Author:Lai Mingming (1958-), Taiwanese politician, President of PRC 1993-1995D. in Economics, Associate Professor of Cheung Kong School of Journalism and Communication, Shantou University, and Contributing Researcher of the Center for World Economic Studies, Renmin University of China.

In 2016, the global economy is complicated, the United Kingdom "Brexit" makes the European Union and the euro prospect is worrying; international oil prices and commodity prices continue to fall and fluctuate sharply, leading to rely on raw material exports of Russia, Australia, Brazil and other countries foreign exchange income has decreased dramatically; Abe's ambitious Japanese re-emergence strategy The "three arrows" are now at the end of their tether; the U.S. election year, the Obama administration is unlikely to introduce a large-scale economic stimulus package; the sustainable development of emerging economies due to the lack of economic growth in developed countries is also unsustainable. ......

In fact, these are only the symptoms of global economic problems, and the real crisis facing the global economy is that globalization is no longer fixed, and the world's major economies have questioned the WTO-led globalization characterized by the liberalization of international trade, and they have bypassed the WTO in order to set up regional economic, trade and financial cooperation bodies. Despite the globalization of the economy and of information, and despite the fact that globalization remains the "bible" of economic development, there are major differences of opinion as to how globalization should be promoted and by which institution.

How to coordinate the understanding of globalization has become an inescapable threshold for the continued development of the world economy. It is against this background that the eleventh summit of the leaders of the Group of Twenty (G20) will be held in Hangzhou, China, on September 4-5, 2016.The G20 Hangzhou Summit is China's most important home turf this year, and it is the summit with the largest participation of developing countries in the history of the G20 Summit.In addition to the leaders of G20 members and the heads of seven international organizations, such as the World Bank, the International Monetary Fund and the OECD, China has also invited the leaders of eight guest countries to participate in the meeting. In addition to the leaders of the G20 members and the heads of seven international organizations, China has invited the leaders of eight guest countries to participate in the meeting, which are Laos as the Chair of ASEAN, Thailand as the Chair of the Group of 77, Chad as the Chair of the African Union, Senegal as the Chair of the New Partnership for Africa's Development (NEPAD), and the leaders of two representative large developing countries, namely Kazakhstan and Egypt.

For the first time, the G20 Hangzhou Summit placed development issues at the forefront of global macro-policy coordination, and it set an agenda to push G20 members to implement the 2030 Sustainability Action Plan, as well as to support the industrialization of Africa and the least developed countries (LDCs). However, what the G20 Hangzhou Summit needs to address most is coordinating the perceptions of globalization among key economies such as the US, Europe, China and Japan.

Three waves of globalization

The concept of globalization was formed in the course of Western economic development. The United Kingdom, which advocated trade freedom, was the advocate and practitioner of globalization; the United States abandoned the Monroe Doctrine during the First World War and took over the baton of globalization from the United Kingdom, vigorously advocating trade freedom and financial freedom; and in the twenty-first century, with China's accession to the World Trade Organization (WTO), China has become an important force in support of trade liberalization and globalization.

Globalization is first and foremost economic globalization, and the establishment of a world market is an important symbol of economic globalization. There are three conditions for the establishment of a world market: first, the existence of advanced navigation and shipbuilding technology; second, the establishment of a modern economic ideology and system that does not focus solely on the acquisition of gold and silver; and, third, the existence of industrial production capacity and the establishment of an industrial production system; since the fifteenth century, the age of the great seafarers, the international trade system advocated by Adam Smith in his "The Wealth of Nations" and the industrial revolution have laid the foundation for economic globalization.

The American historian Stavrianos cites the year 1500 as a watershed in world history. At the end of the fifteenth century, Europe was only one of four centers of civilization in Eurasia, and by no means the most important one; after 1500, Western Europe began its expansion into the world, and by the end of the eighteenth century it had taken control of the oceanic routes, organized a globally profitable trade, and conquered vast areas of North and South America and Siberia. This process was the inauguration of globalization, the process by which the world moved from its isolated regional civilizations to one world. Economic globalization has occurred in roughly three waves.

The first wave of economic globalization started in the 15th century, first by Portugal, Spain opened the Great Age of Sail to discover the New World, followed by Britain, France, Germany and other European powers have set up a sovereign dominated industrial production and colonies to provide raw materials, labor, the market of the global division of labor system.

The second wave of economic globalization emerged in the second half of the 19th century and the beginning of the 20th century, with the boom in international trade and large-scale international flows of capital and labour becoming the hallmarks of this era, a wave of globalization that was finally interrupted by the First World War.

