China agreed to co-operate more closely with trading partners on its politically volatile steel exports as leaders of major economies ended the G20 summit today in Hangzhou, China, with a forceful endorsement of free trade and a crowded agenda that included the Koreas, Syria and refugees.
In a joint statement Monday, Chinese President Xi Jinping, U.S. President Barack Obama, and the leaders of Canada, Britain, Japan, Russia and other Group of 20 nations pledged to boost sluggish global growth by promoting innovation.
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"The global recovery lacks momentum," Xi told reporters after the meeting. "We need to do more to unlock the potential for medium and long-term growth."
There was no mention of a global stimulus or other joint action, which officials said earlier was unworkable because economic conditions vary widely from country to country.
In a statement issued Monday, Prime Minister Justin Trudeau called for the implementation of growth strategies and increasing the collective gross domestic product by two per cent by 2018.
Trudeau also said it's important that the benefits of free and open trade are shared by all citizens.
In an effort to shore up public support for trade, the G20 leaders promised "inclusive growth" to spread the benefits to people left behind by wrenching change. That reflects a recognition that economic strains are fuelling political tensions and a growing clamour to raise barriers against foreign competition.
The statement expressed "opposition to protectionism on trade and investment in all its forms."
The governments pledged to avoid devaluing their currencies to boost exports. They called for co-operation to reduce tax avoidance.
They appealed for stepped-up aid for surging global numbers of refugees and their host countries.
China hopes for influence boost
Chinese leaders hope the two-day meeting will increase their influence in managing the global economy.
They want the G20, created to respond to the 2008 financial crisis, to take on a longer-term role promoting trade and economic growth. The joint statement reflected that ambition by calling it the "premier forum" for economic co-operation.
Beijing made trade a theme of the gathering in Hangzhou, a lakeside city southwest of Shanghai, but faces complaints that a flood of low-cost Chinese steel into global markets threatens U.S. and European jobs, propelling the rise of political movements that promise to curb trade.
The joint statement calls for formation of a steel forum under the Organization for Economic Co-operation and Development (OECD) to study excess production capacity.
In a concession to Beijing, the statement doesn't mention China by name and says excess steel capacity is a global issue. However, U.S. and European officials say the vast Chinese state-owned industry, which accounts for half of worldwide output, is the root of the problem. Washington has hiked import duties by up to 500 per cent on Chinese steel to offset what it says are improper subsidies.
'The market is distorted by subsidies'
Beijing promised in January to reduce steel production capacity by 100 million to 150 million tons (90,718,474 to 136,077,711 tonnes) by 2020. But that is half of China's estimated excess capacity of 300 million tons (272,155,422 tonnes), so deeper cuts would be required to bring it in line with demand.
"The market is distorted by subsidies and other support measures, and that is the fundamental problem," said Japanese Prime Minister Shinzo Abe, according to broadcaster NHK.
The president of the European Union's governing body, Jean-Claude Juncker, called Sunday for the G20 to take action on steel. He said the trade bloc will look at Beijing's response when deciding whether to grant China market economy status, which would make it harder to bring anti-dumping cases.
The steel forum could help to ease strains with Beijing's trading partners, said economist Rajiv Biswas of IHS.
"It may help to reassure countries about tangible steps China is taking," he said.
Defending free trade
Obama, Xi and other leaders called during the meeting for governments to defend free trade.
"The benefits of trade and open markets must be communicated to the wider public more effectively," the joint statement said.
The World Trade Organization is forecasting global trade growth this year at just 2.8 per cent — its fifth year below three per cent.
The International Monetary Fund has cut its outlook for global economic growth to 3.1 per cent.
The G20 as a group is unlikely to be able to do much to boost trade or economic growth, Biswas said. He noted that talks on Obama's TPP initiative for Asia-Pacific governments and a
U.S.-European pact have slowed or stalled. Britain is wrestling with the effects of its June vote to leave the EU. Russia, Nigeria and other economies are in recession.
"I would say it is hard for the G20 to come up with a co-ordinated action plan because many of the countries are caught up in domestic issues," Biswas said.
The summit was frequently overshadowed by other concerns.
On Monday, North Korea added to the drama by firing three ballistic missiles off its east coast. At about the same time, Xi was in Hangzhou telling his South Korean counterpart, Park Gyun hye, that China opposes plans to deploy a U.S. anti-missile system outside Seoul.
China has warned South Korea's capital against installing the Terminal High Altitude Area Defence, or THAAD, system. But Monday marked the first time Xi raised the issue directly with Park.
Beijing complains THAAD will allow the U.S. military to peer deep into northeastern China.