Global imbalance, international organization's reform and development are initially decided topics on the agenda, but since this summer the eurozone debt crisis increasingly weighs down prospects of European economies and adds to global uncertainties, the Europe's headache is predicted to dominate the summit.
EURO AREA DEBT -- DOMINANT FOCUS
Inviting strong, sustainable and balanced growth, strengthening the international financial regulatory system and reforming relevant international organizations are traditional G20 topics tasked from the Pittsburg Summit. France has prioritized international currency system reform, controlling price volatility of major commodities and global governance since it took over the presidency.
France added in September the debt issue to the G20 agenda in hope to win wider coordination on financial policies as the Greek debt issue showed signals to affect core European economies via banking system and tumbled global financial market.
Both western developed countries like the United States and Britain and emerging economies called on eurozone leaders to take immediate and effective actions to scant their debt and soothe the market.
In the wake of series of plunges of stock markets, eurozone leaders' agreement on Oct. 26 breathed finally new hope and boosted high the euro against the U.S. dollar. However, many economists and analysts deemed that more steps and details should be followed up.
According to the Nicolas Berggruen Institute (NBI), a U.S.-based independent think tank, Europe's euro debt crisis is more of a structural problem than just fiscal and financial matter.
As a result of debt accumulation over decades, the European debt issue is too complex and serious for the continent to solve by itself although the core resolution lies in structural reform within the one-currency bloc.
"Europe's leaders must further commit to far greater integration though a fiscal union, deeper economic coordination and move toward political union or face the collapse of the euro," the NBI said in an outcome statement released after a G20-focused conference in Paris.
German Chancellor Angela Merkel also underscored that the Oct. 26 bailout package agreeing to recapitalize European banks and increase the firepower of the European bailout fund EFSF was only a beginning of a new phase.
G20 summit can be a perfect platform for wider coordination as the host of French President Nicolas Sarkozy wished given that eurozone leaders chimed with the International Monetary Fund (IMF) that outsiders' help should be considered to sustain the euro via some special purpose vehicle.
Recent discussion have enrolled fast-growing emerging countries in the savers list for the eurozone debt. China and South Africa have both promised to take joint efforts to help make the summit a success.
However, no specific role is decided for emerging countries yet as the tricky reality is beyond what political willingness can handle by itself.
"Dynamic growth in emerging economies definitely contributes global growth but they are not strong enough to bail out the global economy," Eric Le Coz, deputy director of Paris-based investment company Carmignac Gestion told Xinhua.
At the G20 summit to be held in France, the eurozone will present its new plan to recapitalize and strengthen EU banks, World Bank Group President Robert Zoellick noted in an article carried on the website of the Washington Post.
SUSTAINABLE GROWTH -- CORE TARGET
While how to resolve the euro debt crisis is an emergency task, talks over strong, sustainable and balanced growth is of no less importance not only because it's the way to reduce debt but also a long-term goal of the G20 forum.
The NBI think-tank urged "President Sarkozy to press the G20 countries to develop a credible global growth and employment strategy that aims at inclusive growth by narrowing the income gap within countries and across national boundaries and fairly sharing the burden across countries," their statement said.
Strong growth is extraordinary important at present circumstance because the hard-earned economic recovery needs to be protected, Chinese Vice Foreign Minister Cui Tiankai pointed out, echoing Chinese Vice Finance Minister Zhu Guangyao's remarks that the Cannes summit will focus on the core subjects of promoting global growth and maintaining stability in the global market.
Given the slowed growth in the United States and unfixed euro area debt issue, two-speed development will remain between developed countries and developing ones, Le Coz said, warning bigger global imbalance.
The French Finance Ministry plans to submit an action plan to the G20 summit outlining coordinated policies in need for developed economies and emerging ones.
The action plan called for decisive and reliable fiscal consolidation in advanced countries, flexible macro-economic policies in developing countries to curb inflation and beef up their resistibility to capital flows impact, and structural reforms in both to boost employment.
In Zoellick's view, the true test for the G20 will be whether it can prevent a future financial crisis. "Developing countries' economic growth has helped compensate for the lackluster performance of developed nations, but they are hardly immune to the shocks coming out of industrialized countries," he added, referring to the eurozone debt crisis.
Roles of emerging countries is expected be highlighted during the Cannes Summit giving their increasing share of contribution to global economy and long under-represented importance on international stage.
According to Cui, China hopes emerging economies' contribution can be objectively recognized and looks forwards to favorable exterior environment for their development through cooperation at G20 forum.
DIVISION REMAIN OVER INT'L MONETARY SYSTEM REFORM
Reform of the international monetary system has been hot since consensus was reached on two pillar issues over the past 10 months.
With constant effort of France, G20 countries have agreed that the current monetary system fails to reflect present global economic landscape in effective and comprehensive way, and fast-growing emerging countries need bigger representation in the system.
However, divisions remain ahead of the Cannes Summit on many details, including how to implement the reform.
In the context that the U.S. dollar is still dominating the system while the euro in crisis, France expects key improvement on the reform of international monetary system. It has proposed G20 leaders to consider a framework for capital flows management, internationalization of some emerging economies' currencies and strengthening IMF governance over global financial system.
The G20 finance minister meeting on Oct. 15 supported emerging economies to take more flexible exchange rates based on market-oriented principle and expected more progress on the integration criteria for new currencies in the Special Drawing Rights (SDR) basket of the IMF.
Expressing support to France's proposal on the IMF reform, Zhang Tao, director of the International Department of the People's Bank of China, said China expects the IMF to issue more detailed regulations on the IMF's SDR issue.
As to the IMF reform, China backs multi-lateral supervision framework and expanded area under supervision, Zhang added, calling members to accelerate domestic approving process in a bid to increase the IMF's capability facing crisis.
However, the United States seems indifferent on the reform mainly out of discontent with Chinese currency Yuan. The United States have repeatedly criticised the slow appreciation of Yuan citing it as reason of trade imbalance, but actually the U.S. standard to measure global trade imbalances is yet in doubt. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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