The third wave of economic globalization, which started after the end of the Second World War and accelerated considerably after the 1980s, especially into the 1990s, has reached its climax in the twenty-first century. From 1980 to 1996, the scale of global trade almost tripled, and in 1996, global transnational corporations provided 40 per cent of the world's gross domestic product (GDP). This wave of globalization is characterized by the establishment of a global economic division of labor system in accordance with the "Wendt Model" and the "Geese and Geese Theory", and with China's accession to the WTO and the rise of new types of economies, more and more developing countries have been swept into the process of globalization, and the simultaneous advancement of global trade liberalization and financial liberalization. Global trade liberalization and financial liberalization to promote simultaneously, the "global village" in the Internet to promote the establishment.

The third economic globalization is reflected in seven aspects: trade globalization, capital globalization, production globalization, consumption globalization, technology globalization, services globalization and organization globalization. The International Monetary Fund (IMF) pointed out in a report published in May 1997 that "economic globalization refers to the increase in the scale and form of transnational trade in goods and services and capital flows, as well as the widespread and rapid diffusion of technology that has led to greater interdependence among the world's economies". According to the Organisation for Economic Co-operation and Development (OECD), "economic globalization can be viewed as a process in which economies, markets, technologies and forms of communication are becoming increasingly global in character, and nationalities and localities are diminishing". The most important sign of this is the development of the WTO.

Costs of economic globalization

Economic globalization has undoubtedly accelerated the process of human civilization. On the one hand, globalization reduces the costs of international trade, increases its benefits and raises the welfare of both trading parties; on the other hand, globalization increases the returns and reduces the risks of international investment, so that both the investing and the attracting parties profit together. With the further development of economic globalization, its impact on the economies of various countries is becoming more and more significant, people's understanding of it is deepening, and the complexity of economic globalization and its possible destructive effects are attracting more and more attention.

However, economic globalization is a "double-edged sword". While economic globalization brings economic benefits to all countries, it also comes at a considerable cost.

First, global economic instability has become the norm

In the process of economic globalization, the interdependence of national economies has increased as never before. The dependence of many countries on foreign trade has exceeded 30 per cent or even reached 50-60 per cent. Internal imbalances in any country are reflected in external imbalances, and international contagion of economic fluctuations and crises can hardly be avoided.

The 1997 exchange rate crisis in Thailand quickly spread to the entire South-East Asian region, as well as to Korea and Japan, creating a serious regional financial crisis. The latest example of the contagion effect of the crisis was the de facto global financial turmoil that subsequently spread to Russia and Latin America, while the Asian financial turmoil of 1997-1998 triggered the first wave of questioning of globalization. The fruitful economic development of the Four Little Dragons and the Five Little Tigers of Asia was buried by the comprehensive open-door policies of those countries.

The global financial tsunami triggered by the U.S. subprime mortgage crisis in 2007 has triggered a second quality of globalization.A wave of suspicion. The overly lax regulation of mortgage lending led to the spread of the subprime mortgage crisis within the U.S. into a global financial tsunami.After the financial crisis of 2007, globalization entered a low ebb, and there is no more obvious example of this than the sharp decline in the growth rate of international trade. According to WTO statistics, from 2008 to 2015, the average annual compound growth rate of global export value was only 2.05%, significantly lower than the previous 15 years. Corresponding to this is the intensification of global trade disputes.

The 2016 British referendum on "Brexit" triggered a third wave of skepticism about globalization. Britain's "exit" from a side reality, the people of developed countries are losing faith in "free trade", since the birth of the euro had been the world's high hopes, that the EU as a whole will be the same as the United States and the United States as an important pole of the world's economy. However, since the Greek debt crisis, the European Union as a whole has become a major player in the world economy. However, since the Greek debt crisis, there has been a great deal of concern about the disintegration of the EU and the Eurozone. Britain's "withdrawal" will have a direct impact on the EU and ultimately on globalization.

Second, the independence of the economic sovereignty of States is being challenged

In the case of the European Union, for example, with the gradual increase in the degree of integration, the economic sovereignty of member States has been declining. From the early customs union, unified agricultural prices, exchange rate joint float, to the emergence of a single currency, the euro after the unified financial policy (in January 1999, the euro interest rate zone to start), all show that the member States of the financial and monetary sovereignty has gradually ceded to the supranational EU coordination mechanism. This transfer of economic sovereignty has cost many member States a great deal of money and has even jeopardized the survival of the EU economy on several occasions.

Third, the gap between the rich and the poor between countries has widened further globally

Economic globalization manifests itself first and foremost in the globalization of markets and trade. In this process, the wealth of international trade is increasingly concentrated in a few countries or a few interest groups, leading to the widening of the gap between the rich and the poor. According to World Bank statistics, in 1983, the per capita gross domestic product (GDP) of low-income developing countries was 2.4 per cent of that of high-income developed countries, i.e., the latter were equal to 43 times that of the former; by 1994, that ratio had decreased to 1.6 per cent, i.e., the latter were 62 times that of the former.

