China and the
United States ratified the Paris agreement to cut climate-warming
emissions on Saturday, marking a major step toward the enactment of the
pact as early as the end of the year and setting the stage for other
countries to follow suit.
The
world’s two biggest emitters of greenhouse gases made the landmark
announcement as heads of state from the Group of 20 biggest economies,
or G20, arrived for a summit in the city of Hangzhou, parts of which
resembled a ghost town as Chinese security locked down the area.
U.S.
President Barack Obama’s last scheduled trip to Asia before leaving
office however got off to an awkward start. Soon after Air Force One
landed, a Chinese security official blocked National Security Adviser
Susan Rice on the tarmac, speaking angrily to her before a Secret
Service agent stepped between the two.
China
has gone to great lengths to try to make the Sept 4-5 G20 summit a
success, hoping to cement its standing as a global power, but a range of
thorny diplomatic topics could overshadow the agenda.
G20
leaders are likely to renew their promises to use tax and spending
policies to invigorate the sluggish world economy, although a new
pro-growth push was unlikely.
Overcapacity
in the global steel industry, a sore point for China as the world’s
largest producer of the metal, barriers to foreign investment and the
risk of currency devaluations to protect export markets will also figure
in the discussions.
Beyond
economics, there may be friction over territorial disputes in the South
China Sea and a U.S.-South Korea decision to deploy a missile defense
system in South Korea to counter missile and nuclear threats from North
Korea.
When Obama met Chinese
President Xi Jinping, he told him they would have candid talks on cyber,
human rights and maritime issues.
Nevertheless, the climate deal set a positive tone..
“Just
as I believe the Paris agreement will ultimately prove to be a turning
point for our planet, I believe that history will judge today’s efforts
as pivotal,” Obama said after he and Xi handed ratified documents to UN
Secretary-General Ban Ki-moon.
“We
have a saying in America that you need to put your money where your
mouth is. And when it comes to combating climate change, that’s what
we’re doing. Both the United States and China, we’re leading by
example.”
At a joint ceremony, Xi
said it “speaks to the shared ambition and resolve of China and the
United States in addressing global issues”.
French
President Francois Hollande said it was an important step that would
pave the way for the implementation of the Paris agreement at the end of
the year.
The stakes are high for China to pull off a
trouble-free G20 summit, its highest profile event of the year, and
security in Hangzhou was intense.
Volunteer
security agents prevented journalists from filming in deserted parts of
the normally bustling city of 9 million people. Residents left in
droves after authorities declared a week-long holiday for the summit,
shut down the city’s famous West Lake beauty spot and offered free
travel vouchers worth up to 10 billion yuan ($1.5 billion) to encourage
people to visit out-of-town attractions.
More than 200 steel mills in surrounding districts were shut as part of a bid to limit pollution.
With
the summit wedged in between the Brexit vote and the U.S. presidential
election, G20 leaders will be keen to mount a defense of free trade and
globalization.
Concerns about subdued growth will be a major concern.
The
world’s biggest economies have pulled out the monetary policy stops to
promote growth, but central banks are now “pretty close” to the limits
of their ability to stimulate economies, said Angel Gurria, head of the
Organization for Economic Co-operation and Development (OECD).
In the absence of “breakthrough, collective” policies, global growth was likely to remain weak, he told Reuters.
“We have left our good central bankers to do all the heavy lifting.”
In
separate remarks to Reuters, Pascal Saint-Amans, the director of the
OECD’s Centre for Tax Policy and Administration, addressed the thorny
issue of multinational corporate tax liability, which the European
Commission’s recent decision against Apple Inc (AAPL.O) has brought into sharp relief.
The
European Commission said this week that Apple owed up to 13 billion
euros ($14.50 billion) in back taxes to Ireland, based on existing
regulations, a decision that both Apple and Ireland, which relies on low
taxes to attract investment, have vowed to fight.
China is using the G20 to push its diplomatic agenda with a raft of bilateral meetings.
China
and Turkey pledged earlier in the day to boost counter-terrorism ties,
setting aside previous disagreements over China’s treatment of a
Turkic-speaking Muslim minority.
