Wandering China

An East/West pulse of China's fourth rise from down under.

Shifting power balance sees China, Japan dig deep to save the West [the Australian]


Greetings, am still wandering through Europe getting a feel of the impact (sometimes, the lack of) of China in this region. Internet access has been intermittent as I travel through the countryside. More regular updates to come when I return. In the meantime…

A view from Australia: Shift in the global balance of power tilting east or will this be an Asian century of footing the bill for debts it did not ‘directly’ incur? The way this article is phrased suggests it also means footing the bills with little equivalent exchange in return. Will paying for someone else’s bad habits become the new norm in this new landscape of sharing a boat of interdependence and integration? Perhaps this shift is purely perceptual.

…in a sign that Europe is nearing the end of its tolerance for “helpful” suggestions from outsiders, European Commission president Jose Manuel Barroso told the G20 that the EU was not the cause of the current crisis and won’t be “lectured” by anyone.

“Frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy,” Barroso said.

– – –

Shifting power balance sees China, Japan dig deep to save the West
BY: RICHARD GLUYAS
Source: The Australian, published June 20, 2012

THE arrival of the Asian century has been underscored with news that China will kick in $US43 billion ($42.4bn) to the International Monetary Fund’s global firewall.

China’s commitment, which is the third largest after Japan ($US60bn) and Germany ($US54.7bn), compares with a weighty contribution from the mighty US — zero.

The US is clearly wrestling with its own problems, and a donation to Europe’s begging bowl would be political poison in an election year. Even so, the latest commitments to the new $US430bn fund, which were announced during the G20 summit in Mexico, highlight the anomaly of the US and Europe controlling key global institutions such as the IMF and the World Bank, when the centre of economic power is tilting east.

China’s contribution was eagerly awaited, given it has the world’s deepest pool of foreign reserves at $US3.2 trillion. It meant that total commitments from emerging economies came to $US95.5bn.

THE arrival of the Asian century has been underscored with news that China will kick in $US43 billion ($42.4bn) to the International Monetary Fund’s global firewall.

China’s commitment, which is the third largest after Japan ($US60bn) and Germany ($US54.7bn), compares with a weighty contribution from the mighty US — zero.

The US is clearly wrestling with its own problems, and a donation to Europe’s begging bowl would be political poison in an election year. Even so, the latest commitments to the new $US430bn fund, which were announced during the G20 summit in Mexico, highlight the anomaly of the US and Europe controlling key global institutions such as the IMF and the World Bank, when the centre of economic power is tilting east.

China’s contribution was eagerly awaited, given it has the world’s deepest pool of foreign reserves at $US3.2 trillion. It meant that total commitments from emerging economies came to $US95.5bn.

This helped the IMF raise an extra $US430bn — almost doubling its lending capacity.

In return for that investment, though, the powerful BRICS countries (Brazil, Russia, India, China and South Africa) have made it clear that they want a dividend.

Meeting on the sidelines of the G20 summit, they said the new contributions were made in anticipation that reforms agreed in 2010, including a comprehensive shift in voting power, would be implemented in a “timely” manner.

They also said cheques for the new funding would only be handed over once the existing pool of resources was exhausted.

Not surprisingly, there was no argument from the IMF.

The BRICS countries are not digging into their pockets for the hell of it. They fear that Europe’s rolling debt crisis will clip their own growth rates to plodding, mature-economy levels.

Indian Prime Minister Manmohan Singh said at the G20 there was concern that the continental firewalls would not be adequate to stall the contagion.

“The global economic situation is deeply worrying,” he said.

“Economic recovery is faltering and even fast-growing emerging markets are slowing down.”

Singh’s commentary was a further dose of reality, as if anyone needed it, after the briefest of respites following the election of the pro-austerity New Democracy party in Greece over the weekend.

No sooner had talk started about an easing of Greece’s punishing bailout terms (only in the length of the agreement, not its substance) than bets resumed on the next bailout chump, Spain.

Ten-year Spanish bond yields, which eased five basis points to 7.07 per cent in early overnight trade, surged to an unsustainable, post-euro record of 7.12 per cent on Monday.

Europe is clearly crying out for a long-term fix, but in the shortest possible time.

At the G20, one of the longer-term initiatives — a eurozone banking union — got some traction, including a mention in the final communique.

A banking union is on the agenda for the June 28-29 European Union summit.

It calls for common banking rules and a single lead regulator, a mutualised deposit guarantee scheme and a common bank bailout scheme and recapitalisation fund.

The aim is to break the debilitating nexus between stressed banks and overburdened sovereigns, highlighted in the E100bn ($125bn) lifeline extended last week to Spain’s banks.

Investors spurned what was ostensibly good news because the funds will be channelled through the Spanish government, further weakening its dire fiscal position.

Germany is resisting a banking union, with Chancellor Angela Merkel pushing for fiscal union first.

But in a sign that Europe is nearing the end of its tolerance for “helpful” suggestions from outsiders, European Commission president Jose Manuel Barroso told the G20 that the EU was not the cause of the current crisis and won’t be “lectured” by anyone.

“Frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy,” Barroso said.

What kind of crisis would it be if everyone didn’t have a view on how to fix it?

Advertisements

Filed under: Australia, Beijing Consensus, Chen Wenling, Chinese Model, Economics, Europe, European Union, Finance, Foreign aid, IMF, Influence, Peaceful Development, Politics, Public Diplomacy, Soft Power, The Australian, The Chinese Identity

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 2,577 other followers

East/West headlines of Rising China

East/West headlines of Rising China

About Wandering China

Click to find out more about this project

Support //WC

Support Wandering China now - buy a Tee Shirt!

Be a champ - Support Wandering China - buy a Tee Shirt!

The East Wind Wave

China in images and infographics, by Wandering China

China in images and Infographics, by Wandering China

Wandering China: Facing west

Please click to access video

Travels in China's northwest and southwest

Wandering Taiwan

Wandering Taiwan: reflections of my travels in the democratic Republic of China

Wandering China, Resounding Deng Slideshow

Click here to view the Wandering China, Resounding Deng Slideshow

Slideshow reflection on Deng Xiaoping's UN General Assembly speech in 1974. Based on photos of my travels in China 2011.

East Asia Geographic Timelapse

Click here to view the East Asia Geographic Timelapse

A collaboration with my brother: Comparing East Asia's rural and urban landscapes through time-lapse photography.

Wandering Planets

Creative Commons License
Wandering China by Bob Tan is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.
Based on a work at Wanderingchina.org. Thank you for visiting //
web stats

Flag Counter

free counters
Online Marketing
Add blog to our directory.
%d bloggers like this: