In the aftermath, the ruling of UN International Court of Arbitration decimating China’s claim for its sovereignty in the South China Sea affirmed the global view of the tension.

However, it was a shot in the arm for G-7 members as well as developed nations in G-20. It has shaken China’s role in the forthcoming G-20 summit, which will be held in Hangzhou in China (September 4-5). This year China will hold the presidency of the summit. Generally, the country chairing the summit exercises a big role in deciding the agenda.

Hitherto, China’s presidency was viewed with high hopes for moderations and growth orientation in global trade and investment. Given the opportunity, provided by the presidency to China to exercise its strong sense of ownership over the global trade and investment governance, the sudden eruption of anti-China verdict on South China Sea has left Beijing squirming.

In this changing scenario, China’s defiance to the UNCLOS (United Nation Convention Law of the Sea) ruling and using presidency status to exercise persuasion of the members may stoke stir in the G-20 summit, leaving the main agenda of the summit hanging.

Further, the most unexpected referendum of Brexit, triggering paranoia over major trade distortions in the world, will lead to lost chances for constructive discussions in retrieving the trade confidence in G-20 summit and overcome the crisis. Since Brexit did not appear in the pre-summit ministerial meeting for agenda, there will be little room for intensive discussions on it. Brexit should be a wakeup call for a new trade discipline in the world. In this perspective, G-20 is an important vehicle.

The futurists are worried over the expected behaviour of China, in the backdrop of China’s vehement defiance to the ruling. Will China use its presidency to influence the members of G-20 and try justify that the ruling is “biased and against China’s historical sovereignty”? Or, will it ignore the ruling and buy time for actions in the aftermath of the summit?

According to Mr Glaser, the CSIS, USA (Centre for Strategic and International Studies), Beijing would seek to avoid “de-establishing action”, in the light of President Xi Jinping’s reputation at stake.

Ever since the financial crisis of 2008, the G-20 agenda was in the correction mode and shifting to financial and fiscal consolidation as long-term governance for trade and investment. Over the period, global trade witnessed a downturn in growth – from an average of over 7 percent per annum between 1990 and 2008 to 3 percent between 2009 and 2015.

The pre-summit ministerial meeting of G-20 at Shanghai in July 2016 endorsed the long-term governance for the global trade growth as main agenda. The meeting emphasized that the growth should be driven by lower trade costs, need harnessing trade and investment policy coherence, boost trade in services, enhance trade finance and promote e-commerce. G-20 vowed to support low-income countries to participate in global value chains (GVC) to drive the global growth.

In a press release, the meeting surmised that encompassing the regional value chains (RVC) were the important features for global economy and would support policies to allow SMEs to participate in the growth. This was the first time that GVC was given prime importance in driving the global trade growth.

Against the thrust for the resurrection of dormant global trade growth in the ministerial meeting, the sudden tribunal decision against China’s sovereignty in South China Sea is a blinker for smooth discussions and may affect survival of global trade growth in the G-20 summit.

The UNCLOS ruling against China and its strong defiance may stonewall the China’s pre-emptive aim to consolidate support for One Belt One Road project. OBOR is Beijing’s dream project, initiated by President Xi Jinping. It is a component of Silk Road Economic Belt to connect land and ocean base trade in Eurasia.

The ruling is likely to weaken Chinese confidence to consolidate support and tame its roar. But the ball is in China’s court. It all depends on how China behaves now. India’s call for all parties to respect the ruling and China’s guarded response to it beacons possible softening in the harsh Chinese attitude to the ruling.

G-20 covers 85 percent of world economy, 80 percent of world trade and outbound investment and 70 percent of inbound investment.

For India, UNCLOS ruling against China was a shot in the arm. It will provide opportunity to debilitate Chinese arrogance over India’s membership in NSG (Nuclear Supply Group). “It was for the first time that an international verdict rebutted one of the various claims of China. This would be important for India”, according to China analyst Claude Arpi. The forthcoming G-20 summit will be an ideal forum for India to wrest China’s favour for India’s membership in NSG quid pro quo of Chinese consolidation of support for OBOR.

China was resisting India’s membership in NSG on the plea that India did not sign NPT (Non-Proliferation Treaty). Chinese sovereignty in South China Sea means China’s one-step forward to Indian Ocean. India is already appalled by the US $ 45 billion Pakistan – China Economic Corridor.

To sum up, UNCLOS verdict decimating China’s sovereign claim in South China Sea and the unexpected Brexit will likely see the G-20 summit lock horns and have diplomatic duels, instead of pushing for trade expansion and discipline.

Instead of Chinese authority consolidating support for dream project OBOR, empowered by presidency status, the G-20 summit may end up shredding Chinese hope. (IPA Service)