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DEVELOPMENT: China Lends Support to U.N. Finance Summit

Antoaneta Bezlova

BEIJING, Jun 24 2009 (IPS) - China has lent its support to a U.N. finance summit where developing countries are pressing to air their grievances over how the global economic crisis has affected the world’s poorest. Yet, for the largest developing country the crisis remains a debacle with a silver lining – a matchless opportunity to accomplish its dream of regaining the regional and global clout it once held, and fast forward its ambitions.

“The Chinese government attaches great importance to the conference,” Liu Zhenmin, China’s deputy ambassador to the U.N., said of the Jun. 24-26 Summit on the World Financial and Economic Crisis and its Impact on Development in New York.

“We believe that that the conference should pay special attention to the difficulties the crisis has brought to developing countries,” Liu told reporters at U.N. headquarters. He expressed hopes that the meeting will provide a platform for all countries to discuss measures on weathering the crisis.

Bucking expectations that participants at the meeting should be at the “highest political levels,” meaning heads of state and government, Beijing is dispatching its foreign minister Yang Jiechi. Yang is expected to deliver a speech at the plenary session and hold bilateral meetings with top U.N. officials.

“They [the Chinese] have always been supportive of the U.N. and the role they believe it needs to play,” said a foreign diplomat in Beijing. “But in this case I believe it is more of a lip service than they are willing to admit. The truth is they have been trying to bend the existing economic structure to serve their needs rather than subvert it.”

Coming after the April G20 summit in London, and ahead of the G8 summit in Italy in July, the U.N. finance summit has received little attention from industrialised nations. They have argued that financial crisis solutions are the domain of the International Monetary Fund (IMF) and the World Bank rather than the U.N.

As of Monday, 126 countries among the 192 U.N. members had registered to attend the finance summit. Ten of the 14 world leaders expected to participate are from Latin America and the Caribbean. Just two are from Europe.

Developing countries feel they have been unrepresented at the international forums that have attempted to tackle the crisis so far. They say the clubs of G8 and G20 are dominated by rich nations, and measures adopted have centred on containing the fallout from the collapse of large financial institutions.

Putting the blame for the crisis on Wall Street and the west’s excessive consumption, developing countries grouped under the G77 say they have been the worst affected by the economic downturn, and want more reforms to the global financial system and more attention paid to their needs.

Martin Khor, executive director of the South Centre, a Geneva-based research organisation with 50 developing countries as members, told a news conference at U.N. headquarters this week that developing countries are not responsible for the financial crisis – but are now suffering more than richer developed countries.

Economic growth in developing countries is expected to drop from 8.3 percent in 2007 to 1.6 percent this year – a larger drop than in rich nations, he said.

In its most recent assessment, the U.N. estimates that some 60 poor and emerging markets will suffer falls in income per person this year. By the end of 2009, it says, there will be between 105 million and 143 million more people in poverty than if growth had continued at its pre-crisis levels.

Last fall as the world was reeling from the effects of the economic downturn, China was among the first to announce an aggressive fiscal stimulus package amounting to 586 billion dollars for 2009.

While some Chinese economists were quick to declare the death of the western model of economic liberalism, others called on Beijing to capitalise on the opportunity that the crisis presents for China to advance the role of its currency, increase its global leverage, and push for a bigger say in international bodies like the World Bank and IMF.

Chinese officials took cue. As flows of global capital fell, they used China’s huge foreign reserves to secure energy deals with Brazil and Russia needed for the country’s voracious economy to continue growing. Aided by a sharp downturn in global trade, they went on a buying spree, securing a series of land concessions in Southeast Asia.

Discarding a long-term habit of keeping a low international profile, Chinese officials stepped onto the international stage to send a message that in the wake of the global crisis Beijing intends to play a greater role in shaping the world economy.

In the run-up to the London G20 summit, central bank governor Zhou Xiaochuan called for a new reserve currency to replace the U.S. dollar, while vice-premier Wang Qishan appealed for developing countries to have bigger say in the world economic order. At the summit, Beijing agreed to chip in 40 billion dollars to the IMF – while the world body agreed to reform its system, under which China is likely to get more voting power.

Intoxicated with China’s own successful sustained economic model, some experts have predicted the recession may mark yet another milestone in the predicted shift of wealth and power from west to east. The economic data released by the government for May was better than expected – strengthening market expectations that the world’s third-largest economy could see an early recovery.

“Geithner needs to learn from China”, the China Business News said of the U.S. Treasury Secretary in a signed opinion recently.