The recent G20 summit was a fiasco from start to finish. The purpose of the meetings was to help the global economy back on its feet after a long period of deterioration, however, the participating nations were unable to reach an agreement.
For once, Washington and Beijing were on the same side, against the common enemy- Europe. Beijing had been approached by the IMF and Europe prior to the summit to contribute money to the bailout fund, but after a number of rumours and speculations about what China would ask for in return and after empty comments from the Chinese vice finance minister Zhu Guan, who said that the rescue fund was an "important tool" with which to address the sovereign debt crisis, Beijing simply refused to help Europe save the Euro.
According to Steven Dunaway, CFR adjunct senior fellow for international economics, the Eurozone crisis “is a European problem…For the United States and for the rest of the G20, there’s only a very limited role they can play.” Both China and the United States are not in a position to strike credible compromises also when it comes to major challenges beyond Europe, like pushing for exchange rate flexibility and macroeconomic balancing, policies that have been at the centre of debate since the U.S. began to argue that an intentionally undervalued Renminbi unfairly supports Chinese exports.
Dunaway adds that taking into account China’s pending leadership transition, no Chinese official wants to “stand out and make a strong policy stance, particularly in terms of needed measures to help rebalance China’s economy.”
The French President Nikolai Sarkozy, called the Chinese President urging him to agree to contribute to his proposed €1tn (£864bn) European Financial Stability Facility (EFSF) firewall. However, even prior to G20 summit, doubts were rising as to how willing China would be to produce funds to buy European bonds or capitalise the European firewall fund due to the instability caused by the Greek crisis.
Consequently, with China unwilling to help the Eurozone by lending money to the IMF or by allowing more flexibility in its currency to help ease global trade and investment, Europe and the rest of the global economy continues to struggle.
The G20 summit only brought forth heated debate but the future of the Euro appears to be less certain at this stage than it has ever been.
Furthermore, the summit became a global manifestation of the power presently held by Beijing, and the impact that China has internationally. The fact that Europe needs China to save the Euro illustrates the dependence of the world on the Chinese economy. China’s action -or rather, lack thereof, further indicates that China is not afraid to act independently of international pressures and criticism.
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