G20 summit: 3 ways Xi and Biden can drive the global agenda for greater equality

They can make global institutions more representative and create more equitable financing mechanisms
To open a pathway to partnership, they can start by recognising the common challenges of domestic inequality that both the US and China face

Elizabeth Knup

Published: 1:00am, 17 Oct 2022

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As the G20 gathers in Indonesia this November, Presidents Joe Biden and Xi Jinping are likely to meet on the sidelines. Together, they have a historic opportunity to demonstrate leadership at a time of converging global crises that threaten us all.

To do this, they must put bilateral US-China tensions to the side and focus the considerable power of both nations on leading the global community to address the systemic inequalities embedded in global governance institutions and the inequitable principles that govern how finance for development is allocated.

Global responses to the effects of climate change, food insecurity, public health crises, energy insecurity and increasing poverty are decided by a small number of nations and financed through a set of institutions that, as Mia Mottley, Prime Minister of Barbados, said at the UN General Assembly, “no longer serve the purpose in the 21st century that they served in the 20th century”.

When these institutions – often called the Bretton Woods system – were created, three-quarters of the countries in today’s world didn’t even exist. As such, these institutions do not adequately represent billions of people. As well, financing global responses to these shared crises uses a charity-based model in which wealthier nations decide when, how and to which less-wealthy nations global resources are allocated.

Momentum is growing for reform. Advocates for change like Prime Minister Mottley and others will build on efforts initiated at the United Nations General Assembly and at the World Bank/IMF meetings, as the mechanisms and principles guiding global governance and the allocation of development finance are ripe for change.

As permanent members of the Security Council and as the two largest economies represented in the G20, China and the United States can play a transformational role to drive this much-needed reform agenda in three important ways.

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First, they can make global institutions more representative. Sharing power is not easy. But inroads exist to make the UN Security Council and G20 more representative of the world today. Consider President Biden’s remarks at the General Assembly, where he said “the time has come for this institution to become more inclusive so that it can better respond to the needs of today’s world”.

Or look to Chinese Foreign Minister Wang Yi, who stressed earlier this year that UN reform should enable more countries, particularly developing countries, to get involved in the Security Council’s decision-making processes. Increasing calls for African Union membership in the G20 echo these sentiments – and stress that countries making up the continent should be agents of change, rather than targets of the actions of others.

Chinese State Councillor and Foreign Minister Wang Yi shakes hands with US Secretary of State Antony Blinken at China’s permanent mission to the United Nations in New York on September 23. Sharing power is not easy, but the US and China should support efforts to make the Security Council and G20 more representative. Photo: Xinhua

Second, they can create more equitable financing mechanisms. There are many technical proposals for reforming the global architecture of development finance institutions – but technical solutions alone will not address fundamental inequalities in terms of how resources are identified and allocated – as in the charity-based model mentioned above.

A growing movement called “global public investment” is coalescing around a set of principles to guide this reform in which all countries pay in, all receive and all have a say in how the money is spent.

This concept moves beyond the traditional paradigm in which one set of countries contributes and governs, while another set acts as the intended beneficiary. It is time to build these principles of shared commitment and shared well-being into all global financing mechanisms – and advocacy should start at the G20.

As countries with significant global influence, the US and China could, in collaboration, drive these institutions towards a more representative, inclusive and therefore, more sustainable future.

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Third, they can find commonality domestically. If Biden and Xi meet in Bali, it will be their first in-person meeting since 2015. To rebuild their personal rapport and open a pathway to partnership on addressing global inequality, they could start by discussing the challenges of domestic inequality both face at home. They will find they have much in common.

Both countries have relatively high income and wealth inequality. Both presidents champion domestic policies to manage the extremes of capitalism and distribute the economic benefits within each society more equitably. Both leaders are attempting to address destabilising inequality in an age dominated by a digital economy and divisive social media discourse.

While there are fundamental differences in how each country treats freedom of expression, both societies have robust digital ecosystems where fake news, trolling and extreme nationalism make the public sphere a difficult place to engage in meaningful discussion. And both presidents are susceptible to the temptation of scapegoating external causes for home-grown challenges that have developed unchecked for decades.

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In her latest piece, “The Clash of Two Gilded Ages”, University of Michigan Professor Yuen Yuen Ang points out that both countries are struggling to rein in the excesses of their recent “gilded ages”, and that they share far more than their leaders admit.

Framing this potential G20 meeting in terms of inequality – both domestic and global – does not deny the real and intractable problems that complicate the US-China relationship, nor should it deter from understanding, managing and even solving these problems in the years ahead.

But the tense bilateral relationship should not become an excuse for the leaders of the world’s two biggest economies to shirk their joint responsibility to help solve far larger global problems affecting billions of people. And, it is possible that in shifting the energy in the bilateral relationship slightly towards addressing global inequality, openings and solutions for abiding bilateral challenges may come into view.

True leadership demands that Presidents Biden and Xi both turn their attention to inequality – and upend it not only in their countries’ individual societies, but across the whole world.

Elizabeth Knup is regional director, China, at the Ford Foundation. She is based in Beijing