The global growth rate is being dragged down by the big beasts, namely the G7 countries and China — but elsewhere things are looking up. Modi’s India is humming along at more than 6% a year, with Indonesia close on its heels. While there are still laggards in the developing world, such as South Africa, other perpetual slow-growers including Mexico and Brazil are now coming up strong. Significantly, this growth is generally being engineered amid fairly conservative fiscal conditions, suggesting that expansions will have a better chance of becoming sustainable.

The same cannot be said of the world’s largest economies. There is much excitement in the US about Joe Biden’s green transformation programme, but it is not yet clear if this debt-fuelled boost will outlast the spending spree. In fact, once one strips new debt from new growth, the G7 economies are close to flatlining. They would have collapsed altogether during the pandemic had it not been for their governments borrowing trillions to keep them afloat — something that can’t be said of most developing countries, which weathered the storm fairly well. In this state, the ageing and debt-saddled West will struggle to restart its economic engines.

This seems to be the direction in which China is headed as well. An alleged Chinese spy at the heart of Westminster may have captured the media’s attention this week, but Beijing’s bigger story is one of diminishment. While it may sound impressive, China’s growth rate of more than 5% is significantly less than what its leadership had expected. Moreover, given China’s heavy reliance on debt to keep boosting its economy, it’s not even clear how much of China’s expansion can count as growth. With its population ageing rapidly, the Middle Kingdom’s dream of one day resuming its historic place as the world’s largest economy now looks to be in jeopardy.

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If there is spirited debate among economists as to whether China will be able to escape its funk, there is broad agreement about how it sank into it. Over the last 40 years, and particularly in the two decades straddling the turn of the millennium, China built its economy by exploiting its massive labour force. By repressing wages so as to attract investment in the manufacturing of goods wanted by the rest of the world, it was able to allocate nearly half its economic output to investment. The result was an unprecedented buildup of a world-class industrial base.

There are obvious limits to this strategy. Eventually, the world gets tired of being a sink for one country’s output. Overseas markets were saturated by “Made in China” goods and recent moves in China’s trading partners have put a crimp in its ability to keep exporting its way towards growth. In the US, for instance, the Biden administration has largely continued with its predecessor’s attempt to reduce trade with China, and even though Europe won’t go so far, talk is growing of the need to “de-risk” trade. As a result, China has reached the mature phase in its development; now it has to shift from an investment-based model towards a consumption-based one — in which rising incomes enable more of the economy’s output to be consumed locally.

On the face of it, this shouldn’t be difficult to achieve. One of the reasons that China’s saving rate is so high — some 45% compared to a G7 average of half of that — is that it does not have the sort of welfare state that exists in Western countries. As a result, Chinese households build up large rainy-day funds, storing much of it in real estate, which only adds to the country’s economic woes since it further inflates the housing bubble that has so worried the government. In addition to direct transfers of money to boost consumption, such as stimulus cheques, the Chinese state could encourage its citizens to spend more by providing them with the sort of healthcare that removed the necessity to self-insure to such an extent. If Chinese families knew they could rely on state care to cover a long-term illness, they might not feel the need to squirrel away so much of their earnings.

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That, however, is proving to be an obstacle for the ruling Communist Party. Part of the resistance to changing its economic strategy is ideological: Xi Jinping frequently muses that welfare will sap Chinese resilience. But part of it is practical. China has the administrative infrastructure needed for big public investment programmes, from building housing blocks to high-speed railway lines, but lacks the capacity for a similar ambition in delivering services to their citizens. When faced with an economic slowdown, the Chinese authorities keep doing what they do best — borrowing tons of money to fuel yet more big public works programmes. But the problem is that these merely add new capacity to an economy that already has too much of it, leaving the country with even heavier debts in the meantime.

China’s economic woes are part of a wider global trend. The two-track world economy, in which the big powers are slowing and the rising ones are catching up, began to take shape in the wake of the 2008 financial crisis, and it seems to have ossified since the pandemic. It was only a matter of time before the consequent economic redistribution began to alter the geopolitical landscape. Although Western observers still tend to see the world through Cold War lenses, merely substituting China for the old Soviet Union as the opposite pole in the global political economy, the emerging world order is actually a lot more complicated.

Along with the recent Brics Summit in South Africa, the G20 revealed a more assertive developing world that is less willing to sing superpower tunes. If India and other developing countries — including the African Union, which secured a permanent seat at the table of what will now become the G21 — feel they got what they wanted out of the Summit, the same probably can’t be said of the US, China, or Russia. While the final declaration on the war in Ukraine didn’t deliver the condemnation that the Western allies had wanted, it didn’t exactly leave Russia off the hook, regardless of what Russian foreign minister Sergei Lavrov would have us believe.

