For China, the G20 Summit was a first step towards a more pluralistic global financial system.
It is the photo, taken seconds after the official G20 photo seen on many title pages around the world, which may stay fresh in peoples’ minds. The American Barack Obama, the Italian Silvio Berlusconi and the Russian Dmitry Medvedev are joking around like Formula 1 drivers on the winner’s podium, giving the thumbs up. In front of them, two steps below, one can just make out the heads of two other statesmen: the Chinese President Hu Jintao next to the Saudi King Abdullah. They are somewhat out of focus, but one can still see their facial expressions. They look confident and composed, almost piqued by the spectacle above them.
The players of the old world order are being hit the hardest by the economic crisis. They desperately need pictures that portray them as winners at home. By contrast, the representatives of the new world order act in a more reserved and modest way. Time is on their side, especially for China. The Chinese diplomats responsible for the G20 Summit are satisfied. In particular they point to the tone of the first G2 meeting between American President Barack Obama and Chinese Party Leader and President Hu Jintao on the eve of the summit. Not only is the relationship between the two countries important for the people of these two countries, “but [it] also help set the stage for how the world builds with a host of challenges,” Obama said. Any future collaboration between the two will “define” the well-being of the world economy and “will remain like this in the future.” And Obama has acknowledged to President Hu Jintao that China has contributed to solutions to the global economic crisis. In this context, the relationship between the US and China “has become very constructive”. Thus from the Chinese perspective, Hu has taken home some diplomatic trophies.
Hu also dared deliver a few punches in the direction of not only the US but also the International Monetary Fund (IMF). The world should keep the “most important currencies” stable, he asserted during the summit, and at the same time allow “all countries to choose development paths that suit their own conditions and improve their development models in the light of their respective national realities.” Hu added that “it is very important to keep the diversity of development models and encourage different models to complement each other if we expect the world economy to move forward with full dynamism.” He also called for the strengthening of international institutions — which would ultimately lead to weakened Western nations.
However, if one looks at the composition of power in the IMF, China barely features in relation to the US. The Chinese were only able to secure 0.2 per cent of the votes during the G20 Summit. For this they have to contribute $40 billion more to the IMF budget. China has only 3.99 per cent of the votes whereas the US has about 17 per cent. Hence, the Chinese People’s Daily commented mundanely that this was “a small step” towards “having more influence on how the IMF, and the world financial system, operates”. At least the Chinese got the G20 participants to agree to review the power configurations within the IMF before January 2011. “This won’t be easy,” says Mei Xinyu, a researcher in the Chinese Ministry of Commerce, realistically, because “that would affect the interests of the United States and the European Union”.
Yet the European and American unity is already beginning to break up. The British Foreign Secretary, Mark Malloch-Brown, is calling for a more significant role of the Chinese in the IMF. Even the Managing Director of the IMF, Dominique Strauss-Kahn, said about a month ago that he intends to collaborate with China in helping Africa to combat the financial crisis.
In aiming for more influence the Chinese do not intend to rely on diplomatic phrases. Prior to the G20 Summit the Chinese set up pressure points to keep their concerns on the agenda. For example the Governor of the People’s Bank of China, Zhou Xiaochuan, in a surprise move demanded the replacement of the US dollar as the global lead currency. In the last few weeks, the Chinese have initiated currency exchange deals with countries such as Malaysia, Argentina, Indonesia and South Korea worth 70 billion US dollars and in so doing have begun to undermine the US currency. This is a delicate political act, especially for countries who are participating.
Furthermore, Chinese President Hu recently travelled to Africa to reassure ‘partners’ that despite the difficult times China will continue to invest and will remain an international spokesperson for developing countries. The more surprising point, however, and one that could cause real pain to Western nations is that the government heads of ten southeast Asian countries as well as Japan and South Korea, who used to be loyal to America, have agreed to build up a sort of Asian IMF under the leadership of China. As a first step, a fund with reserve assets of $120 billion will be established. “On the one hand, China could count on the IMF restructuring,” researcher Mei said, “and on the other hand, it can push forward the establishment of the Asian reserve pool.”
The bestselling author Frank Sieren has been living in Beijing for 15 years and is regarded as one of the leading German China-experts. His brother Andreas Sieren is a specialist in international relations and development aid. He worked for many years for the United Nations in Asia and Africa
