Global cross-border investment may decline by as much as 15 percent this year as trade remains sluggish, China's commerce minister said after a Group of 20 trade ministers meeting Sunday. The G-20 representatives pledged to increase their efforts to facilitate trade and urged other World Trade Organization member nations to do likewise to enable global commerce, Gao Hucheng said at Sunday's briefing. The ministers had met in China's financial capital for two days of talks on how to boost investment cooperation before heads of state convene for a Sept. 4-5 leaders summit in the eastern city of Hangzhou. The ministers projected a 10 percent to 15 percent drop in cross-border investment this year, Gao said. Britain's referendum in favor of leaving the European Union will crimp global trade in the short term, and a G-20 workshop will study the potential impact, China's Vice Commerce Minister Wang Shouwen said at the briefing. In February, finance chiefs and central bankers from the group agreed to consult closely on foreign-exchange markets and reiterated pledges to refrain from competitive devaluations. Since then, currency markets have been roiled by Brexit, which caused the pound to plunge and helped drag down China's yuan. Transparent, Predictable The G-20 opposes protectionism and supports establishing new investment principles that are open, non-discriminatory, transparent and predictable, the group said in a statement. The World Bank early last month cut its outlook for world gross domestic product this year to 2.4 percent, a pace unchanged from 2015 and down from the 2.9 percent estimated in January, as business spending sags in advanced economies including the U.S. and commodity exporters in emerging markets struggle. The WTO released a world trade indicator on July 8 that projected sluggish trade in July and August. Trade ministers said they recognize excess capacity in steel and other industries is a global issue that needs collective responses, and committed to communicate better to make changes and improve market functions. ‘Market Distortions' "Structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers," the ministers said in the statement. Subsidies and other support from government "can cause market distortions." Excess capacity has been a sticking point for China and the U.S., which has called for the Asian country to make cuts. China Finance Minister Lou Jiwei pushed back last month in Beijing at the Strategic and Economic Dialogue between the world's two largest economies, saying officials are addressing the issue and private companies can't just be ordered to cut output. Wang on Sunday defended China, saying the country has already taken steps to cut millions of tons of excess steel capacity, while other nations are still discussing how to do so. U.S. Trade Representative Michael Froman said the summit yielded promise by giving momentum to addressing the "root causes" of excess capacity. "The G-20 took an important step in the right direction," Froman said in a statement. Ministers also made progress toward completing the Environment Goods Agreement, Froman said. The U.S. is working with 16 other WTO members on the pact, which would eliminate tariffs on a range of green technologies including solar panels and water treatment mechanisms. China hosts the G-20 this year for the first time since it became a summit-level forum. Finance ministers and central bankers are next scheduled to meet July 23-24 in Chengdu. source: Bloomberg
