China and the G20
China takes centre stage
Mar 31st 2009 | BEIJING
Chinese officials assume an increasingly self-confident tone towards the rest of the world
IF ONLY the rest of the world were run like China, the global financial crisis would be over much sooner. So the governor of China's central bank, Zhou Xiaochuan, implied recently. China, he said, had responded with “prompt, decisive and effective policy measures, demonstrating its superior system advantage when it comes to making vital policy decisions”. At the G20 summit in London on Thursday April 2nd, China's President Hu Jintao sees a chance for his country to take centre stage.
Chinese leaders are not accustomed to that position. The late Deng Xiaoping gave warning, in the wake of the collapse of European communism, that China should keep a low profile in world affairs and bide its time. He had good reason then to be cautious. It was still by no means certain how China's Communist Party would weather the political storm. The country's economy had yet to take off and China was still viewed as a pariah by many in the West because of its bloody crackdown, in 1989, on pro-democracy campaigners in Tiananmen Square.
Now, with the West in economic disarray, China's leaders see an opportunity if not to supplant American power, at least to start wielding a bit more of the clout that they feel they deserve given recent, rapid economic growth and the country's importance to a global recovery. Notwithstanding the enormous social stresses that China is facing at home as a result of rising unemployment, caused by an export slump, Chinese officials recently have assumed an increasingly self-confident tone when speaking to the rest of the world.
Mr Zhou had some advice for Western governments. They should give powers to ministries of finance and central banks “to use extraordinary means to contain systemic risk”. This, he said, would allow them to “act boldly and expeditiously without having to go through a lengthy or even painful approval process.” China has avoided any such difficulties with its 4 trillion yuan ($586 billion) stimulus package announced in November. Officials have provided only the barest of details of this. The rubber-stamp legislature has not been consulted.
In another article, Mr Zhou suggested the creation of a new international reserve currency, managed by the IMF, to replace the dollar. Western officials have given that a lukewarm response, but there has been greater interest in China's proposals for a restructuring of voting rights at the IMF to allow developing nations more say. With almost $2 trillion in foreign-exchange reserves, China is seen by Western countries as a big potential lender to the IMF, and thus to countries in need of financial rescue.
China, however, is still reluctant to stick its neck out far. It has not made public any detailed plans for IMF reform. Neither has it made explicit whether or how any lending by China would be conditional on such changes. In an article in the Times on March 27th, Wang Qishan, a deputy prime minister, said that it was “neither realistic nor fair to set the scale of contribution simply by the size of foreign-exchange reserves”. But he did not offer a sum.
China remains wary of its own economic predicament. Although the goal remains to achieve 8% GDP growth this year, this would still be slow by the double-digit standards of much of this decade. The World Bank predicts 6.5% growth. Even Mr Zhou sounded a note of caution. Asked whether China's economic slowdown had ended he told reporters on March 28th, during a visit to Colombia, that it was “still uncertain”. The answer, he said, depended on whether the global financial crisis had yet “reached bottom”.
As China Daily, a state-owned English-language newspaper, put it, “what China is going to do is be seen and be heard” at the G20. President Hu will bask in the limelight of his first meeting with President Obama on the sidelines of the London summit and do little to brush off comment that it is really a “G