The G20 summit of leading economies in both the North and the Global South emerged to prominence at the time of the 2008 financial crash. It was seen as potentially more important than the older G7 summit of the leading Western industrial economies.
This promise hasn’t been realised, in part because the so-called “emerging market economies” don’t form a cohesive bloc with common interests. More recently the G20 has become a venue for the struggle between the two giants of the global economy, the United States and China.
This is what the strategic thinker Edward Luttwak has called a “geo-economic” conflict.
In other words, the antagonism between the states is being mainly expressed, not over territory and weapons—though this exists—but over trade and investment.
Donald Trump has had two main aims in this struggle. The first is to force China to buy more US exports. The second is to block president Xi Jinping’s “Made in China 2025” programme, which is designed to upgrade Chinese industries technologically. This second objective lies behind Trump’s campaign against the Chinese IT giant Huawei, which he has forbidden US firms to trade with.
The tit-for-tat game that the US and China have been playing of slapping tariffs on each other’s exports threatened to escalate after talks between the two sides broke down in May. Trump raised tariffs on £158 billion worth of Chinese imports from 10 to 25 percent and threatened to extend them by another £237 billion.
But Trump and Xi had a side-meeting at the G20 summit in Japan last week and agreed to resume talks. The compromise was signalled by the announcement the day before that China would buy £158 billion worth of soya beans from the US.
US soya farmers have been among the main hostages in the trade war, along with Huawei. Rising living standards in China mean higher demand for meat, and huge soya bean imports for animal feed. China accounts for 60 percent of total global trade in soya.
In June last year Beijing slapped 25 percent tariffs on US soya beans, and switched to suppliers in Latin American countries such as Brazil.
It remains to be seen whether moves like this are more than gestures.
China’s emergence means there is an increasingly powerful actor in the world economy that isn’t prepared to play by the rules written by the US
Trump and Xi had a supposedly successful meeting at the last G20 summit in Buenos Aires a year ago, but this didn’t stop the recent collapse of trade negotiations.
Trump’s trip to North Korea will give China more leverage since it has the economic power to pressure Kim Jong-un over his nuclear programme.
But the summit seems to have been interesting because what the Financial Times calls “new dynamics emerged: with the US and China so focused on their bilateral trade war, the rest of the G20 could turn up the heat on both sides”.
At a preparatory meeting of trade ministers in Tsukuba, China found itself isolated over both state subsidies to industry and overcapacity in its enormous steel industry.
At the same time the US was forced to agree to a common effort to reform the World Trade Organisation’s dispute settlement system, which Trump had been boycotting.
One way of looking at this is that G20 member states—particularly the host Japan—are stepping in to fill the vacuum left by the effective abdication by the US under Trump of its traditional role of leading the advanced capitalist states.
This can work only to a limited extent.
This is partly because the world’s biggest trading bloc, the European Union (EU), has turned in on itself. The impasse over who should take over the EU’s leading positions, which are about to fall vacant, is a symptom.
More fundamentally, China’s emergence means there is an increasingly powerful actor in the world economy that isn’t prepared to play by the rules written by the US. The fact that the US under Trump also is tearing up the rule book increases the instability.
But having someone more palatable to the other main Western imperialist states in the White House wouldn’t remove the antagonism. What is at stake in the longer term is nothing less than whether the US remains the dominant capitalist state.