The global economy is being threatened by rising protectionism and risks from highly leveraged financial markets, Chinese President Xi Jinping said at the opening of a two-day summit of leaders from G20 nations in Hangzhou Sunday.
His warning followed bilateral talks with U.S. President Barack Obama which Obama described as "extremely productive," but which failed to bring both sides closer on thornier topics such as tensions in the South China Sea.
With the summit taking place after the U.K.'s vote in June to exit the European Union and before the U.S. presidential election in November, observers expect G20 leaders to mount a defense of free trade and globalization and warn against isolationism.
The global economy has arrived "at a crucial juncture" in the face of sluggish demand, volatile financial markets and feeble trade and investment, Xi said.
"Growth drivers from the previous round of technological progress are gradually fading, while a new round of technological and industrial revolution has yet to gain momentum," he said.
G20 countries are set to agree in a communique at the end of the summit that all policy measures—including monetary, fiscal and structural reforms—should be used to achieve solid and sustainable economic growth, Japanese Deputy Chief Cabinet Secretary Koichi Hagiuda said.
Xi also called on G20 countries to match their words with actions. "We should turn the G20 group into an action team, instead of a talk shop," he said.
On Sunday, Xi held talks with Australian Prime Minister Malcolm Turnbull and told him he hoped Australia would continue to provide a fair, transparent and predictable policy environment for foreign investors.
China was angered when Australia blocked the US$7.7 billion sale of the country's biggest energy grid to Chinese bidders last month.
Beijing has also criticized Australia, a staunch U.S. ally, for running surveillance flights over disputed islands in the South China Sea.
Meanwhile, European Commission President Jean-Claude Juncker said China must set up a mechanism to address its problem of industrial overcapacity, saying it was "unacceptable" that the European steel industry had lost so many jobs in recent years.
The U.K.'s future after its departure from the EU was also subject to discussion. Obama called it a mistake but reassured Prime Minister Theresa May that the U.K.'s closest political, commercial and military ally would stand by her.
Obama held talks with Xi on Saturday that ran late into the night where he urged Beijing to uphold its legal obligations in the disputed waters of the South China Sea, and stressed U.S. commitments to its regional allies.
Xi said China would continue to safeguard its sovereignty and maritime rights in the South China Sea.
Obama’s visit began chaotically at the Hangzhou airport, where his staff argued with Chinese security over media access. Obama played down the incident Sunday saying he "wouldn't over-crank the significance" of the airport events.
Security was extremely tight in Hangzhou, with parts of the city of 9 million people turned into a virtual ghost town as China seeks to ensure that the G20 summit stays incident-free.