G20 slipping from China’s hands

By Srikanth Kondapalli

As the G20 summit wound up in New Delhi on September 10, China must be pondering over the emergence of a world order that seems to be slipping from its hands. For, overcoming the tectonic East-West divide and the North-South fault lines, India is trying to bring more inclusive and multilateral regional and global orders in the post-pandemic world.

By most indicators, China was at the centre of the G20 processes. It’s sheer economic size at over $19 trillion and average growth of 10 percent from 1980 to 2010 and above 7 percent in the last decade have positioned China as a key player in the G20 sphere. It is one of the largest trading partners of many G20 member States, utilising all the privileges offered by the World Trade Organization. In the last two decades, China also began influencing the G20 debates on global trade, investment, financial stability, and sustainable development.

China hosted G20 at Hangzhou in 2016 and used the platform to advocate its policy priorities and interests. At this meeting it called for financial market reforms, trade liberalisation, infrastructure investment and others. It attracted huge capital, technology and markets in the process.

However, this fairy tale seems to be ending as China has frittered away these benefits as it began showing its teeth prematurely. China’s economic growth rates fell to about 3 percent last year, partly due to its domestic economic restructuring from exports to domestic consumption, import substituting Made in China 2025 campaign and the disastrous pandemic that originated in Wuhan. Its largest trading partners began questioning China’s lack of market economy, as promised under the WTO, soft protectionist policies, non-tariff barriers and currency manipulation practices.

The Covid pandemic, Ukraine conflict, US-China “decoupling”, European “derisking” processes, in addition to other geo-political aspects, are testing China recently. Beijing has shown no comprehensive and transparent responses to these challenges, thus paving the way for others like India to emerge.

Despite many objections from China and other observers, the Delhi declaration of G20 proved to be based on everyone’s consensus. First, the statement on Ukraine, though watered down compared to the previous Bali declaration, reflected the current dynamics of the Ukraine situation. The Delhi declaration did condemn any “territorial acquisition against the territorial integrity and sovereignty or political independence of any state” but without naming “aggression by the Russian federation” as the Bali declaration did a year ago. As explained by foreign minister Dr S. Jaishankar, the situation today has changed substantially – referring to the effects of the conflict on the vast majority of developing countries. Besides, despite a beeline of US visitors to China such as Blinken, Yellen, Kissinger and Raimondo, Beijing does not seem to have mellowed down. The Biden administration has to consider this new geo-political situation developing around an assertive China.

The Covid pandemic, Ukraine conflict, US-China “decoupling”, European “derisking” processes, in addition to other geo-political aspects, are testing China

Second, China was represented at the G20 not by its President but by its Premier Li Qiang, who recently took over in March this year. Li made a brief speech at the G20 summit, mentioning China’s recent initiatives to build a “community of common destiny”, Global Development Initiative, Global Security Initiative and Global Civilisational Initiative, none of which were endorsed by the G20 countries who seem to be beginning to find long-term domination efforts by China through these concepts. Since the 20^th communist party Congress last year, China’s leaders began criticising the US and others for forming “small cliques” to counter their country. Likewise, Li stated that “we must choose solidarity over division, cooperation over confrontation, and inclusiveness over exclusion”. He also asserted China will “firmly oppose the politicisation of economic and trade issues”.

 Li’s interactions at the G20 venue were also subdued. Li met U.K. Prime Minister Rishi Sunak, EU Commission President Ursula von der Leyen, European Council President Charles Michel, Italian Prime Minister Giorgia Meloni, South Korean President Yoon Suk Yeol, while the US President Joe Biden commented that they “talked about stability... it wasn't confrontational at all”.

Earlier, China boycotted the G20 meetings held in Arunachal Pradesh and Srinagar and advised that the words “vasudhaiva kutumbakam” (the world is one family) be removed from the logo. President Xi Jinping’s rejection at the Johannesburg meeting of an “expeditious” disengagement of troops in the western sector and China’s release of a map incorporating vast swathes of lands in Arunachal Pradesh and Ladakh, furthered increased the chasm between the two countries. 

Third, despite a planned 3^rd summit meeting of its Belt and Road Initiative (BRI) next month, it may not be moving so well. The BRI began a decade ago with a unilateral agenda favouring the communist party-State apparatuses and businesses, and leaving no effective room for global or regional participation. On the other hand, the declaration for an India-Middle East-Europe Corridor (IMEC) has public-private partnership arrangements for all the countries on the port, road, railways and hydrogen pipelines, in addition to digital connectivity.

Triggers for integration – including trade facilitation, digital tools, logistics, resilient supply chains and infrastructure on a massive scale are being planned. It was mentioned that the process would be inclusive, open, fair, secure, non-discriminatory, and address the digital divide. At the Jakarta meeting of the Southeast Asian grouping, just before the G20 meeting, Prime Minister Modi announced an “economic corridor” connecting Southeast Asia to West Asia through India. These ambitious “spice route” projects may be eclipsing the BRI.

Fourth, China at one time supported the Third World concept and recently invested in the developing countries being a part of the BRI. But now that ground seems to be slipping for Beijing. Several Chinese commentators have expressed concern that India is taking over the “leadership of the Global South” through the G20 mobilisation. While China supported activities related to 55-member African Union in G20 meetings, it is hard for China to digest the fact that India became instrumental in successfully pushing for the AU’s membership in the G20.

Fifth, in recent times the G20 began making efforts for the “Debt Service Suspension Initiative” and “Common Framework for Debt Treatments” that aim to provide debt relief and restructuring options for heavily indebted developing countries. This is of concern for China as it has become a major lender to the Global South, often at exorbitant interest rates. For instance, bilateral debt from Chinese lenders accounts for 24 percent of Africa’s external debt, compared to 32 percent from global private sector lenders (excluding China), 16 percent from the World Bank, 19 percent from the International Monetary Fund and other multilateral institutions, and 10 percent from the Paris Club.

The debt phenomenon is so significant that nearly half the African Union member States are in debt – mostly to the State-owned banks of China. Countries in South America and Asia are also catching up on this debt slide. While the New Delhi G20 summit only appealed to countries to address this serious debt issue, the Damocles Sword of being a part of the problem seems to be hanging over China.

(Dr. Srikanth Kondapalli is Dean of the School of International Studies, Jawaharlal Nehru University)