It wasn’t a negligible harvest, so now the question must be whether this cooperative spirit can last long enough to survive the acute phase of the crisis? For the aftermath may be less easy to deal with than the apex, with two issues of particular relevance. The first is the future of the coordination process launched last year at Pittsburgh, whose goal is a rebalancing of global growth. How can a heterogeneous group of countries succeed, when some – not least the U.S. and China – have no tradition of allowing foreign oversight of their domestic policy choices?
External surpluses and deficits and corresponding exchange rate policies will be key, as any re-balancing of global economic growth requires the U.S. and China to engage in major overhauls of their own growth models. Domestic adjustment has started on the U.S. side, but it’s by no means certain that the U.S. political process will take external dimensions into account when confronted by the hard choices that lie ahead. And welcome as it was, China’s stimulus shouldn’t be seen as a first step towards more consumer-oriented growth. The task ahead for Chinese policymakers is daunting, and China’s refusal to bow to U.S. and European pressures on revaluing the renminbi doesn’t bode well for future macroeconomic and monetary cooperation in the G20.
The second issue is the redefining of global governance responsibilities. Europe’s huge over-representation in international organisations like the IMF and World Bank has long irritated the rest of the world, and so far, the G20 has achieved no progress on this. An even more difficult question is whether the emerging world is ready to take part in fully in the fashioning of new global rules. Again, China’s answer will be key; for all the talk of G2, Beijing still seems very reluctant to take on its full share of global responsibilities. It will still be a poor country when it overtakes the U.S. as the world’s leading economic power, and right now it lacks the human resources to play a full role in international financial diplomacy. China is also afraid of being made co-responsible for decisions it will have little ability to influence.
The upshot of all this is that after a brilliant start, global cooperation and governance may disappoint in the years ahead, even though is to be hoped that the acquis of 2008-2009 will provide the basis for its further development.