Wednesday, December 2, 2009

The day Beijing blinked
The day Beijing blinked
By Antoaneta Bezlova

BEIJING - The jury is still out on what Beijing and Washington achieved during President Barack Obama's first state visit to China last week. But one trait has emerged more strongly than anything else.

While eager to receive recognition for its star-power economy and financial crisis management, China balked at suggestions of global burden-sharing with the US and rejected the possibility that the Group of Two (G-2) would play a role in shaping the new world order.

Many other sensitive issues were broached only indirectly during Obama's stage-managed visit, but on the subject of G-2 and

acting as US partner in global management, Beijing was more than explicit.

"We do not approve of the notion of G-2," Chinese Premier Wen Jiabao said. "China is the world's most populous developing nation, and we are very conscious of the long way China has to go before it becomes a modernized country."

Wen praised the importance of US-China cooperation in the current risky international situation, but emphasized that China was going to consider first and foremost its national interests.

"Advocating the G-2 is in fact an American strategy, not China's," said Shi Yinhong, an expert on international relations at Renmin University in Beijing. "The US wants us in a tandem because that way it will be easier to work on all financial and security issues the way they want us to."

Since the conclusion of Obama's visit, a string of articles and opinions has appeared in the press appraising the new status quo between the world's only superpower and the one aspiring for the title. A note of caution has been recurrent in most of them. In a rebuke of proliferate predictions of America's decline of recent months, experts are now warning that the US's "era of world dominance" is far from over and China has been misled into believing the opposite.

"We must be crystal clear that the United States still is and will remain for some time the only superpower in the world. Its supremacy in military, technological and any other area of importance is unrivalled," said an editorial in the China Business News this week. "Those who profess America's decline are being too rushed."

Some experts see the rise of the European Union as the only viable threat to US supremacy, and caution that all advances to China made by the US are based on the premises of reluctance to cede international leadership to the EU.

"The last 10 years have been all about US efforts to preserve the dollar's status as a global currency from the challenges posed by the euro," said Wang Jian, a well-known expert with China Society of Macroeconomics, in an opinion article published by the same paper.

"Washington's international strategy has been to 'stir trouble in Europe while keeping Asia stable'. This is why Washington is so keen on drawing close to China and vehemently opposed to Japan's idea of creating an Asian community without the US," he argued.

Warnings have been issued that China has done little to loosen the embrace of Chinamerica - the interdependence of the countries' economies that is often blamed for creating trade imbalances and contributing to the financial crisis.

Since China's economy continues to be largely dependent on exports, Beijing reacted nervously to suggestions by US officials that the United States was now ready to shrug off its role of insatiable buyer of Chinese goods to save more.

For months, China has been the target of calls from the West to get its huge population to spend more. Chinese leaders have rolled out a series of policies to boost consumption in the countryside, where two-thirds of China's population live. The results have been negligible.

Wang Jian openly dismissed Beijing's progress in boosting domestic demand, saying nothing much has changed since the days before the crisis. "Unless China changes the way national income is distributed, domestic consumption will not replace exports as the new economic engine," he said.

Fears that exports may suffer explain Beijing's refusal to budge at prodding from the US, Europe and several Asian countries to let its currency, the yuan, appreciate.

Allowing the yuan to rise is seen by many now as China's due contribution to reversing global trade imbalances. During his visit, Obama repeatedly paid tribute to China's rise as a global power, arguing that its emergence as such gave it a greater share of global responsibility.

But Beijing rebuffed all these calls, saying that in regard to the yuan, its national priorities converged with the world's best interests.

"We maintained a stable yuan during the financial crisis, which not only helped the global economy but also the stability of the world's financial markets," Deputy Foreign Minister He Yafei told journalists just hours after Obama issued his call for "more market-oriented exchange rate over time".

(Inter Press Service)