulation and oversight of all financial
markets, products and participants that may present a systemic risk, including
hedge funds, private equity, credit rating agencies and tax heavens.
Corporate remuneration practices, banks' capital
requirement and accounting standards, which contributed to the current crisis,
all need to be improved, it said.
There is also a call for reform of international
financial institutions, in particular the IMF. The EU wants to improve IMF
surveillance instruments in order to strengthen its key role in crisis
prevention, boost the fund's lending resources and support a change of power
sharing in the IMF by giving emerging economies a bigger say.
With their contribution to the world economy
increasing, the emerging economies are justified to have a bigger voice in
international financial institutions.
"We call for urgent action with regard to voice and
representation in the IMF in order to better reflect their economic weights,"
Brazil, China, Russia and India, also known collectively as BRICs, said in a
joint communique at the G20 finance ministers' meeting earlier this month.
They also called for a study on the role of
international reserve currencies and enhanced IMF monitoring of developed
economies since the financial crisis actually did not happen in developing
In the face of an economic downturn, there is an
increasing risk that more governments would resort to protectionist measures.
Although the G20 members committed themselves to free
trade at the Washington summit, not all of them have kept their words.
Concerns have been voiced over the so-called "Buy
American" clauses in the newly-adopted U.S. economic stimulus package, which
barred the use of foreign iron, steel and manufactured goods in public works
projects funded by the plan.
Alarm bells have also rung in Europe after French
President Nicolas Sarkozy said French car makers which received government help
should keep domestic jobs first.
When rich countries spent massively to bail out
financial institutions, they are required to put priority on domestic lending to
help save the economy. This kind of financial protectionism has caused flight of
capital from developing and emerging markets.
The World Trade Organization (WTO) warned on Thursday
that a gradual build-up of protectionist measures threatens to strangle
international trade and hamper global recovery.
"There is no indication of an imminent descent into
high intensity protectionism, involving widespread resort to trade restriction
and retaliation," the WTO said in a report. "The danger today is of an
incremental build-up of restrictions that could slowly strangle international
trade and undercut the effectiveness of policies to boost aggregate demand and
restore sustained growth globally," it said.
WTO Director General Pascal Lamy urged the G20
leaders to make a strong commitment to avoiding trade restricting or distorting
measures and working for a rapid conclusion of the long-stalled Doha round of
global trade talks.
The WTO estimated that tariff and subsidy cuts for
trade in goods already on the table in the Doha global trade talks were
equivalent to a new stimulus package of 150 billion euros (about 195 billion
It had already warned that global trade would shrink
by 9 percent this year, the worst drop since World War II, due to dwindling
demand, while the threat of protectionism would only make the situation even
After meeting Chilean President Michelle Bachelet in
Santiago, Brown said that the London summit should send a strong warning against
"One of the messages that must come from next week's
summit is that we will reject protectionist countries, we will monitor
thosecountries and name and shame if necessary countries that are not following
free trade practices," he said.
Brown agreed with Brazil's President Luiz Inacio Lula
da Silva on Thursday that they will propose at the London summit to create a
100-billion-dollar global fund to provide trade finance.
No matter what the G20 leaders could really achieve
at the London summit, German Chancellor Merkel had already acknowledged there is
no quick fix to all the problems.
"We are talking about building a new global financial
market architecture and we will not be able to finish this in London," she said.
G20 meeting closes in Britain,
promises more action to fix economy
HORSHAM, Britain, March 14 (Xinhua) -- The G20
Finance Ministers and Central Bank Governors Meeting was formally closed here
Saturday afternoon after issuing a communiqu¨¦ calling for further action to
restore global economy.
Finance ministers and central bank
governers pose for group photos at a hotel near Horsham, southern England,
March 14, 2009. The G20 Finance Ministers' Meeting kicked off here
The communiqu¨¦ said G20 countries agreed further
action to restore global growth, support lending and strengthen the reform of
the global financial system. Full story
G20 finance ministers, central bank governors agree to restore
global growth, support lending, reform global financial
HORSHAM, Britain, March 14 (Xinhua) -- The G20 finance
ministers and central bank governors agreed on Saturday further action to
restore global growth, support lending and reforms to strengthen the global
They made the statement in a communique issued after their
meeting held on Friday and Saturday in Horsham, southern England for the London
Summit in April. Full story
G20 finance officials meet to discuss
HORSHAM, Britain, March 14 (Xinhua) -- Finance ministers
and central bank governors of the G20 countries started meeting here Saturday to
discuss measures to deal with the economic crisis and reform the global
The meeting was hosted by British Chancellor of the
Exchequer Alistair Darling, who said participants have discussed on Friday the
situation facing all the countries across the world, saying he was sure
Saturday's meeting would make progress. Full story
European expert: G20 summit to be
stage of confidence-building
BRUSSELS, March 14 (Xinhua) -- The upcoming G20 Summit in London will serve
mainly as a confidence-building stage, says a Belgian expert in political and
"Confidence-building is extremely important," Jonathan
Holslag, head of research at the Brussels Institute of Contemporary China
Studies and an expert at the EU-China Academic Network, told Xinhua in an
exclusive interview on Wednesday. Full story
HORSHAM, Britain, March 14 (Xinhua) -- The BRIC nations
at a meeting of finance ministers and central bank governors of the G20
countries called for more say in the reform of the international financial
The BRIC countries -- Brazil, Russia, India and China -
issued the call in a statement Saturday after the second meeting of their
finance ministers on the eve of the G20 summit in London. Full story
Brown: G20 to tackle "root causes" of
LONDON, March 14
(Xinhua) -- British Prime Minister Gordon Brown said here on Saturday that the
upcoming G20 Summit in London must be used to tackle the "root causes" of the
global recession and reshape financial regulation around the world.
Speaking at a joint press conference with visiting German
Chancellor Angela Merkel in Downing Street on Saturday, Brown said the
international community was building an agreement on "the biggest fiscal
stimulus the world has ever seen" as well as on the shape of future fiscal and
monetary policy. Full story