The same was true at the Brics summit a few weeks ago. Widely seen as a success for its South African host, Russia tried but failed to enlist support there for its position and ended up looking somewhat isolated. Countries such as India are quite happy to buy Russia’s oil and natural gas at the knock-down prices resulting from sanctions, but they’re not going to line up in its camp. As for China, Xi sat out the G20 Summit, probably as a snub to his Indian rival, only to watch as it produced a blueprint for a trade corridor between Europe and Asia that will rival China’s Belt and Road Initiative. Xi has long wanted to position himself as the head of a rising world; Modi may have exploited his absence to take his place.

What all this reveals is a range of rising middle powers that will pick and choose from what the major powers have to offer, whether it be trade concessions or aid, without offering them blanket support. India not only won the African Union a seat at the table but also engineered language favourable to the multilateralism and World Bank reform it favours. Rather than a world which is polarising into two camps, therefore, what we are witnessing is a world in which middle powers are skillfully playing the US, China, Russia, and Europe off against each other, securing concessions from all as each of the superpowers tries to curry favour with as many of them as possible.

Meanwhile, something interesting is going on in the background. To say that big economies are floundering obscures the fact that for many people, their individual circumstances may be turning a corner. In Western countries, house and share prices have been falling in real terms, but real wages have, after decades of stagnation, recently turned positive. It will take a while before people begin to feel the cost-of-living crisis is receding, but there are reasons to believe that reversal may prove permanent. After decades of rapid expansion, the growth of the global labour supply has begun slowing. The consequent rise in labour’s bargaining power has shown up in recent pay settlements across the developed world, where competition to attract immigrant workers will get more fierce.

In short, while the world economy slows, the poor get richer and the rich stand by. Not only is the developing world’s share of global income rising, but within Western countries, the share of income that goes to labour looks set to rise too. If this is what the end of growth looks like, many could be forgiven for saying “bring it on”.

He’s a little bit right. And so he proposed to invite Russia, India, South Korea and Australia too — as “guests”. This, he contends, would counter the might of China and might re-energise the group.

The first to complain was Canada’s Prime Minister, Justin Trudeau. He did not actually say he would boycott the summit if Russia attended, but he said there would have to be “many discussions” first. The UK was next. A spokesman for Boris Johnson conceded that it was customary for the host country to invite others to participate as guests and that the UK would “look at the detail of what the US is proposing”.

But our statement went on to say that the UK would not support Russia’s readmission to the G7, because there was “no evidence of changed behaviour”. In so saying, though, it went further than Donald Trump had done, because while he has in the past mooted the return of Russia to the G7, his latest proposal, to invite Russia as a guest, can be seen as an attempt to avoid the issue of whether Russia should be reinstated after its indefinite suspension over the annexation of Crimea in 2014.

And then the EU’s high representative, Josep Borrell, picked up the baton, saying that the format of the G7 was not for the summit chair to change. “The G7 cannot become G8… until Russia changes its course.”

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In fact, the G7 host does have the discretion to invite additional guests. But somewhere along the way, the distinction between Russia being invited as a guest and being reinstated as a full member has been lost. Not that Russia would necessarily even want to be reinstated at what used to be seen as — but is no longer — the world’s top table.

So why is Trump extending the guest list? To make the G7 meaningful again?

In fact, I think the go-it-alone, America-First, Donald Trump is on the look-out for, if not multilateral then glad-handing bilateral relationships with countries that could side with the US in trying to rein in China. Tired of the European olde worlde timidity and, like his immediate predecessors at the White House, entertaining the idea of that still incomplete ‘pivot’ to Asia, Trump is exploring ways to cope with an increasingly assertive Beijing. He knows that Australia, India and South Korea all have beef with China and that they are also casting around for some way of configuring the world in a way that better corresponds both to their own national needs and what they see as the needs of the wider Pacific region today.

Underlying at least some of this is a widespread dissatisfaction with the way existing multinational organisations have been working in recent years, highlighted by the perception that they have not exactly covered themselves in glory during the Covid pandemic. All sorts of international and internal power balances have been upset, exposing differences in the way individual countries responded and the varying success of the measures taken. Only a few, very different, countries — some of the Asian nations, starting with South Korea and Japan, and Germany in Europe — have distinguished themselves. No international grouping has proved in any way adequate to the emergency, let alone excelled.

