G20 Summit in China (#13)

For the 2016 G20 Summit, the Chinese leadership wanted to put on a show, and by all accounts they really did.

From the very start, the arrival of the World leaders, this G20 had unprecedented international publicity as China chose to show its approval or disapproval of the visiting leaders, and their countries, by either laying out the red carpet or not. Most of the World’s leaders got the full red carpet treatment. But the jarring discordant note was struck early in the Summit by the shocking action taken by China with the deliberate and most pointed snub of US President Barack Obama and his entourage upon arrival. The President’s plane was not only - not provided with the proper red carpeted staircase to descend from - but after appropriate delay and confusion, to make sure the point was driven home, the plane was provided with a staircase that forced the President to exit Air Force One from the back end, the ‘ass’, as the US officials put it. And the snubs did not stop there, Susan Rice, the US National Security Adviser was aggressively accosted on the tarmac, as she tried to get past the roped off area for reporters, by a Chinese official, with the excuse given later that he perhaps mistook her for a reporter.

A host country official not recognizing one of the most senior officials in President Obama’s entourage, is not only not possible, but the excuse is an insult in its own right, as in these highly managed events where everything is worked out to the most finite detail, a senior most official of the most powerful country not being recognized and given due deference by the host country officials, is beyond incredulity. The fact that the President and his accosted National Security Adviser also happened to be ‘black’, in a country known for its overt racism towards black people generally, adds a note of crassness to the whole sordid affair. This is not the kind of behavior one expects from a major country.

With that opening gambit, China made an unequivocal statement to the World that it no longer fears openly, and deeply, insulting and offending the lone Super Power of the World, the United States, and its President. Now that the gauntlet is openly smacked across the US’s face let see how the Americans respond, as they sure will, in time, in spite of the classy, diplomatic and diffusing response by President Obama at the time.

It is surprising that China would be so bold so early in their bid to be influential in the World, with such a crass act. The leaders of the other countries, even those who got the full red carpet treatment (just about all the rest), would have noted the almost unimaginable, open, international slight to the World’s most powerful nation. And regardless of their proper treatment at this Summit, they must wonder if someday they may be subjected to similar actions, if China ever took offense at them. That sort of suspicion embedded in the mind of other countries, does not foster confidence or serve China well in the future.

At the start of the Summit, the Chinese President Xi Jinping sounded a note of alarm about the fragile state of the global economies, and the volatility of the financial markets. And he stressed the need of all nations to work together to boost World economic trade and activity. He followed up that urging for collective action with the exhortation to the Summit participants to not indulge in “empty talk”, but to take real action in an effort to boost economic activity around the globe.

Unfortunately the issues plaguing the World’s economies are stemming primarily from overcapacity, and China is possibly the biggest contributor to that problem, especially in the areas of steel, cement, solar panels, etc. In fact, the Europeans raised real concerns about those specific industries, especially steel. And in spite of President Xi’s own admonishment to not indulge in empty talk, we are sure China has no intention in seriously curbing exports of its surplus capacity in all industries where it is seriously over supplied. So most of the discussions regarding cut backs in, and the rationalization of overcapacity, will turn out to be mostly ‘empty talk’.

The other key risks are the overheated asset markets and the over-leveraging in the financial institutional areas. Again China’s markets and its financial institutions are a part of those problems. Just about everything in China is over leveraged, particularly its industry, its investments in new cities, its bridges, its airports, etc., its real estate market and its banking and non banking institutions. China’s government has been trying to curb some of the excesses in its non banking area but, in its efforts to continue to prevent its economy from collapsing it has been boosting lending through its banks to support economic activity; and so the problem persists.

Europe, Great Britain has similar problems, as does the USA, and Japan is of course the poster boy of decades of stagnation. These economic blocks along with China are the most influential economies in the World and therefore in discussing the ongoing global economic malaise and exhorting each other to take action, they are all indulging in empty talk, as none of them can, at this time, do much more than what they are already doing.

Of course the other two bones of contention at the G20 were Russia’s incursions in Ukraine, and the West’s sanctions tied to that Russian misadventure. Neither is Russia going to withdraw from Ukraine, and neither are the sanctions coming off any time soon. So more ‘empty talk’.

And of course the 800 lb gorilla in the room at the Summit was the Hague’s ‘Ruling’ regarding the extravagant territorial claims of China in the South China Sea (SCS). Any and all discussions with the Chinese government, by the Western leaders, Japan and other neighbors in the SCS dispute, regarding China’s need to accept and acknowledge the legality of the ‘Ruling’ would have fallen on totally deaf ears. Not only will China not accept the validity of the Hague’s Ruling, in our opinion, but it would infuriate China to no end to be subjected to the torture of having to even listen to it being mentioned, by the Leaders of other countries, in China itself.

This is the kind of stuff that drives China mad, and would make it do crazy things, like openly and most crassly try and humiliate the leader of the free World, and his entourage, who would have the temerity to lead the opposition to China’s ambitions in SCS, and to salt the wounds, encourage the discussions on human rights. In this frame of mind China would be in no mood to cooperate on any really meaningful issues, unless the issue favored it, and it alone. That is why, except for the ratification of the Paris Climate Accord with the US that was overdue, regarding climate change, China probably has no intention to follow up on any of the substantive issues that are plaguing the globe, and all the other sensitive issues countries want addressed. So for all its hype, the G20 was all just empty talk.

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