A G4 that included China and a single voice for Europe makes sense but international diplomacy means it won’t happen overnight.
A Google search for “G4” comes up with the Apple Power Book computer. In future years it may come up with something more substantial (with no disrespect to Apple). The weighty idea of a G4 – involving the US, the euro area, Japan and China – is now being floated as a more expedient way of resolving global economic issues than the G7. After all, what influence do Canada, Italy and the UK really have on the global economy? Not that much.
On the other hand, China – which is currently left out in the cold – is a major player. Its holdings of US treasury bonds, the value of its currency, its export strategy and the openness of its domestic market – all are critical issues for governments and companies everywhere, big or small. Leaders of small African countries, for example, are concerned about China and whether their own exports can compete against those from the Asian giant.
Witness also the recent fuss over the ending of textile quotas that has had Europe and the US threatening protectionism against China, leading it to propose introducing export taxes that are highly market inefficient. China needs to be in the frame when it comes to international economic discussions.
The euro area would also be better represented as a single voice rather than separately by France, Germany and Italy. A recent report from the Centre for Economic Policy Research comes up with the idea of “a minimum willing coalition”, which is the smallest number of players an international body needs to be effective. Clearly, many multilaterals have been bogged down for years in trying to resolve differences between country shareholders. A G4 would be ideal.
But existing groupings, even when they become redundant, don’t tend to pack up and go home. While the economic reality of the world is that G4 opinions count, the first meetings may be held on the fringes of the G7 (with China invited), in order to save British and Canadian face. Watch out for the G4 to appear in the shadows at first.