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The WHO, for one, was hardly a commanding presence. So much so that even Trump noticed — and announced an end to US support. Similarly, the United Nations. It is true that in April António Guterres set up what he called the Secretary-General’s Covid-19 Response and Recovery Fund, but the target budget, at US$2bn seems pitifully inadequate. Mr Guterres himself was hardly out and about promoting his project, at the very time when almost any attempt at a coordinated response would have been welcomed by many.

Nato helped with airlifting medical supplies, mostly within Europe — though the alliance hardly sang of its achievements from the rooftops either. Help was also delivered by countries on a bilateral basis, including US medical supplies for Russia and EU medical aid for Iran (a breach of sanctions to which the US turned a blind eye).

Given the scale of what had become a global health emergency, however, the fact is that there was a conspicuous gap where institutional leadership might have been. Every government’s priority was to protect its own; borders were closed from Australasia through much of Asia to Europe and on to the United States. This national turning inwards, however, in no way precluded a role for international initiatives and cooperation; there was just no one taking any credible lead.

Once, the world might have looked to the US for leadership. We certainly did during the Ebola and Aids epidemics. The United States was (eventually) at the forefront of the campaign, both medically and morally, to wipe out Aids; it was perfectly placed to lead. Ebola, moreover, was a largely regional epidemic in a part of the world where the US and the West in general had longstanding expertise they could apply.

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Coronavirus, however, reached the United States only after ravaging parts of Asia and Europe. When deaths were at their height in Spain and Italy, the US still barely acknowledged it might also have a problem. And when the virus started to make itself felt, the US — for all its wealth and advanced medical facilities — proved no better at handling it than most Europeans.

It was not just the late arrival of coronavirus on US shores, and prior US scepticism, however, that militated against US leadership. It was also that Trump has eschewed global leadership even more than his predecessor, Barack Obama — leaving an even more conspicuous vacuum.

The European Union, which had in the past presented itself a potential alternative pole of leadership, wasn’t up to the job. It regards health as a national issue, so pan-EU channels were undeveloped, and when desperate members begged for central help, the EU was barely able to organise itself.

Enter Gordon Brown, then, who wants to save the world again, as he claimed to during the 2008 financial crisis. Along with various other former leaders, he has tried to resurrect the joint effort they mounted through the G20 in 2008-9, calling for the G20 summit to be brought forward from November to consider a global approach to coronavirus.

But the main reason why the G20’s response to the financial crisis is seen as a success is that the group was not only able to agree a particular set of goals, but it incorporated governments with the power and the political will to do what was required. The extent to which even central governments, let alone an international body, could accomplish a similar feat in relation to very disparate health services is doubtful.

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There has also been a move by the UK, as it embarks upon life outside the EU, to form a grouping of major democracies — a D10, comprising the G7, plus India, South Korea and Australia — designed to cooperate in the first instance on technology so as to reduce dependence on China, but which could in the longer term grow into something more substantial.

The close resemblance between the proposed D10 and Donald Trump’s expanded G7 is not coincidental, but there is one key difference. The D10 is not only directed against China, but expressly excludes Russia. Pushing Russia into China’s arms — which could be a consequence — might not in the end work in democracy’s best interests.

The United Nations, for its part, is certainly too unwieldy to address a specific global emergency. The Commonwealth? When was the last time we heard of that? The WHO’s big success was the eradication of smallpox which was a long time ago and a long-term effort. It has not covered itself with glory during Covid.

If not the US, the EU, the UN or the WHO (for pandemics) or an expanded G7 or the G20 or a D10, then where is leadership in global emergencies to come from?

Maybe better to start from what has worked. Identifying and agreeing a set of goals is essential. The members of any group must have the power and the will to honour what is agreed. Inclusivity is another key. A grouping whose real purpose is to oppose China is not going to solve a China problem; similarly Russia or Iran.

The Helsinki Accords, signed in 1975 with the purpose of reducing Cold War tensions, illustrate how this strategy can bring change. The signatories included distinguished statesmen, but you will search in vain for a single leader. And maybe that is how it has to be. With the US bowing out and other actors with different agendas taking the stage, perhaps it is time to allow ad hoc groupings to take a more collegiate approach to a particular task in hand.

Perhaps that is what Trump is driving at with his proposal for an extended G7 this year? Could that help our post-Covid recovery? If only, the next generation might say, we had got our act together sooner.