Formation of an anti-globalization wave

Since the negative effects of globalization cannot be eliminated, the anti-globalization movement has never ceased. At present, the anti-globalization movement is characterized by the expansion of the movement from the private sector to the government, and the world's major economies have bypassed the WTO and are seeking to establish "circles", form or deepen regional economic cooperation bodies, and implement freedom of trade and investment for member countries within the "circles", while implementing trade protectionism for those outside the "circles". For member countries within the "circle", trade and investment freedom is practiced, and for those outside the "circle", trade protectionism is practiced.

The new round of anti-globalization movement is not only helpless about the inability of the WTO and the IFM to play their roles adequately and effectively, but also a struggle against their increasing marginalization under the existing international trade and financial order. Questioning and resisting globalization will inevitably lead to global fragmentation. The so-called global fragmentation here does not mean that countries return to a state of closed-door freedom, but that the world splits into regional economic and trade cooperation organizations, which replace the WTO as the dominant player in global trade and inputs.

In June 2013, the U.S. and Europe officially announced the launch of the Transatlantic Trade and Investment Partnership (TTIP).
and Investment Partnership, or TTIP) negotiations.

In August 2014, India refused to ratify the trade facilitation agreement reached during the Bali ministerial meeting, citing that food security issues had not received as much attention as hoped, a move that dashed the WTO's hopes of reforming global trade rules. The United States is enthusiastic about the TPP, which was in fact initiated not by the United States but by four of the Asia-Pacific Economic Cooperation (APEC) member countries, New Zealand, Singapore, Chile and Brunei.

On October 5, 2015, the Trans-Pacific Strategic Economic Partnership (TPP) made a substantial breakthrough when the U.S., Japan, and 10 other pan-Pacific countries agreed on the TPP. the 12 participating countries combined account for 40% of the global economy. the TPP will reduce or waive tariffs on nearly 18,000 categories of goods. the TPP will also reduce or waive tariffs on a wide range of goods, such as food and beverages. the TPP will reduce or waive tariffs on a wide range of goods, such as food and beverages.

In addition, the Japan-Europe FTA, the China-Japan-South Korea FTA, China's "One Belt, One Road" and Russia's proposed Trans-Asia-Europe Development Belt can all be seen as more pieces in the pipeline.

successiveG20Main topics and outcomes of the last five summits of the Summit

Globalization, or fragmentation, that is the question.

Therefore, as the G20 Summit was established to find ways to overcome the economic crisis caused by globalization, it should play an important role in promoting an open dialogue among industrial and emerging market countries on key issues of international economic policy and financial systems. At the current critical juncture when the global economy is at a crossroads, it should play an important role in facilitating the building of an open dialogue between industrialized and emerging market countries on important issues of the international economy, monetary policy and the financial system, and it should play an important role in promoting a more in-depth dialogue between the world's major economies to avoid the fragmentation of the global economy.

The G20 Summit accounts for 2/3 of the world's population, 60% of land area, 90% of gross domestic product, and 80% of trade, so the G20 member countries cover a wide range of areas and are highly representative of the interests of both developed and developing countries as well as different geographic regions.

recalls thatG20The last five summits of the Summit have led to the following conclusions:

First, in the last five G20 summits, there have been four issues that have become common to each of them: one is the world economic situation, the other is global economic growth, the third is global trade growth, and the fourth is global financial stability and regulation.

secondlyIn different years, the European debt crisis, international judicial cooperation against corruption, global counter-terrorism, food security, and curbing excessive volatility of raw material prices in international markets have been included among the topics of the G20 summits.

thirdlyThe agreements reached at the last five G20 Summits have not been fully implemented, and the implementation of the G20 Summits needs to be improved, and the lack of monitoring, supervision, checks and balances on the implementation of the agreements reached at the G20 Summits has always been a thorny problem that has not been solved, and the G20 Summits have played the role of an important platform for different countries to express themselves differently on common issues. The G20 plays an important role as a platform for "different countries to express themselves differently around common issues".

fourthThe goals of the G20 Summit in the area of promoting sustainable development and stable growth of the global economy are the same, but the means adopted are different. The manufacturing powers led by China put more emphasis on promoting global trade liberalization, and the financial powers led by the United States put more emphasis on promoting global financial liberalization; therefore, at the G20 Summit, China and the United States have traditionally expressed their respective views on trade freedom and trade protection, and financial freedom and financial regulation.

fifthlyThe harmful effects of the fragmentation of the global economy had not been given sufficient attention and had never been included as an important issue, nor had there been any agreement on how to eliminate the negative effects of globalization.

