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A year after Lehman, an assertive China eyes influence
(Agencies)
Updated: 2009-09-15 16:57 Rothman at CLSA plays down the importance of Zhou's proposal, and Chinese policymakers acknowledge there is no practical alternative to the dollar as the world's main reserve currency. But there is deep concern that Washington will be unable politically to withdraw the monetary and fiscal stimulus injected into the economy in time to prevent a spike in inflation and the debasement of the dollar. Accordingly, researchers say China is likely to keep using its new-found influence to promote the yuan as a trade settlement currency, despite a lukewarm response to initial pilot schemes. "The goal is risk mitigation," Kurtz said. "China knows they are now disproportionately exposed to dollar risks in the medium to long term." ACTIVISM A related policy priority is to nurture what Kurtz called a more permissive environment for cross-border mergers and acquisitions so that China does not find the door slammed in its face when it goes shopping for energy and natural resources.
Despite China's greater assertiveness since the onset of the crisis, some foreign politicians believe Beijing could and should be doing much more. "China is at great pains to tread lightly as it grows," British Business Secretary Peter Mandelson said in Beijing last week. "But there is now no alternative to the full leadership role that its economic status deserves." That judgment seems harsh. Yes, China could suck in more goods from the rest of the world by letting the yuan resume its rise and opening its markets wider. If it did, it would also be less vulnerable politically to charges that its exporters sometimes sell at unfairly low prices, as in last week's US decision to slap duties on cheap Chinese tires. But Beijing is playing an increasingly active role in Asian policy-making circles, in the World Trade Organization and in the debate over the shape of international financial institutions. The days when China was content to sit on the sidelines are over. "It's not as though there's some new Chinese model that they can now go out and start aggressively shopping to the world. They don't have that more than anyone else ever did," Kurtz said. "Therefore I'm not sure they become more influential in terms of being able to peddle a particular consensus or growth model to the rest of the world. They can't. They have to struggle with 'what do we do now' just like everyone else does."
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