Hangzhou Consensus
At the close of Hangzhou G20 Summit {4–5 September 2016}, Chinese premier Xi Jinping had proposed to the world a so called “Hangzhou Consensus”. With this proposal, China calls for a radical shift of G-20 from merely a crisis response talk shop to an instrument which will provide a “new path of economic development” for the world, based on scientific and technological innovation. At the heart of the Hangzhou Consensus is policy coordination and innovation-led growth; and recovery of the world economy through international economic integration based on market principles and free trade.
Key ingredients
They four key Ingredients of Hangzhou Consensus are as follows:
- An all-dimensional, multi-tiered and wide-ranging approach to innovation.
- Bring about structural reforms.
- Internet-based innovations are expected to play a major role in future economic recovery.
- Inclusiveness and openness.
Discussion: Washington Consensus versus Hangzhou Consensus
Washington Consensus was coined in the year 1989 by the US economist John Williamson. It provided solutions to the problems which were faced by the less-developed economies in Latin America and post-Cold War Eastern Europe. It stressed on the role of markets, limiting the role of the state. The ingredients of that consensus were fiscal discipline, cuts in public subsidies, trade liberalization, and “shock therapy”. However, instead of solving the problems, the consensus led to severer polarization of the rich and poor in the countries which had adopted its prescriptions.
The Hangzhou Consensus on the other hand is to enhance policy coordination and innovation-led growth, which will lead to an improvement in the global economic governance as well as to reinvigorate cross-border trade and investment. However, the success of the “Hangzhou Consensus” can only be measured after some measurable targets have been achieved. It would be too early to comment whether it is a failure or success. The G-20 communiqué itself does not outline an action plan or roadmap and appears to be rhetoric only.
