Smog in Harbin, northeast China © Getty Images
When the leaders of the world’s biggest economies gather this weekend at the G20 summit in Antalya, Turkey, they must recognise the real scale of subsidies for fossil fuels and accelerate their eradication.
In 2009, G20 leaders agreed to “phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest”. They acknowledged that “inefficient fossil fuel subsidies encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change”.
While that commitment has been restated at many summits since, action to implement it has been unacceptably slow. Read more
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Until China’s currency joined the International Monetary Fund’s Special Drawing Rights on Monday the term rarely attracted headlines. This event drew so much attention because many see its inclusion as an acknowledgment of China’s status as a global economic power. The renminbi is the first emerging market currency to be added to the elite basket and the first new one since the SDR’s creation, nearly 50 years ago. For China, it has been a much sought after goal. In financial significance, however, it is still largely symbolic since it will be decades before the renminbi becomes a major international currency.
Including the renminbi in the basket of reserve currencies — to join the dollar, euro, yen and pound — would seem to be an obvious move given’s China’s economic weight in the global economy, and.it might be viewed as a gift from the western financial powers — but it also carries a heavy burden that Beijing may come to regret. Under the qualifying rules a new entrant has to meet two criteria. The candidate must be a major trading nation, which China clearly is. And its currency must be “freely usable”. Initially this was understood to mean “freely convertible or tradable” and if so, the renminbi would not qualify given China’s extensive capital controls. But the IMF came out with the interpretation that it means widely used in international transactions — and this condition was met given its use in trade finance, swap arrangements and currency spot markets. Read more