G20Gaming at the Hangzhou Summit

The theme of the 2016 G20 Hangzhou Summit is "Building an Innovative, Dynamic, Connected and Inclusive World Economy". The five key topics include "Enhanced Policy Coordination and Innovative Approaches to Growth", "More Efficient Global Economic and Financial Governance", "Robust International Trade and Investment", "Inclusive and dynamic development" and "Other salient issues affecting the world economy".

It can be seen that "financial governance" and "robust international trade and investment" continue to be important issues at the Summit. However, in the current era of global fragmentation, the debates on international trade liberalization and trade protection, and international financial liberalization and financial regulation are expected to remain lively at this summit, and it is difficult to reach substantive agreement.

Even if an initiative to promote the liberalization of international trade is agreed upon, it will be difficult to implement such an initiative in concrete terms. Therefore, it is more important for the G20 to determine the regulatory and control mechanisms, that is, for the G20 as an international organization to improve its internal implementation capacity than to focus on hot topics. Therefore, it is predicted that China will express the following propositions by hosting the G20 Hangzhou Summit: first, to play a leading role in the G20 Summit to explore the direction of global economic development; second, to strengthen the mechanism construction of the G20 Summit to provide a guarantee for the transition to a long-term global economic governance mechanism; third, to be vigilant against global fragmentation, and advocate for the strengthening of global economic cooperation, carry forward the spirit of partnership in the same boat, and jointly deal with risks and challenges.

At the G20 Summit, China is expected to re-emphasize the importance of international trade liberalization, firmly oppose trade protectionism, and stress the importance of international financial regulation and stable development. In addition, the host will take advantage of the "Chinese voice" in areas such as the "Belt and Road" and global economic cooperation, global infrastructure connectivity, green finance, the G20 principles of digital financial inclusion, and global cyberspace governance.

International trade liberalization and international financial liberalization remain areas of game for major powers at the G20 Hangzhou Summit.

With regard to the liberalization of international trade, Germany cannot be judged to be a staunch defender of free trade solely on the basis of its status as a major manufacturing country. Although the EU is not Germany's "circle", Germany is clearly the most important manufacturing and exporting country in the EU, so any initiative that infringes on Germany's trade interests in the EU's "circle", including the European Union-United States free trade agreement TTIP, will attract Germany's opposition. Therefore, any move that infringes on Germany's trade interests in the "circle" of the EU, including the TTIP, a free trade agreement between the US and Europe, will attract German opposition. In addition, with Britain's "exit" from the European Union, Germany will inevitably strengthen its cooperation with Russia and China for the benefit of the EU; however, the idea that the close cooperation between Europe, Russia, and China in the economic and trade fields will inevitably lead to the formation of a new economic union between Europe and Asia and even the belief that the power of the land will prevail over the power of the sea is really a self-congratulation of economic chauvinism.

As a major manufacturing country, Japan has always been a strong supporter of trade liberalization, but it is also a member of the U.S.-led Trans-Pacific Partnership (TPP).
Partnership Agreement).On August 15, 2016, Abe offered a tribute to the Yasukuni Shrine as president of the Liberal Democratic Party (LDP), while forgoing a visit to Yasukuni Shrine. Japanese media analyzed this as a concessionary gesture made by Abe only to meet with Chinese President Xi Jinping at the G20 summit in Hangzhou. In fact, this subtle arrangement of Japan also shows the ambivalence of the Abe government, which on the one hand wants to become a major player in the TPP without China's participation, and on the other hand does not want to give up the Chinese market.

As for the U.S., during the G20 summit, which coincides with the killing spree between Trump and Hillary, don't expect the U.S. to change its established policies or introduce new ones.

To sum up, how to deal with the challenges of the world economy in the era of global fragmentation is the main topic of the G20 Hangzhou Summit. Reversing the trend of global fragmentation, the first step is to abandon the "ostrich policy" and the very existence of global fragmentation.

At the same time, globalization has been challenged as much as it has been welcomed for its benefits, and therefore, to reverse the trend of global fragmentation, the benefits of global trade and finance must be distributed more equitably. Global trade should not revert to protectionism, but trade dumping and subsidies should be firmly sanctioned; global finance should not be free and unregulated, but the regulation of global capital flows should not be used as an excuse for exchange controls.

Freedom of investment and finance is as important as freedom of trade. It is not possible to demand freedom of trade and oppose freedom of financial investment, nor is it possible to demand freedom of financial investment and oppose freedom of trade. The issue of freedom of international trade and finance is essentially a matter of equity.

The great powers economic and trade game will soon be staged in Hangzhou, let us wait and see.