An illusion of global governance
By Jonas Parello-Plesner
Since the onset of the financial crisis there have been suggestions to form a
Group of Two (G-2) consisting of the United States and China. This proposal is
based on the facts that China is the largest creditor of the US, the US is
China's biggest export destination, and the strong interdependence of their two
economies provides a foundation for joint action that can shape the global
economy. This thinking is tempting when the Group of Eight is seen as
reflecting an outdated balance of power and the Group of 20 is considered too
diluted to respond to global challenges.
Yet a G-2 would give a false assumption about stronger global governance and
China would probably not deliver in such a format. Let me explain why.
China's main focus is still its own economic development. Re-read Premier Wen
Jiabao's statement at Davos on January 29, "[The] steady and fast growth of
China's economy is in itself an
important contribution to global financial stability." Or look at the closing
statement of the National People's Congress: "We have prepared enough backup
firepower to deal with potential greater difficulties, and new stimulus
packages, if necessary, will be launched."
The main priority is, very naturally, on getting the Chinese economy going.
That continues to be the source of the Communist Party's legitimacy. If that
link is broken, it could spell trouble. At the same time, 2009 is a sensitive
year, full of anniversaries that involve such issues as 1959 Tibetan uprising
and the 1989 Tiananmen demonstrations. Social disturbances because of the
financial crisis could be on the rise. China will in many ways be
inward-looking.
The responsibility gap
Some Chinese are flattered by the suggestion of a G-2. It suggests China is a
global power. It isn't yet, and the Chinese realize that. None of the Chinese
experts in government, think-tanks, and scholars that I have talked to are
enthusiastic about the concept. They all underlined the potential
responsibility gap on China's part as part of a G-2. Some even saw it as a
potential trap for China that could expose it on the world stage. China is
active in international reform now because its focus on internal growth
converges with a more active foreign policy in financial and monetary matters.
China is on the center court of international decision-making to protect a
system of economic globalization that has provided China with many benefits.
That is reflected in diplomatic efforts undertaken with regard to financial
reform and the International Monetary Fund, as well as floating suggestions
regarding a new reserve currency. China is worried about the future value of
its assets in dollars. Japan, South Korea, and Taiwan have similar concerns
about foreign currency assets.
China's new activism should be encouraged as part of its transformation into a
responsible stakeholder. Nevertheless, China might not maintain its current
profile - much depends on the duration and severity of the financial crisis -
and could return to its more traditional "stay low" diplomacy if external
conditions for continued internal growth are again secured.
Don't put all your American eggs in one basket. Former National Security
Council director Dennis Wilder has argued that the US "will, however, pay a
heavy price with our long-term friends and allies in Asia by referring to
increased economic cooperation with China as a new G-2". A G-2 would antagonize
allies and friends - both of China and the US - without providing extra value.
If it's only size that counts, then why not form a G-2 consisting of the
European Union (the world's largest economy) and Japan (number three) instead
of between number two (US) and four (China)?
Furthermore, economic cooperation between the US and China is much needed but
world governance is still about more than economics. Will China really help in
securing Pakistan or in Afghanistan? European soldiers are serving alongside
Americans in Helmand, not Chinese. Will China really secure a nuclear-free
Korean Peninsula or does it still prefer stability and crisis avoidance to
crisis resolution?
Here, US cooperation with allies in South Korea and Japan is essential. And if
there was a comprehensive settlement with North Korea, Europeans would be asked
to contribute as they did with the Korean Peninsula Energy Development
Organization in the 1990s. China's foreign policy is still deeply rooted in
non-interference and at its best conflict-avoidance, although Beijing is moving
toward a more responsible stakeholder-approach in multilateral settings.
China might also introduce its parochial concerns into global governance if
given a G-2 role. Look at China's recent annoyance at India's loan from the
Asia Development Bank, presumably because of the unresolved border dispute.
Should International Monetary Fund loans in the future be given on conditions
over a country's view of Taiwan or the situation in Tibet?
The US-China relationship is one of the most important bilateral relationships.
There is need for tight coordination between the US and China and perhaps some
version of a Plaza Accord would benefit both countries. Yet, to turn that into
a G-2 will create an illusion of global governance that will not deliver on its
promise.
Jonas Parello-Plesner (j.parello-plesner@get2net.dk) works as
senior advisor with the Danish government on Asian affairs. He is on the board
of editors of the Danish magazine Raeson (www.raeson.dk). He is currently on
research leave studying East Asian political integration meeting with think
tanks, experts and commentators in East Asia's major cities. The views
expressed are entirely his own.
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