China at Center Stage
China’s huge foreign reserves forced the G-20 Washington 2008 summit global crisis spotlight to be shined on Beijing to step up and take a bigger financial role in addressing the crisis. Because China holds the biggest inventory of foreign exchange reserves in the world, and because it looks to be one of the few major economies to show significant growth in the near future, it was urged to boost the resources of the International Monetary Fund. Pressure was brought to bear on China because Japan, which holds $1-trillion in foreign reserves ─ the second-largest cache of foreign reserves ─ pledged $100 billion in loans to the IMF.
The IMF, like the World Bank, is a relic of World War II, created at the Bretton Woods conference in 1944, as the foundation cornerstones of the postwar world financial system. I advocated their abolition along with the United Nations, or at the very least, their restructuring in my last book Custom Maid Knowledge, to give China and other developing countries greater say than the founding European nations and America now dependent on China have. That is the only way to avoid the widening fissures developing between the developed, developing and underdeveloped nations. To its credit, China demanded greater voting rights be assigned to it and other developing countries in the U.S.-dominated organization before committing to loan any funds to the IMF.
China announced at the opening of the summit that in addition to the $586-billion economic stimulus package it announced to bolster domestic demand and consumption, it had offered $500 million in financial aid to financially teetering Pakistan, calling it an urgent agreement based on the countries’ long-term friendly relations, and that it was prepared to do more once it had a say proportionate to its size and global financial clout. China also demanded the abolition of protectionist legislation in America and Europe which limit its export ability.
China wants the global trust and respect it thinks it justifiably deserves. It is frustrated and angry that despite all its economic progress, the developed world led by America, is denying it the proper place at the head of the table alongside America.
The reality is China cannot afford to follow in the financial footsteps of America and the Western world it leads. Furthermore, there is no domestic support for such action. China has been adversely affected by the Wall Street meltdown and needs to spend its reserves domestically to support its economy and create new jobs to replace the millions of factory jobs lost because of the global recession and loss of export orders.
China is already helping the global financial situation by holding onto U.S Treasury debt. China’s foreign reserves have already been invested ─ more than half in U.S. Treasury issues and other American bonds and much of the rest in euro-denominated assets ─ and it isn’t easy or practical to transfer hundreds of billions, or tens of billions of dollars without causing serious disruption to the currency market, which wouldn’t be in China’s self-interest either. If it sells the U.S. Treasuries it holds, global interest rates will go up and the dollar would collapse.
The IMF, like the World Bank, is a relic of World War II, created at the Bretton Woods conference in 1944, as the foundation cornerstones of the postwar world financial system. I advocated their abolition along with the United Nations, or at the very least, their restructuring in my last book Custom Maid Knowledge, to give China and other developing countries greater say than the founding European nations and America now dependent on China have. That is the only way to avoid the widening fissures developing between the developed, developing and underdeveloped nations. To its credit, China demanded greater voting rights be assigned to it and other developing countries in the U.S.-dominated organization before committing to loan any funds to the IMF.
China announced at the opening of the summit that in addition to the $586-billion economic stimulus package it announced to bolster domestic demand and consumption, it had offered $500 million in financial aid to financially teetering Pakistan, calling it an urgent agreement based on the countries’ long-term friendly relations, and that it was prepared to do more once it had a say proportionate to its size and global financial clout. China also demanded the abolition of protectionist legislation in America and Europe which limit its export ability.
China wants the global trust and respect it thinks it justifiably deserves. It is frustrated and angry that despite all its economic progress, the developed world led by America, is denying it the proper place at the head of the table alongside America.
The reality is China cannot afford to follow in the financial footsteps of America and the Western world it leads. Furthermore, there is no domestic support for such action. China has been adversely affected by the Wall Street meltdown and needs to spend its reserves domestically to support its economy and create new jobs to replace the millions of factory jobs lost because of the global recession and loss of export orders.
China is already helping the global financial situation by holding onto U.S Treasury debt. China’s foreign reserves have already been invested ─ more than half in U.S. Treasury issues and other American bonds and much of the rest in euro-denominated assets ─ and it isn’t easy or practical to transfer hundreds of billions, or tens of billions of dollars without causing serious disruption to the currency market, which wouldn’t be in China’s self-interest either. If it sells the U.S. Treasuries it holds, global interest rates will go up and the dollar would collapse.
posted by Peter de Krassel's Custom Maid Politics at 4:17 AM
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