Xi Jinping's absence poses a problem for the Western powers
All is not well in the G20. The summit planned for the end of this week, hosted in New Delhi by the Indian government, has been overshadowed by China’s announcement that President Xi Jinping will not be attending. Further reports suggest that India is struggling to get member states to reach a consensus on the leaders’ declaration, mainly due to language that the Western powers want to include about the war in Ukraine.
The fact that the G20 is fracturing should be taken as bad news for the West. The group was initially conceived by former US Treasury secretary Larry Summers and former Canadian finance minister Paul Martin as an expansion of the US-led Bretton Woods institutions. After a series of financial crises in the mid-to-late 1990s which included the 1997 Asian financial crisis and the 1998 Russian financial crisis, economists decided that closer cooperation was needed to ensure fiscal stability.
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The tensions surrounding the G20 summit are therefore usefully contrasted with the recent expansion of the Brics bloc to include six new members last month — Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. Brics is advertised as an alternative to Western-led economic and financial gatherings like the G20: the fact that one is expanding while the other is fraying around the edges speaks volumes.
Just as discussions are taking place about who will and who will not be attending the G20, news reports have revealed that Chinese lenders have extended billions of dollars’ worth of loans to Russian banks. When President Joe Biden announced the sanctions against Russia last year, he vowed that they would engineer the collapse of the Russian economy. Yet this still hasn’t happened, and the Chinese lending shows that non-Western economies are now sufficiently large and developed to be able to operate independently.
The Chinese loans to Russia have been taken as a signal that non-Western powers are trying to create alternative economic and financial arrangements that do not rely on the US dollar or the US-led Bretton Woods systems, of which the G20 itself is a late addition. In fact, these arrangements are already taking place and Western commentators are merely catching up with the changed reality on the ground.
Last month’s Brics meeting in South Africa was largely focused around plans to challenge the Western economic order, a discussion that has been ongoing for some time. If the six countries mentioned above were to join the group, Brics would account for a little under half of global GDP.
Organisations like the G20 were conceived when American power was at its zenith. They implicitly rely on the ability of the United States to unilaterally dictate terms. So the implication is that not attending the G20 — as is the case with Russia — is a sort of punishment while the forum can be used to make statements about Western dissatisfaction with the Russia-Ukraine war. But Xi Jinping’s decision to not attend the upcoming summit shows that non-Western powers are losing interest in what they see as hegemonic institutions in which they are forced to play second fiddle. Further divisions in the G20 can only make Brics seem more appealing.