G7 led by US can't drive the world economy anymore. G20 must step up.
As developed economies deal with debt and emerging economies like China ramp up, the G20 must spearhead coordinated, complementary policies to navigate the choppy waters ahead, especially for Europe. Austerity alone won't do the trick.
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Further, at this critical moment when protectionist temptations are re-emerging, the G20 needs to reaffirm its commitment to open trade and investment globally by continuing to pursue completion of the Doha trade round that can deliver new, concrete, market-opening steps that benefit developing countries.Skip to next paragraph
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Today we are going through a historic structural transformation. The old G7 countries led by the United States are no longer able to keep the global economy afloat and prosperous, yet the emerging economies led by China are not yet able to do so. For the foreseeable future, the G20 will be the mechanism of adjustment to bring this shifting world order into equilibrium.
As the consumer West deleverages its debt, and high-saving export manufacturers like China move toward a consumer-oriented middle-class transition, balancing out the disequilibrium will continue to produce more shocks over the coming years. The G20 must be more proactive in navigating these raging whitewaters of change. To wait for crisis before acting is to invite crisis itself.
Nicolas Berggruen is president of the 21st Century Council, and Nathan Gardels is senior advisor. The council is a forum for dialogue and action on issues of global governance. It met in Paris October 26-27 to prepare recommendations for the G20 Summit in Cannes this week. Among others, 21st Century Council members include senior Chinese strategist Zheng Bijian; former leaders Gordon Brown, Gerhard Schroeder, and Ernesto Zedillo; Nobel Prize-winning economist Michael Spence; PIMCO CEO Mohammed el-Erian; and Google’s Eric Schmidt.