G20 needs to honor oath to joint action in global economic revival

The Group of 20 needs to honor its oath to joint action to revive the global economic development through coordination of monetary and fiscal policies, at a time when the current growth momentum in the global economy remains fragile.

Central bank governors and finance ministers of the G20 countries have been closely following each other before they meet in Istanbul, Turkey this week to formally diagnose the world's economic malaise left over from the 2008 global economic crisis.

Some have already taken action. No fewer than 17 countries joined a global wave of monetary easing to stimulate demand and counter deflationary pressures from tumbling oil prices.

On the other side of the ledger, however, the United States looks set to raise interest rates some time this year, in efforts to boost a robust recovery from the global economic meltdown it triggered in 2008.

The G20 came under the spotlight during that crisis, when it rolled out a global stimulus package to tackle the recession together. But it is now facing a more delicate task of joining hands in a world of uneven growth.

The apparent divergence of major central bank policies could lead to financial and economic disruptions worldwide. Adverse ripple effects, such as capital flights, policy tensions and trade disputes, are looming over emerging markets, narrowing their room for domestic reforms.

At a time of weak demand, monetary easing is often a useful policy tool. Yet for Europe, it is no cure-all. Structural problems in the labor market, fiscal policies, as well as coordination mechanisms within the European Union, can only be solved with substantive reforms step by step.

Meanwhile, the depreciation of the euro as a result of the EU's quantitative easing program has sparked fears of competitive devaluations. The emergence of a beggar-thy-neighbor policy pattern cannot put the global economy on an more solid footing, but will only push it into an abyss of uncertainties.

For China, structural reforms remain a top priority. Despite complex external environment, the People's Bank of China -- China's central bank -- is unlikely to roll out a large-scale easing program. Policy stance will focus on the growth prospects of domestic economy and reform measures of specific sectors.

As observers have already pointed out, China's economy has entered a "new normal" of moderate growth. Nevertheless, it will continue to support global growth as a key engine and a more mature contributor.

Looking ahead, the current growth momentum in the global economy remains fragile. Coordination of monetary and fiscal policies among the G20 nations has become more important than ever. The world leaders need to adopt joint action and keep their word in contribution to global economic revival.