Wealthy Nations Daily Update - G20

On the 1st December 2015 China took over the G20 presidency for the first time with the Chinese President Xi Jinping stating the theme will be "Building an innovative, invigorated, interconnected and inclusive world economy”. He added that preparations for the presidency will focus on innovating upon growth patterns, improving global economic and financial governance, boosting international trade and investment, and promoting inclusive and interconnected development. During a working lunch at the just concluded 10th G20 summit, which was held at Antalya, Turkey he went on to say, "We need to increase the representation and voice of the emerging-market economies and developing countries, so as to enhance the capabilities of the world economy to resist risks".

The G20 was founded in 1999 after the Asian Financial Crisis. It was formed of 19 individual countries sending their finance ministers and central bankers plus the European Union (EU). The EU is represented by the European Central Bank (ECB) and the European Commission. The G20 brings together the world’s major and developing nations, which together represent approximately 85% of global GDP, over 80% of world trade and two thirds of the earth’s population. The presidency of the G20 rotates annually amongst its members to ensure continuity. This is supported by a ‘troika’ (from the Russia word meaning ‘set of three’) made up of the immediate past, current and next host countries. As of 2015, the members of the troika were Australia, Turkey and of course China.

One area that China is leading the way is research and development (R&D) investment spending, where is it on course to be the second highest spender globally, with only the US spending more. In 2005 China accounted for approximately 5% of global R&D, whereas over the last 5 years this has grown rapidly to currently nearer 20%. By way of example, the EU is responsible for 19% of global R&D expenditure, with Japan 10%. The US leads the way with 28% of total spend. Away from these 4 heavyweights, which make up one third to the world’s population, R&D expenditure accounts for just 23% of the rest combined. It seems that there will be no let-up by China either, with a report published in November 2014 by the Organisation for Economic Co-operation and Development (OECD), forecasting China will overtake the US in R&D spending by the end of the decade.