Source: Thanh Nien Daily
The world's biggest economies will work to support global growth and better share the benefits of trade, policymakers said on Sunday after a meeting dominated by the impact of Britain's exit from Europe and fears of rising protectionism.
Philip Hammond, Britain's new finance minister, said the uncertainty about Brexit would begin to abate once Britain laid out a vision for a future relationship with Europe, which could become clearer later this year.
But there could be volatility in financial markets throughout the negotiations in the years ahead, Hammond said after the meeting of finance ministers and central bankers from the Group of 20 (G20) major economies in China's southwestern city of Chengdu.
"What will start to reduce uncertainty is when we are able to set out more clearly the kind of arrangement we envisage going forward with the European Union," Hammond told reporters.
"If our European Union partners respond to such a vision positively - obviously it will be subject to negotiation - so that there is a sense perhaps later this year that we are all on the same page in terms of where we expect to be going. I think that will send a reassuring signal to the business community and to markets."
A communique issued by the G20 ministers at the end of the two-day meeting said Brexit, which dominated discussions, had added to uncertainty in the global economy where growth was "weaker than desirable". It added that members, however, were "well positioned to proactively address the potential economic and financial consequences".
"In light of recent developments, we reiterate our determination to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth."
The International Monetary Fund this week cut its global growth forecasts because of the Brexit vote.
Need to lift growth
Whereas monetary policy figured prominently in previous meetings of G20 financial officials, Bank of France Governor Francois Villeroy de Galhau said there was very little debate this time and discussions focused instead on growth.
That was echoed by others.
There was broad consensus that the global economy needed more growth, U.S. Treasury Secretary Jack Lew told reporters, while Chinese Finance Minister Lou Jiwei said it had been easier to forge consensus because the global recovery remained weak.
The specter of protectionism, highlighted not only by Brexit but also by U.S. Republican presidential candidate Donald Trump's "America First" rhetoric and talk of pulling out of trade agreements, was also a focus for the policymakers.
"Not only Brexit but various risks of low growth remain, and there was a lot of debate on the need of monitoring developments including terrorism, geopolitical risks and refugees," said a Japanese finance ministry official. "A lot of concerns were voiced over spreading measures for protectionism."
In the communique, the G20 underscored "the role of open trade policies and a strong and secure global trading system in promoting inclusive global economic growth, and we will make further efforts to revitalize global trade and lift investment".
It recognized problems wrought by industrial overcapacity, particularly the steel sector, which had a negative impact on trade and workers. Overcapacity was a "global issue which requires collective responses".
"We also recognize that subsidies and other types of support from governments or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention," the communique said.
Persistent concerns about the potential for competitive currency devaluations were discussed, and the agreement to refrain from them was in the communique but did not appear to figure as prominently as in the ministers' February meeting in Shanghai.
Japanese Finance Minister Taro Aso expressed concern over China's weakening yuan.
"If you ask me whether a weakening yuan is a good thing for China, I cannot say so," he told reporters. "Whether up or down, a rapid yuan movement is undesirable. "This is our stance. The world too does not hope that only the yuan weakens, as it doesn't do just good to the Chinese economy. It may boost exports but it also raises import costs for China."
So-called "helicopter money" was not discussed, said Bank of Japan Governor Haruhiko Kuroda, who has repeatedly said helicopter money was not under consideration.
"This G20 meeting did not discuss things seen as helicopter money, or even the word helicopter money at all," he said.
Japanese markets have risen this month on speculation that authorities, battling to revive an economy dogged by decades of anemic inflation, will resort to using helicopter money, possibly issuing perpetual bonds to underwrite public debt.