Financial Times Editorial: China slowly grows into its crucial role

Financial Times Editorial: China slowly grows into its crucial role
Copyright The Financial Times Limited 2009
Published: April 3 2009 19:54 | Last updated: April 3 2009 19:54
http://www.ft.com/cms/s/0/5f673850-207e-11de-b930-00144feabdc0.html


Remember the Group of Seven? Not so long ago, this small clique could mould the world according to its predilections. Now the Group of 20 has come of age.

That is no bad thing. The elite club’s most glaring defect was the absence of China, the world’s stirring giant, now the planet’s third biggest economy and, if things continue as they are, soon to surpass Japan as its second biggest. China is also the only economy of any size that is actually still growing, albeit at a subprime (no pun intended) 6-8 per cent. Most of the rest of the world, desperately trying to stave off outright recession – or worse – can only look on with envy.

The seismic shift in global economic fortunes has accelerated China’s emergence on to the world stage. Whether it likes it or not – and until recently there were signs that it did not – China will have to play a bigger international role. Last July, Fred Bergsten of the Peterson Institute for International Economics was suggesting – whisper it quietly in Brussels – that most of the world’s big problems could be tackled by a G2 of the US and China.

That is going a bit too far, though the London summit suggests China has been growing into its enlarged boots. Even before the gathering began, Beijing told the US to take proper care of its $1,000bn in Treasury holdings through a responsible fiscal policy. It also made an intriguing proposal to enlarge the role of special drawing rights so they could become an alternative to the dollar as a reserve currency.

Some other G20 participants, including Indonesia, South Korea and Argentina, recently concluded renminbi swap arrangements with China, a sign that Beijing’s weight in international finance is growing even without the benefit of a convertible currency. At the meeting itself, China contributed positively to discussions about enlarging the IMF’s budget, although it was unclear about what funding it would commit, and stood up to France’s attempts to brand Hong Kong and Macao as tax havens.

Beijing has shown signs of moving beyond simply telling the world what it does not like. Tentatively, it has begun to articulate a more active vision of how the world might be run and how China might contribute. Yet the process has only come so far. China remains a poor country with a per capita gross domestic product on a par with Albania. Its model may be attractive to some authoritarian leaders who would love to know the secret both of double-digit growth and political longevity. But the shortcomings of China’s political culture limit its ability to make a full contribution to global debate. For all its failings, the US remains a more attractive beacon for billions of people worldwide looking for a better life. If China is to match that, it will need to make some important changes at home.