Slow global growth sets challenge

Roach, also formerly chairman of Morgan Stanley Asia, said China might combat the protectionist mood by unveiling a new bilateral investment treaty with the US at the summit.

"This would be a very significant event, and it is something I have long been an advocate of. It might be the preferred way to launch the summit with great fanfare and a major bilateral agreement between the two leaders, Chinese President Xi Jinping and President (Barack) Obama."

The summit in Hangzhou, one of the China's more entrepreneurial cities and home to e-commerce giant Alibaba, is likely to bring attention to how important the Chinese economy is to global recovery.

The Chinese economy contributed 30 percent to global economic growth last year, and Finance Minister Lou Jiwei has said it would be the "driver" and "anchor" this year as well.

Kerry Brown, professor of Chinese studies and director of the Lau China Institute at King's College London, said the summit gives China the opportunity to demonstrate its importance to the world economy.

"In the US and Europe, China has stood accused of being one of the causes of the problems in the global economy, through overproduction, rather than as a solution.

"The summit offers the perfect chance to rectify this impression and to show the ways in which its consumption and service sector growth offer huge opportunities for the rest of the world to engage with it in a new way."

When world leaders met in Brisbane for the G20 Summit in November 2014, they set the task of raising the GDP of G20 members by 2 percent by 2018 through structural reforms.

Roach, also author of Unbalanced: The Codependency of America and China, said that so far China has done better on structural reform than the US.

"It has to be given credit for the program of reforms it has put in place which have already achieved results. Structural reform is something the rest of the world needs to think long and hard about as well."

Martin Jacques, a British journalist and author of the best-seller When China Rules the World, said the summit is taking place while the neoliberal orthodoxy that has dominated Western economic thinking since the Reagan and Thatcher era is in its death throes.

"I think many countries, particularly in the developing world, are now looking for China to take a lead. If you look at what is driving growth in Central Asia, it is China's Belt and Road Initiative. Similarly, in Africa it is China's investment in infrastructure," he said.

"China now sees itself as a mover and shaker of globalization, and if you went back only three or four years, you would say no way that this would be the case."

Ruchir Sharma, author of The Rise and Fall of Nations: The Rules of Change in the Post-Crisis World and head of emerging markets at Morgan Stanley in New York, said the world has reached a stage where there are no immediate policy solutions for sluggish growth.

"We need to redefine the map of economic success, which is that we have lower economic growth everywhere and we just have to accept that. We have to begin to figure out how in a lower economic growth world we can do relatively better."

The G20 Summit may begin amid more short-term speculation as to whether buoyant US jobs data published on Friday will see the Fed move to raise interest rates as early as this month.

Sharma at Morgan Stanley, however, said the Federal Reserve Board does not now have the latitude to control monetary policy in the way it often tries to imply.

"The Fed today is the central banker of the world and not just of the US, and there is only so much it can do when the rest of the world is looking to ease."

The major worry for policymakers in Hangzhou remains what to do if the world economy does face something unexpected.

"If there were to be a significant shock from anywhere, at this weak rate of growth it would be sufficient to topple the world back into a renewed recession," said Roach.