HONG KONG — As much of the world continues to move toward a recession that many fear will be deep and prolonged, eyes increasingly are turning to China in the hope it can somehow help the rest of the world in its moment of need. Thus The Economist reported “China Moves to Center Stage,” and Time magazine asked, “Can Chinese Cash Save the World’s Banks?”
Late last month, leaders from 43 countries in Asia and Europe met in Beijing to discuss the worst economic meltdown since the 1930s. Even before the meeting, Jose Manuel Barroso, the president of the European Commission, called for cooperation from China, India and Japan to help avert a global recession.
“I very much hope that China can make an important contribution to the solution to the financial crisis,” he said. “It’s a great opportunity for China to show a sense of responsibility.”
Expectations are high because China has become a world engine of growth, with its economy having grown at an average of 9.6 percent a year for the last 30 years. The country now holds the world’s largest foreign exchange reserves, which stand at $1.9 trillion. Japan is in second place, with slightly more than half that amount.
In his keynote address at the Asia-Europe Meeting, President Hu Jintao declared that while China was willing to help, it was still a developing economy and what it could do was limited.
“The Chinese economy is increasingly interconnected with the global economy,” he said. “China’s sound economic growth is in itself a major contribution to global financial stability and economic growth. That is why we must first and foremost run our own affairs well.”
There might have been some disappointment when the Chinese leader said his country’s first priority was to run its own affairs well, and that growth of the Chinese economy was itself a contribution to the global economy. That is similar to China’s attitude toward alleviating world hunger. China says it has helped reduce poverty in the world by lifting millions of its own people from poverty.
That’s logical. On airliners, for instance, passengers are always told that in case of an emergency, they should put their own oxygen masks on before helping others, including their own children. To help others, one must first be able to take care of oneself. China’s attitude is actually not that different from that of other countries, all of which are trying to protect their own economies.
Japanese Prime Minister Taro Aso said the same before the U.N. General Assembly on Sept. 25: “As I see it, the task ahead for Japan is quite clear, namely, that Japan’s primary responsibility lies in invigorating its own economy. . . . In light of the size of the Japanese economy, the second-largest in the world, certainly this would be the most immediately effective contribution that Japan can deliver. I will work determinedly to realize this very contribution.”
The Chinese — and Japanese — attitudes certainly do not indicate any unwillingness to extend help to others. In fact, even before the Asia-Europe Meeting, China had agreed with Japan, South Korea and the Association of Southeast Asian Nations to create an $80 billion fund to fight the global economic crisis.
Moreover, Beijing has already accepted the American invitation to attend the international summit in Washington on Saturday, called by U.S. President George W. Bush. It is understood that, at the meeting, developing economies, China in particular, will play a much bigger role than before as the world’s developed and developing economies recognize how much they need each other.
Beijing is deeply conscious of its part in the globalized economy and knows that it is in its own best interest to do what it can to help stabilize, if not rescue, the economies of the West. As President Hu said, China wants to act “with a sense of responsibility.”
China is already feeling the impact of the drop in overseas demand. Tens of thousands of factories in the Pearl River Delta have shut down or are in severe difficulties. The Chinese economy grew by 11.9 percent in 2007 but slowed to 9 percent in the third quarter of this year.
The Chinese government has made it clear that it will stimulate domestic demand to maintain economic growth, albeit at a slower rate. But with a population of 1.3 billion, there is a huge potential market.
Frank Ching is a Hong Kong-based journalist and commentator (Frank.email@example.com).