China: No Longer Just a Quiet Listener
Editorial, issue no.412, March 30, 2009
Translated by Zhang Junting
Original article: [Chinese]
In a warm-up for the G20 summit this week in London, China's top financial officials called for reform of global financial monitoring system, the establishment of a super-sovereign reserve currency, a replacement of the Bretton Woods System, and greater influence by China and other developing countries in international organizations.
This will be the first time that China chooses not play the role of the quiet listener. The world is indeed expecting a greater "China voice", and hopes that China can take more of an active role in rescuing the global economy.
Yes, China is willing to help pull the world out of the economic crisis, but it also will expect the right to speak its mind.
Indeed, China has already done much of the former, such as taking regional responsibility by supporting the IMF in bond issuance and by establishing a currency exchange system worth 80 billion dollars with neighboring countries to ease trade. Furthermore, despite a wave of trade protectionism, China has sent it procurement and investment groups to Europe for large-scale deals. And though both the US and Europe were criticizing China a year ago for protectionism, China was now among the minority who firmly supported free trade.
But China plans even more. Zhou Xiaochuan, president of China's central bank, recently suggested replacing US dollar with a super-sovereign reserve currency, sparking much discussion and a significant amount of support. China has expressed concern over its rights and interests, and suggested its own new rules for a stronger financial system. Clearly, China will only gain more attention as the G20 continues.
For China, combinging long-term goals with short-term interests is the way to promote the establishment of a fairer global financial system.
Zhou Xiaochuan understands that discussion of a super-sovereign reserve currency won't yield short-term results, but his claim makes it clear that China will not unilaterally promise to bear any responsibility when its own interests have yet to be secured.
The world needs to understand China. As the Federal Reserve keeps its cash printers running on overtime, it's even more likely for the US dollar to sink. In the meantime, China has more than a trillion dollars worth of US bonds. It's unacceptable for the US to save itself by sacrificing its creditor country or by shifting its duty by claiming "China is willing to do so".
China's concerns will be officially brought up during the Sino-US summit, awaiting a more persuasive response from the US. Many observers believe the possible agreements during the G20 will largely depend on the dialogue between China and the US, which are considered representatives of the two poles in the global economic imbalance.
The US supported its extravagant consumption via enormous debt while China became the biggest creditor with its trade surplus. The rebalancing of the global economy calls for joint efforts and adjustments from both China and the US. If the US continues ignoring other countries' rights and interests, it will neither receive sufficient support, nor help the cooperation of major economies in terms of drafting macro-policy.
Any advocates of "China responsibility" theory should admit that as the third largest economic body, China deserves the rights that correspend to the responsibility it needs to take. It's unfair to expect China and other developing countries to take money out of their pockets while keeping their mouths shut.
As for the IMF's reforms at the moment, China should actively lay its interests on the table.
Cooperation among countries stems from common interest. China is now becoming a more active advocate and participant in international economic affairs, which is good news for both itself and the rest of the world. However, magnifying China's responsibility in the resolution of the crisis, while simultanouesly ignoring the rightful interests of China and other developing countries, will hurt efforts to establish a fair financial monitoring system.
The summit is supposed to be a process for listening to each other, where differences can be set aside and solutions sought out.
The views posted here belong to the commentor, and are not representative of the Economic Observer |
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