G20 says global excess capacity issue requires collective response – communique

Central bank chiefs and finance ministers from the world’s top 20 economies met in the southwestern Chinese city of Chengdu, and USA treasury secretary Jacob Lew told journalists it was “a time of continuing uncertainty in the global economic outlook”.

Envoys from the Group of 20 major economies ended a two-day meeting Sunday with a pledge to use government spending and regulatory reforms to strengthen growth but announced no joint action.

Britain’s vote to leave the European Union must be binding, the chairman of Britain’s ruling Conservative Party said, adding that Article 50, which formally starts the exit process from the bloc, would be triggered before the next election.

The G20 economies committed to enhance communication and cooperation, and take effective steps to address the challenges of structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand.

“We are taking actions to foster confidence and support growth”, a draft statement by the policymakers seen by Reuters said.

The specter of protectionism and nationalism, as illustrated by the rise of Donald Trump and his “America First” rhetoric in the United States presidential election, as well as Britain’s recent vote to leave the European Union, has cast a pall over the meeting.

Britain’s new finance minister Philip Hammond was attending the G20 meeting in the southwestern Chinese city of Chengdu but did not comment to media.

In sharp contrast to an earlier G20 finance ministers meeting in February, attendees appeared less concerned about a slowdown in China’s economy-a key driver of global growth-and persistent weakness in its yuan currency.

The present challenge is seeing how the fifth largest economy in the world can take advantage of that decision, rebuilding a “close” trading relationship with the European Union and new economic relationships with countries, like China, which, it should be remembered, has never had a free trade agreement with any European Union country.

Sunday’s statement says the referendum increased global economic uncertainty.

Those conditions would see the United Kingdom go into a recession, and global growth drop to 2.8 percent in the next two years. “Due to current developments, we restate our determination to utilize all policy tools- financial, financial and structural- separately and jointly to attain our objective of strong, sustainable and well balanced development”, it stated.

“A lot of concerns were voiced over spreading measures for protectionism”.

Following an unprecedented round-table meeting, the group of also called for better worldwide coordination on economic policy amid a gloomy global outlook, lacklustre growth from unconventional monetary policy easing, and rising trade protectionism. That has been a source of tension between China and trading partners who have accused China of exporting steel at low prices.