G-20 meeting reflects shift in world economic balance

G-20 meeting reflects shift in world economic balance

Agence France-Presse, Xianghe, China

International financial bodies need to reflect the impact
emerging powers are having on the global economic landscape,
finance chiefs said at a weekend meeting hosted by China.

The Group of 20 also warned of high oil prices, trade barriers
and economic imbalances -- all key issues involving energy-hungry
China, the world's fastest growing major economy that is running
a huge trade surplus with the West.

The finance ministers and central bank chiefs meeting outside
Beijing also agreed on a "roadmap" to reform the International
Monetary Fund (IMF) and World Bank, to give more say to booming
newcomers from Asia and elsewhere.

The G-20 was founded in 1999 to enhance dialogue between the
Group of Seven industrialized nations and population giants such
as China, India and Brazil as well as other key economies,
including oil-rich Saudi Arabia and Russia.

The grouping is now considered an informal forum for debate
but organizers point out that its members account for two thirds
of the world population, 80 percent of its trade and 90 percent
of global economic output.

"So far the G-20 is still a talk shop and no major decisions
have been made," said Andy Xie, Morgan Stanley's Asia Pacific
chief economist.

"But I think eventually the G-20 could replace the G-7 in
importance. The biggest problems in the world relate to the
diverging interests between big developing and developed
countries."

In the long run, he said, economic issues should be discussed
between six key players: the largest economies, the United
States, European Union and Japan, and the largest developing
countries -- China, India and Russia.

The G-20 responded to criticism that world financial bodies
such as the Bretton Woods Institutions (BWIs) -- the IMF and
World Bank -- still reflect the economic power balance of the
time they were founded over 60 years ago.

"The world economy has evolved considerably since the founding
of the BWIs, with fast growth in many emerging markets and
deepened integration in industrialized countries," they said in a
final statement.

"We reaffirm the principle that the governance structure of
the BWIs -- both quotas and representation -- should reflect such
changes in economic weight."

Australian Treasurer Peter Costello, who will chair next
year's G-20 meeting in Melbourne, said there had been a
"recognition that, as the world economy has changed, so too these
organizations must change."

The emergence of the new economic powers would have a growing
global impact by increasing competition for resources, he said.

"Those economic powers naturally are going to be looking for
resource and energy security to drive industrialization and
economic growth. This will become a key question for the
international community."

As the fastest-growing of the emerging powers, host China was
eager to present itself as a future economic heavyweight with a
glorious and important past.

The tightly-managed meeting was held at 'Grand Epoch City', a
sprawling complex near Beijing that is modeled on the Chinese
imperial capital of the Ming and Qing Dynasties.

The meeting came at a time when China's export-oriented
economy is booming at near 10 percent a year, and during a
weekend when the country's second manned space mission only
strengthened the idea of a superpower on the rise.

Despite the rapid growth of China and other economies, some
experts have also warned against overdoing the hype. China, with
20 percent of the world's population, still accounts for less
than 5 percent of its economic output, said Xie of Morgan
Stanley.

"The international media has been exaggerating the rise of
China," he said. "China has a long, long way to go".