When China signed up to host this week’s G20 summit two years ago, it seemed like an ideal venue to showcase its financial accomplishments and assume the mantle of international leadership.

Since then it has struggled to steer its giant economy through a slowdown, the free-wheeling stock market went into convulsions, and concerns over chronic industrial overcapacity and massive government lending have deepened.

g20 hangzhou

Beijing’s aggressive stance in the South China Sea, where it has created artificial islands in disputed territory, has also created alarm and joins a list of awkward issues authorities are keen to leave off the agenda in the summit city of Hangzhou.

The Group of 20, which accounts for 85 percent of world GDP and two-thirds of its population, is the biggest international policy gathering the country has held, and it has made every effort to ensure it goes flawlessly.

The government has dramatically renovated Hangzhou, a tourist destination known for its scenic West Lake, shut down hundreds of factories to ensure telegenic blue skies, and rolled out restrictive security precautions.

“We all pin hopes on this summit to inject new life and impetus for world economic growth,” foreign ministry spokeswoman Hua Chunying said this week.

But China and its uber-confident President Xi Jinping have other, less selfless ambitions at a gathering that is expected to be short on breakthroughs.

“The whole exercise will be about giving China a lot of face,” said Jean-Pierre Cabestan of Hong Kong Baptist University. Xi “wants to show that China will be at the centre of global governance, which the G20 is supposed to be”.

To that end, Beijing is eager to promote its work on climate change, its new infrastructure bank which poses a potent challenge to the World Bank, and a massive spending plan to build a new Silk Road.

Xi Jinping
Xi Jinping. Photo: iYouPort.

“Clearly, Xi will try harder to demonstrate that China is a responsible stakeholder and a responsible neighbour of Japan, South Korea and other Asian countries,” Cabestan said.

He “will be very keen to demonstrate that China doesn’t have any enemies”.

‘Don’t cause trouble’

But an increasingly bitter dispute over the reefs and rocks of the strategic South China Sea is one of several geopolitical issues likely to present challenges to China‘s preferred narrative for the summit, which is themed around building a more interconnected and inclusive economy.

In July Beijing vehemently rejected an international tribunal ruling that its claims to most of the waters in the resource-rich South China Sea have no legal basis, drawing pointed criticism from a number of G20 members.

The territorial row is one of a handful of priority issues the US has said it plans to discuss.

President Barack Obama will also prod Xi to lean on North Korea, after the hermit state carried out a fourth nuclear test, followed by ballistic missile launches that sent tensions soaring across East Asia and beyond.

China, North Korea’s main patron and protector, has tired of the country’s intransigence, but remains wary of pushing Pyongyang too hard, fearing a regime collapse that could create a refugee crisis and swing the regional balance of power towards the US.

And then there is Japan, whose government has taken every opportunity recently to needle Beijing about the South China Sea, as well its own territorial tiff over the Senkaku islands, known as Diaoyu in China.

East China Sea
A group of disputed islands, Uotsuri island (top), Minamikojima (bottom) and Kitakojima, known as Senkaku in Japan and Diaoyu in China is seen in the East China Sea, in this photo taken by Kyodo September 2012. Photo: Reuters/Kyodo

But the G20 is no place for tough talk about these issues, Gao Hong, a Japan expert at the official Chinese Academy of Social Sciences, wrote Tuesday in China‘s state-run Global Times newspaper.

“In East Asia, there is a saying that a guest should suit the convenience of the host,” he wrote, adding that Tokyo should “act in tune with the theme of the summit instead of causing trouble.”

Holding tongues 

Despite their concerns, leaders will have to balance the desire to directly confront China about thorny strategic issues with other goals.

Washington has turned down its rhetoric ahead of the meeting, where Obama is hoping to make progress with Beijing on climate change and a long-stalled investment treaty as he seeks to cement his legacy before leaving office.

Photo: USGov.
Photo: USGov.

In recent months “the US has been deliberately restrained and hasn’t put a lot of pressure on China on the South China Sea,” said Bonnie Glaser, senior adviser for Asia at the Center for Strategic and International Studies in Washington.

After the summit, though, all bets are off said Graham Webster, a senior research scholar at Yale Law School.

“There are obviously good reasons to avoid diplomatic trouble before a prominent summit,” he said.

“It seems very unlikely that Chinese authorities would take major action on the South China Sea before the G20. But the picture is far more uncertain afterwards.”

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