by Geoff Raby | Source: Financial Review | Updated Sep 1 2016
Next week's G20 is being held both at an unfortunate place and time. Notwithstanding the protestations of participants, and China's wish for the Summit to rev up the engines of the world economy, attention will be everywhere else other than on common efforts required to return the world to solid growth.
Hangzhou, the capital of prosperous Zhejiang Province and a testament to open markets, is China's Geneva. Built around the beautiful West Lake that features prominently in Chinese classical poetry and painting, today it is ringed by Maserati, Lamborghini, and Porsche stores, as well as the lesser Mercedes, Audi and BMW ones. What Hangzhou lacks in expensive watch shops compared with Geneva it makes up for in the highest-end designer stores.
Hangzhou's natural beauty and elegance notwithstanding, China's government has temporarily shuttered factories, booted migrant workers out of town and erected Potemkin-like screens to hide any potential eye-sores from visitors. The Great State is still vulnerable and insecure when it comes to hosting these mega events.
It is not the choice of Hangzhou itself that is the problem but China at this time. Its increasingly muscular and assertive behaviour in the South China Sea, its ongoing dispute with Japan over Diaoyu/Senkaku Islands, and rising tension with the new administration in Taipei will be the elephants in the room.
Whatever the merits, or otherwise, of the respective sides of these points of heightened regional tensions, China's behaviour – past, present and future – will be on the top of the assembled leaders' collective minds. Being in Hangzhou will focus attention on these issues and be a distraction from the main business at hand – ostensibly to promote economic growth.
And the timing could not be less helpful for creating an atmosphere of a common sense of purpose for the G20. The US presidency is effectively in lame-duck mode and the two aspirants for the job are competing with each other as to who can be the most protectionist.
The Trans-Pacific Partnership (TPP) – from which the G20 host has either be excluded from or not invited to join, depending on who one listens to – seems to be dead, undercutting an important element of the Obama Administration's "pivot" to Asia. Hangzhou will only serve to remind at least the Asia-Pacific participants of what might have been.
Meanwhile, on the way to Hangzhou, German Chancellor Merkel has been publicly told by her deputy that the North-Atlantic trade and investment pact too is dead. Those coming from Europe will be preoccupied with Brexit. Nothing the G20 could possibly discuss, let alone agree upon, could match the disruption caused by the British vote last June.
Pressure on Britain
The new British Prime Minister will of course have a weighty brief to carry beyond her discussions bilaterally with European colleagues over Brexit. The Chinese leadership is deeply annoyed at her decision to postpone approval of the Hinkley Point nuclear power station. This was one of her first major acts on becoming Prime Minister and indicates that Britain will now take a much more circumspect approach in its bilateral relations with China from the effusiveness of former Prime Minister Cameron to the China relationship. Agreement on Hinkley Point was the centre piece of President Xi's recent visit to London.
Prime Minister May will also be under pressure to raise Beijing's increasingly disturbing behaviour towards Hong Kong over the past year, including the rendition off the streets of Hong Kong and Bangkok of five Hong Kong book publishers noted for their salacious publications on China's leadership, including President Xi's family. Hong Kong will be a crucial test for May on how she intends to reset Britain's relationship with China after Cameron.
Turkey's invasion of Syria to attack Kurdish militias, putting it at odds not just with the US but all its NATO allies, will be another major distraction from the G20's agenda. As will be, Russia's renewed military destabilisation of eastern Ukraine. China and Russia have opportunistically drawn closer together to balance the US, notwithstanding the deep reservoir of strategic mistrust between them. China's stance on the Ukraine will be high on the list of issues of concern among European G20 members as it will be for the US.
Closer to Hangzhou, China's client state, the DPRK, has been busy testing more missiles. Most recently, and alarmingly, was the successful test of a submarine launched missile, fired in the direction of Japan for good measure. Although the real strategic threat of Pyongyang is often exaggerated by western strategic analysts, the chutzpah of the young leader with the bad haircut grabs attention. He may even have something in mind to enliven the G20's discussions.
Turnbull's balancing act
As for the Australian Prime Minister, he will be arriving in Hangzhou having just scuppered China's State Grid's bid to acquire a controlling stake in the NSW's grid operator, Auspower and before that the sale of the Kidman properties to Chinese interests. His persuasive powers will be tested if he's to reassure not just China, but many of the assembled, that his newly elected government is not heading down a populist path dictated by his coalition partner the Nationals and minority parties in the Senate.
His Chinese hosts will also want to understand why his foreign minister has taken the most forward leaning and strident position over the South China Sea of any regional country and why Australia has adopted the seemingly contradictory policy of declaring "strict neutrality" on the issue, but at the same time in the most un-nuanced language insisting China adheres to the recent arbitration ruling in The Hague, to which China was not a party.
For his part, the Prime Minister will want to understand, among other things, China's deteriorating human rights situation, highlighted in early August by the show trial of five "rights lawyers", four of whom received lengthy prison terms and one forced into a humiliating disavowal of her work defending the rights of individuals against the state.
The G20 is occurring at a time when the great unravelling of globalisation has begun. Ideally it could set the world's face against the rising tide of populism, protectionism, nationalism and demagoguery. It won't of course, not least because many of those attending are willing participants in this.
Global summitry on display in Hangzhou has a place and value in bringing leaders together. While the once all-powerful G7 (for an interlude G8) is no more than an anachronism today, G20 is at best worthy. The only game that really matters these days is G2 – US and China. And fortunately for the rest of us, they meet regularly, in low-key and usually more productive ways.
Geoff Raby is chair of Geoff Raby & Associates and is a former ambassador to China.