G7 needs to focus guidance and impetus on inclusive global growth and development

As the club of the world’s major developed economies commenced its annual summit in Evian-les-Bains, France, on Monday, the debate over whether China should be invited to join has resurfaced. The Associated Press cut to the chase, posing the question, “Without China, does the G7 make sense?”

The question highlights a notable shift in global dynamics since the G7’s inception. The group was established in the 1970s as a forum for the world’s largest advanced economies to discuss and coordinate economic policy.

However, according to the International Monetary Fund, the overall share of emerging market economies in global GDP has shifted dramatically over the past few decades — rising from just over 30% in the 1990s to approximately 61% of the world economy (adjusted for purchasing power parity terms) by 2025. Continuing to exclude these economies from discussions on macroeconomic policy coordination risks rendering the G7 increasingly irrelevant in addressing today’s global challenges.

Projections also strongly suggest that emerging markets, or the E7, will account for a substantial share of global economic growth, eventually challenging the historic dominance of the G7.

The G7 accounted for roughly 60% to 70% of the global economy in the 1970s. By 2026, the G7’s share has fallen to about 44% in nominal terms (or roughly 28% in purchasing power parity terms). Projections suggest this share will drop to between 20% and 30% by 2035 as emerging markets continue to expand.

Despite this, the G7 continues to position itself as the arbiter of world affairs across many domains. To remain relevant in a changing world, the group must first address its own internal challenges.

The G7 should make the effort to understand and respect the positions and interests of developing countries and look at the rise of China and other members of the Global South objectively. This is the practical way for the grouping to sustain its influential role on the world stage.

China’s economic and trade relations with other countries are characterized by mutual benefit and win-win cooperation. It is steadfastly expanding high-standard opening-up and will continue to share development opportunities with other countries and deliver more certainty and stability to the world economy, as Chinese Vice-Premier Zhang Guoqing said on Thursday when addressing the World Convergence Summit for Growth via video link.

It is easy to reach a one-sided conclusion of an “imbalance” in trade if one only looks at the trade in goods without considering the trade in services and investment returns, or if one focuses solely on trade figures without examining the trade structure and profit flows, or considers only imports from China while ignoring self-imposed export restrictions.

Whether it is “de-risking”, “reducing dependency” or the so-called “trade imbalance” these are all essentially forms of protectionism. Such measures will only weaken the long-term industrial competitiveness of G7 members and harm the interests of their consumers.

G7 leaders should know that unilaterally instrumentalizing economic, trade and technological issues, and making the group a “small clique” within the multilateral global governance system will only accelerate the marginalization of the group to its own detriment.

Zhang called for prioritizing development, improving global governance and promoting inclusive growth of the world economy.

All countries should uphold openness and cooperation, take an objective view of the comparative advantages of different countries, foster a free and facilitative trading environment, and practice true multilateralism, he said.

That is how the G7 can sustain its relevance in a world that has developed beyond recognition from the days when it ruled the roost.

[Abridged]

Editorial, China Daily