The other G20 issue: remember China? - Macleans.ca
 

The other G20 issue: remember China?


 

With our focus so firmly fixed on the tension between the U.S. accent on stimulus and the deficit preoccupations of Canada and Europe, the question of China’s place in the G20 has been pushed a bit to the side of this weekend’s summit.

But the question of how willing China might be to play ball by letting its currency appreciate and otherwise boosting domestic demand is arguably of more long-term importance than this weekend’s stimulus-vs-austerity rift. After all, many argue the imbalance between America’s spending and China’s saving is the crucial economic question of the age.

And if the challenge here was only reconciling, say, Angela Merkel’s inclination to retrench with Barack Obama’s instinct to stimulate, the old G8 would surely suffice. The strains are mainly among the old rich countries. The G20 was meant, remember, to expand the summit club to reflect 21st-century global realities, so a more telling test of the new group’s utility will be China’s reaction to peer pressure at the Toronto summit table.

Obama and Chinese President Hu Jintao met for a bilateral this morning, where the U.S. president praised China’s tentative pre-summit signal that it would let its currency rise somewhat. As well, Obama invited Hu to visit the U.S.

However, Chinese officials at the summit are saying any exchange moves will be made taking domestic economy priorities into account first, rather than because China is bowing to pressure from its new G20 partners.

If that sounds like defiance, it might simply reflect the internal reality of China’s evolving economic policy. Donald Brean, co-director of the G20 Resarch Group at University of Toronto, and a professor at the U of T’s Rotman School of Management, says China is indeed divided within.

“It’s a conflict between China’s central bank and the department of commerce,” says Brean, an expert on China who has lived and worked there. “The department says, ‘A low exchange rate has been working well for twenty-five years.’ The central bankers are saying, ‘We cannot sustain this imbalance.’ It’s not just international; it’s an internal imbalance.”

That’s good news for the G20. It suggests that shrewd summit players will pick up on the factions inside China that share the desire of the rest of the world for a Chinese economy that buys more and sells perhaps a little less aggressively.


 

The other G20 issue: remember China?

  1. If they want China to 'buy more' they have to be willing to sell to them….something we rarely see in NA.

    China isn't in the market to buy trinkets, and won't be fobbed off with them.

  2. Is it not time to reevaluate what the US can not sell to China? If China want to compete with the US on military terms, would China not up its military spending up to 4% of GNP as the US does rather than spend only about 1.5%? China only spend enough to make sure countries will not take asdvantage of China as in the 18 &19 centuries. China want to concentrate in developing its economy rather than spend foolishly on military as the former Soviet Union which result in its demise. The US bound its own feet when it does not sell in the area where it has a strong comparitive advantage.

  3. Canada hasn't been on any of Chinese agenda since Harper's embracing Dalai Lama. Until Harper leave, I really doubt China will buy much from Canada as throughout Chinese history, Chinese never do business with those who embarrass or criticize them publicly. True friends just don't do that.

    UK PM Cameron learned fast and immediately warmed up to China putting himself to oversee personally the China-UK relationship, even though the Brits would equally have to suffer from their history abuses to China for centuries since Opium wars and especially their continued alliance with India in Tibet issues and border issues with China.

    We might see that China will trade much more readily with Asean countries, Africa, South America and of course EU and you can see that these countries try not to internationally embarrass China. Except of course Sarkozy & Merkel & Kevin Rudd learned their lessons and they behave quite well now even though China is still keeping relationship low with these leaders. Kevin Rudd and Gordon Brown are now gone, China is only waiting for Harper & Merkel gone before warming up to us & germany too, possibly.

    For what it's worth, a 20th century prophet Baba Vanga predicted that China will be the ONLY superpower in 2018 and Mandarin will be the dominant language in commerce, not English in a few decades. Believe it or not.

  4. WE CONDEMN YOUR TERRIBLE HUMAN RIGHTS RECORD IN THE STRONGEST POSSIBLE TERMS!! (please please adjust your currency to suit us)

    • Yeah, we're big on telling others what to do, aren't we?

      Well, except for the US over Abu Ghraib, or Israel over Gaza etc etc.

      China though, is apparently fair game.