World-China Forum

How Beijing is Battling the Global Crisis

To protect their borrowers from collapse, the Chinese have hardly any choice but to continue buying up American treasury bonds. Nevertheless, Beijing is also taking advantage of the crisis to portray itself as an alternative to the United States and a future superpower. It is gratifying for the Chinese leadership to look on as the West reaches for solutions that smack of state capitalism.

China's leaders stand a good chance of winning this global competition, at least in the short term. After all, the planned market economy is their own turf. Furthermore, the Communist Party has no democratically elected parliament to worry about, one that could seek to influence its "market economy with Chinese characteristics." And they can practically order their state-owned banks to issue loans to companies, many of which are also state-owned.

It doesn't take much to convince the Chinese masses to spend their money, as they embark on an enthusiastic shopping spree in Anhui and other provinces -- particularly in the country's relatively backward western regions -- into which Beijing is currently funneling large amounts of government funds. "Jiadian Xiaxiang," or "Electric Household Appliances for the Villages," is the title of the campaign currently underway in China. The economic stimulus program is straightforward: Buyers must identify themselves as farmers. After purchasing their new television sets, refrigerators, washing machines or mobile phones, the customers receive a 13-percent rebate on the purchase price from their local tax offices. Beijing is using similar government stimulus programs to boost car buying. A tax imposed on the purchase of certain small cars was cut in half, bringing it to 5 percent. The government is spending about €560 million ($755 million) in the hope of stimulating sales of vehicles in rural areas. And it seems to be working. In March alone, the Chinese bought more than 770,000 new cars, a 27-percent rise over the previous month and a new record monthly sales figure. (Wieland Wagner, SPIEGEL)

West bells China and says catch the mice

First, there was G7, the group of seven industrialized countries. Then came G8. Now the buzz revolves around G2, making it explicit that China has been recognized as a new "superpower". But China is not ready for this new status.

If the West really wants China to help clear the mess it has created, it has to give the Middle Kingdom more say in matters pertaining to the global economy. But despite all the fancy talk about G2, China is still worse than a junior partner, discriminated against in many fields. Even though China is willing to loosen its purse strings and buy sick enterprises or mines, it cannot because the West won't allow it to. The sauce for the gander in this is not sauce for the goose.

American kids are taught in high schools the principle of "no taxation without representation". This is the basic tenet of "freedom and democracy" that the West wants to proselytize us with. It's high time we told the West to please walk its talk, and let responsibility start with rights. (Lau Nai-keung, China Daily)

Two ideals for the 21st century

The two greatest ideals of recent times are that of a "nuclear-free world" and a "harmonious world". The first was projected by US President Barack Obama in a speech in Prague, Czech Republic, on April 5. The second was proposed by President Hu Jintao. 

What do these two ideals mean? Both stand for change. Obama's nuclear-free world proposal reflects the first change in US nuclear strategy since World War II. US governments down the line have regarded nuclear weapons as the fundamental guarantee for the country's security and for maintaining balance in international relations. The ideal of a harmonious world reflects a shift in China's foreign policy and global strategy. It reflects China's views on global issues, and bids adieu to the principles of "war" and "revolution" that dominated the early years of New China. The shift, so evident in the past four years, started when Deng Xiaoping described "peace" and "development" as the two major themes of the contemporary world that formed the cornerstones of a harmonious world. Now, China has shifted from "closed-door policy" to "open-door policy", from struggle to cooperation, from "passive response" to "active engagement", from "struggle-oriented ideology" to "reform-oriented ideology". A harmonious world is the most precise answer to the question: "What kind of world does China want."

The ideas of Hu and Obama are long-term goals that need generations of struggle to realize. To realize their goals, the two countries have to communicate and cooperate to the maximum level, for if they fail to do so, their ideas will prove to be utopian. (Wang Wanzheng, China Daily)

Beijing Learns to be a Superpower

The year 2009 will go down in history as a watershed for the expansion of China’s global clout. The world financial crisis may have dealt the Chinese economy a blow, but it has hardly deterred the Chinese Communist Party leadership from aggressively projecting both hard and soft power. This has been made possible by not only China’s fast-growing economic and military might but also the decline of America’s international influence in the wake of the Iraq war and the meltdown of its financial institutions.

President Hu Jintao, who heads the CCP’s Leading Group on Foreign Affairs, is pushing “quasisuperpower diplomacy” to consolidate China’s pre-eminence in the new world order. Despite the charm offensive launched in Europe and Latin America by President Barack Obama, there is no denying that Mr. Hu has stolen some of the limelight traditionally accorded the leader of the Free World. (Willy Lam, Far Eastern Economic Review)

The Almighty Renminbi?

Traditionally, empires that hold the global reserve currency are also net foreign creditors and net lenders. The British Empire declined — and the pound lost its status as the main global reserve currency — when Britain became a net debtor and a net borrower in World War II. Today, the United States is in a similar position. It is running huge budget and trade deficits, and is relying on the kindness of restless foreign creditors who are starting to feel uneasy about accumulating even more dollar assets. The resulting downfall of the dollar may be only a matter of time. So Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear. (Nouriel Roubini, New York Times)