Asia’s opportunity for say in a new order

14 October 2014

Source: Asia Times (Hong Kong)
Source type: Others
Published on: 24 Oct 2008

Cast in the role of global savior in the unfolding financial turmoil, China is hosting a meeting of Asian and European leaders in Beijing this week that is expected to castigate the Anglo-Saxon model of capitalism and press for a reshaped global economic order.

"Can Asia be global economy’s best hope," asked an editorial in China's Economic Observer last week. Noting that Asia hardlyplayed any role during the global economic recovery after theGreat Depression of 1929, the paper suggested that the continent’s established and emerging economies constituted the world’s best chance for recovery after the present financial crisis.More than 40 leaders will converge in the Chinese capital for the 7th Asian European Meeting (ASEM) summit from October 24 to 25 to discuss the global financial crisis and a plan for joint action.

Aside from the 27 European Union countries, the 10 Association of Southeast Asian Nations members, the European Commission, China, Japan and South Korea, the summit will be attended by three other Asian countries - India, Pakistan and Mongolia. The talks will be co-chaired by France, which holds the European Union’s presidency, and China.

"China maintains that the international community should strengthen cooperation and jointly handle the current financial crisis on the basis of equal consultation," foreign ministry spokesman Qin Gang said in Beijing on Tuesday. But he warned that "developing countries' interests and concerns should be fully respected and safeguarded."

China - which sits on US$1.9 trillion worth of foreign exchange reserves - has been looked upon as an important player to lead the way out of the global financial meltdown. US Treasury Department officials and politicians have all called on Beijing to show a proactive attitude and join efforts with the Western world to fight the financial crisis.

Qin said Beijing had adopted a "responsible and constructive attitude" in dealing with the crisis, but few details have emerged over the role China is expected to play. Latest economic figures show that the country’s economy is also vulnerable to the effects of the global economic slowdown.

China's National Bureau of Statistics said on Monday the economy expanded by just 9% in the third quarter, the slowest rate in five years. The economy grew 10.6% in the first quarter and 10.1% in the second quarter of 2008. The slowdown was blamed on plummeting demand for Chinese goods as consumers in the US and Europe cut back on spending.

In recent weeks, Beijing has grown more critical over the lack of financial surveillance in developed economies, which it blames for the spiraling crisis. The deputy governor of China’s central bank, Yi Gang, who took part in an emergency meeting of the Group of 20 countries in Washington earlier this month, chastised the International Monetary Fund for allowing too much leverage in the system and failing to exert control of big Western financial institutions.

He told the media that "weak financial-policy discipline resulted in excess global liquidity and disorderly capital flows". The line has been echoed in a numerous articles and columns in the Chinese media attempting to dissect the reasons for the downfall of Wall Street powerhouses. Some have sung a "eulogy to US capitalism" while others have proclaimed the end of the "era of Washington consensus".

But there has been less certainty about what would replace the current order of international capitalism. "The demise of Wall Street Anglo-Saxon model doesn’t signify the victory of China’s financial modus operandi," said a commentary in the 21st Century Business Herald, based in Guangzhou.

"Even as we criticize Wall Street’s excesses, we should be aware that China’s model of financial operation is not necessarily the answer," it said. "True, Chinese banks are stable and they don’t pursue excessive profits blindly. But they are far from free from red tape and administrative interference."

According to Qin, the ASEM summit offers the "perfect platform" for leaders to discuss ways of dealing with the crisis.

British Prime Minister Gordon Brown has proposed a global system of financial supervision that would empower international bodies including the International Monetary fund to monitor global markets and act as early warning systems. French President Nicolas Sarkozy has pledged to use the meeting as a platform to persuade Asian nations to take part in a plan for rebuilding of international capitalism.

"What has happened is an act of treason against the values of capitalism; it is not a result of the market economy," said Sarkozy during a speech Tuesday at the European Parliament in Strasbourg.

"The most simple solution" for the global summits would be to bring the G-8 (Group of Eight) largest industrialized nations together with the five biggest emerging economies, led by China and India, he told European politicians.

Chinese analysts anticipate that the summit may produce an agreement for the establishment of a joint trust fund betweenAsia and Europe, similar to the one launched during the second ASEM summit in London in 1998, to combat the Asian financial crisis.

By Antoaneta Bezlova