This weekend the trade ministers of G20 shall meet in Shanghai. It is an opportunity for China to pave the way for the G20 Summit in Hangzhou in September.

Led by China, G20 economies could refocus global attention to world trade and investment, even amid rising economic uncertainty, market volatility and political risk. Indeed, one of the greatest risks the global economy is facing is world trade. It has not just slowed down. It has nearly collapsed.

The writing has been on the wall for some time. Let's start with the Baltic Dry Index (BDI), which provides a crude estimate of the price of moving major commodities by sea. It peaked with globalization at 11,793 points in May 2008, plunging 94 percent to just 663 points amid the global crisis. Today, it remains around 690 points.

Broader world trade indicators, too, suggest that world trade is barely breathing. World export volumes are not just growing more slowly, but have been falling for half a decade. Manufactured exports have been declining in price since 2011. After recovering in 2010 and early 2011, world trade ceased to grow in total value, flattened and began to fall in nominal terms after late 2014.

In part, the trend reflects the collapse of oil prices; but it is also self-induced. The fall in the total value of global trade is concentrated in a small number of product categories, which happen to be the very same products in which the G20 has imposed proportionally more trade restrictions since early 2014.

Foreign direct investment (FDI) has been more encouraging but not immune to new headwinds. Last year, global FDI climbed 38 percent year-on-year basis to US$1.8 trillion. However, it is still behind the high reached before the global financial crisis.

In the coming months, China is likely to encourage other G20 members to ratify the World Trade Organization's (WTO) trade facilitation agreement by the year-end to propel world trade. As Vice-Minister of Commerce Wang Shouwen said recently, that would improve global trade environment, reduce costs of world trade, foster coordination between trade and investment policies, reinforce services trade, generate global trade indexes and foster e-commerce, and introducing trade financing.

According to the WTO, the implementation of the trade facilitation agreement has the potential to increase global merchandise exports by up to US$1 trillion per year, while developing countries could capture over half of the available gains.

From the burst of the Dotcom bubble at the turn of the 2000s to the global financial crisis in 2008-9 and the Euro crisis in early 2010, recent periods of acute financial stress have witnessed the collapse of world trade.

In the past few years, major central banks in advanced economies have sought to defuse these pressures by deploying record-low rates and quantitative easing (QE). However, as some are now resorting to negative rates and QE effects are diminishing, the potential for collateral damage is rising. As a result, G20's success in energizing world trade might prove far more consequential over time.

Dan Steinbock is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). For more, see www.differencegroup.net

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