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. Last Updated: 07/27/2016

G20 Set to Supplant G8 as ‘Premier Forum’

APBarack and Michelle Obama welcoming Dmitry and Svetlana Medvedev to the G20 summit dinner late Thursday.

PITTSBURGH — The Group of 20 rich and developing nations promised to give rising powers such as China more say in rebuilding and guiding the global economy, and declared their crisis-fighting efforts a success on Friday.

Leaders pledged to keep emergency economic supports in place until sustainable recovery is assured, launch a framework for acting together to rebalance economic growth and implement tougher rules governing banks by 2012.

“Here in Pittsburgh, leaders representing two thirds of the planet’s population have agreed to a global plan for jobs, growth and a sustained economic recovery,” British Prime Minister Gordon Brown said after the summit.

U.S. President Barack Obama’s first turn hosting a major summit ended on an upbeat note, with leaders claiming victory in stopping the recession from turning into a depression.

“It worked,” they said in the final communique. “Our forceful response helped stop the dangerous, sharp decline in global activity and stabilize financial markets.”

The Pittsburgh gathering was the third summit in a year for the G20, which said it would now be the “premier forum” for economic cooperation, supplanting the Western-dominated G7 and G8 that were the primary international forums for decades.

“This is a symbolic act of inclusion of immense importance to international politics,” said Colin Bradford, senior fellow at the Brookings Institution. “There is tremendous significance to the history being made today that this decision does not enlarge the G7 but replaces it.”

Others were more skeptical. “I think the G7 is something of a zombie — very hard to kill,” said Simon Johnson, a former IMF chief economist. “They have a lot of interconnections … but obviously at the summit level, they are gone.”

The move was a clear acknowledgment that fast-growing countries such as China and India now play a much more important part in world growth.

“This movement to the G20 and away from the G7 is recognizing economic realities. You can’t talk about the global economy without having the major dynamic emerging economies at the table,” said John Lipsky, the deputy managing director of the International Monetary Fund.

The G20 vowed not to return to the “reckless behavior” blamed for triggering the financial crisis, which exploded two years ago when failing U.S. mortgage loans caused catastrophic losses at financial firms around the world.

“A sense of normalcy should not lead to complacency,” the G20 leaders said in the communique. “We want growth without cycles of boom and bust and markets that foster responsibility not recklessness.”

In addition to the regulatory reforms, which are supposed to be developed by the end of 2010 and put in place two years later, the G20 took aim at lavish pay packages for bankers.

The leaders agreed that firms should be able to claw back or reclaim pay and bonuses in certain instances. The measure was aimed at making sure bankers don’t get huge payouts for making risky bets that later go bad.

The leaders agreed to shift some voting power at the International Monetary Fund to underrepresented countries such as China from rich ones, another sign that the developed world had accepted the changing balance of economic power. In the statement, the G20 endorsed a plan to phase out fossil fuel subsidies as a way to combat global warming, and to step up efforts to complete the Doha round of trade talks.

World leaders also backed a U.S.-led push for reshaping the global economy to smooth out huge surpluses in exporting powerhouses such as China and large deficits in big importing countries such as the United States.

Obama wants to ditch the U.S. borrow-and-spend mold and embrace saving and investment but that means countries such as China that rely on exports for growth must also adjust.

G20 leaders agreed to work together to assess how domestic policies mesh and to evaluate whether they are “collectively consistent with more sustainable and balanced growth.”

Countries with sustained, significant surpluses — a description that could fit China — pledged to strengthen domestic sources of growth, according to the communique. By the same token, countries with big deficits — such as the United States — pledged to support private savings.

Economists have warned for years that these large imbalances could destabilize the global economy, and previous attempts to correct them have failed.