July 8, 2005

China in balancing act at G8 summit

By Scott Hillis

EDINBURGH (Reuters) - The G8 summit this week has
illustrated Chinese President Hu Jintao's balancing act -- to
edge closer to superpower status while not giving up the
traditional role of a developing country.

On the superpower side of the ledger, China's economy is
the seventh-biggest in the world and, having expanded at an
average 9 percent pace a year for the last two decades, it is
now a crucial factor in driving global growth.

A diplomatic campaign is also winning Beijing friends
across Asia, Africa and Latin America, and China's rapidly
modernising armed forces could end up giving it more heft in
world affairs.

Hu's presence representing the largest of five developing
nations invited to the Group of Eight meeting in Scotland shows
that Beijing is willing to take on more global responsibility.

After Thursday's bombing attacks in London that killed more
than 50 people, Hu stood shoulder to shoulder with G8 members
in denouncing terrorism.

Beijing has also played a key role in shaping a more active
role for poorer countries in resolving one of this G8 summit's
key issues, global warming.

"We can see more clearly that the developing countries,
with China in the lead, are quite prepared to act as equals
with the G8 to control climate change," said John Kirton,
director of the G8 Research Group at the University of Toronto.

"That's a fundamental change," Kirton said.

But China has its share of problems, too.

Tens of millions of Chinese people remain mired in poverty
and the country's Communist rulers are tightening their grip on
the media and political debate.

Surging exports of everything from strawberries to shirts
are causing alarm in the United States and Europe and sparking
calls for tough barriers against Chinese goods.

And there is growing concern among some Western policy
makers over Beijing's cozy ties with countries like Zimbabwe
and Sudan, which are drawing criticism for widespread human
rights abuses.

Hu's pre-G8 visit to Russia and Kazakhstan, where concern
was voiced about the U.S. presence in Central Asia, showed
China was in no rush to join the ranks of liberal democracies.

"They realize that they can be much more powerful in the
socialist camp than they can on a level playing field," said
David Wall, associate fellow at the Asian program at Royal
Institute of International Affairs.

"Hu's got what he wants. He's got his country. From his
point of view it's all working well," Wall said.

Some say Beijing wants to keep having it both ways.

"They like being there because they like being seen as one
of the big players, but they don't want to be a fully paid-up
member of the G9," said one diplomat who declined to be named.

"They are too attached to the position they occupy: that
they are a developing country and they don't want to lose that
by throwing their lot in with developed countries."

One litmus test of how far Beijing will be willing to play
the role of responsible global citizen may well be what it does
with its yuan currency.

The United States, Japan, and many European countries say
the yuan, fixed near 8.3 to the dollar for the past decade,
should be allowed to rise in value because the current level
makes Chinese exports unfairly cheap.

They argue that China's growing economic clout means it
must shoulder more of the burden of fixing global imbalances.
If China revalues the yuan, other currencies such as the
Japanese yen and South Korean won are expected to follow.

China says publicly that it will not bow to foreign
pressure to revalue its currency, but economists and diplomats
say there is a growing sense that Beijing could move before
September, when Hu makes his next big trip abroad, to the
United Nations in New York.