The Wall Street Journal
By CHUIN-WEI YAP
Updated Sept. 1, 2016 12:31 a.m. ET
14 COMMENTS
BEIJING—A summit of major economies meant to be a moment of glory for China coincides with a world-wide backlash against globalization—and much of it is blamed on China.
Beijing sees gatherings of world leaders as its chance to emphasize China’s ascending role on the world stage, and spares no effort to ensure outsize pomp—or blue skies—for the occasion. But as President Xi Jinping prepares to welcome leaders of the Group of 20 economies to the ancient city of Hangzhou, keeping China from being singled out as a hindrance to global growth is increasingly emerging as a goal.
As China’s growth slows and economies in the U.S. and Europe remain in the doldrums, complaints have gathered pace in recent months: China’s industrial overcapacity has doused prices abroad. Access for foreign investors hasn’t matched the terms Chinese encounter overseas. And the world’s largest trading nation has become a fixture in trade spats from Brazilian pulp to American chicken claws.
Meanwhile, Western officials and businesses see the bidders in ever-larger Chinese acquisitions of major global brands as state-controlled beneficiaries of protected markets.
“China is the most closed of the G-20 countries in terms of inward direct investment, and at the same time it is emerging as the largest investor in the world,” said David Dollar, senior fellow at the Brookings Institution think tank. “The lack of reciprocity presents a real problem for the world.”
Failing to tamp down these contentions at the G-20 will mean a setback in China’s aspirations to reshape the global order, blunting triumphs such as the establishment of the Asian Infrastructure Investment Bank, China’s answer to the World Bank whose membership is growing. Canada on Wednesday became the first North American country to apply to join.
Chinese officials suggest they will play up investment-treaty talks at the G-20—including discussions with the U.S. now going on eight years—as evidence Beijing is committed to openness.
Beijing casts China as a victim, not a cause, of “rising trade protectionism.” Commerce Ministry spokesman Shen Danyang told reporters last week that a rise in steel exports was due to more competitive Chinese mills. The G-20 communiqué, Mr. Shen predicted, would include language on “reducing trade protectionism.”
Officials involved in G-20 planning say it is unlikely the forum will produce a major deal to support global growth, along the lines of the 2009 London summit that lined up more than $1 trillion in credit commitments to boost multilateral lending. At Hangzhou, they say, the focus is instead turning to persuading China to help get the global economy humming again.
At the summit, scheduled for Sept. 4-5, Beijing is likely to emphasize its stewardship of “green” finance, tax transparency, financial regulation and other areas in a G-20-coordinated Hangzhou Action Plan that will allow it at least a symbolic chance to demonstrate global leadership.
But China’s attempt to return the G-20’s agenda to the wider global economy could prove difficult.
“If the final communiqué is going to be about overcapacity or other issues affecting trade, China wouldn’t want its name” singled out for blame, an official with a Western business group said.
Prestige is at stake, as well as more tangible interests.
World Trade Organization data show antidumping measures, including tariffs, against Chinese exports by G-20 members rose 47% to their highest level last year from 2010. The remedies were aimed at anything from children’s bicycles to water heaters. One-third targeted China’s steel shipments.
The scale and rock-bottom prices of China’s exports have hit a nerve in working-class communities world-wide. Labor-affiliated economists in the West argue that opening markets, particularly to China, has suppressed wages and crowded out as many as three million American jobs. Such views have gained traction even in pro-trade circles in the U.S. and is a major issue in the presidential campaign.
European lawmakers have voiced strong objections to opening the bloc’s economy further to China without Chinese concessions. A study for the European Commission, the EU’s executive branch, estimated that job losses in the EU could reach 211,000 or more if China is conferred “market-economy” status at a year-end vote.
“When the world needs more globalization, China remains in a defensive mode,” said Jörg Wuttke, president of the EU Chamber of Commerce in China. “We worry that China might unleash protectionist forces that no one wants to see.”
EU officials say they will raise China’s steel production in separate talks for an EU investment deal with Beijing and will use China’s bid to join the Organization for Economic Cooperation and Development to pressure it to accept an OECD agency monitoring its steel output.
U.S. officials have also said they expect steel to be “a major topic of conversation” at the G-20, and want to work it into the final communiqué.
China’s outbound investment has swept into foreign shores with relative ease, even in prized sectors such as robotics and biotechnology, such as the Chinese acquisition of biotech giant Syngenta AG, which received U.S. clearance in August.
By contrast, Beijing keeps key sectors entirely or largely closed to foreign investors and has used trade as leverage in crossborder investments. After Canberra in August blocked State Grid Corp. of China from a controlling stake in Australia’s largest electricity network, Beijing warned that the rejection would potentially damage trade ties.
“It’s a very contentious time for G-20 to occur,” said Angus Nicholson, analyst for the investment trading firm IG. “And China has been a huge contributor to that unease.”
—Lingling Wei in Beijing and Valentina Pop in Brussels contributed to this article.
Write to Chuin-Wei Yap at chuin-wei.yap@wsj.com
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