The world needs China to stay engaged in international economic and financial discussions.
The noticeable absence of senior Chinese delegates at two of the largest events on the banking calendar was disappointing, because of the signals China, as the world’s emerging superpower, is sending to the international community.
The withdrawal of the Chinese central bank governor, finance minister and state-owned banks from the International Monetary Fund (IMF) annual meeting in Tokyo came as tensions increased with Japan over disputed islands in the East China Sea. And the snub was extended by major Chinese banks to Sibos, the annual conference of the Society for Worldwide Interbank Financial Telecommunication (Swift), hosted this year in Osaka.
Such action leads to questions about China’s foreign policy and the course international relations will take once the country’s leadership transition is complete.
These territorial disputes are a legacy of the region’s colonial history, from a time when China was weak and the demarcation of its borders did not hold the same importance. Today, China stands as an economic giant, whose role in the international community is becoming increasingly important.
Territorial disputes
In a paper published earlier this year, Tung Chee Hwa, vice-chairman of the National Committee of the Chinese People’s Political Consultative Conference, noted that China has already resolved territorial disputes with 11 of its 14 neighbours. While its military spending is large, it is comparatively low at 1.5% of gross domestic product, says Mr Tung, and is defensive in nature.
Nonetheless, as a superpower in the making, such economic and military strength makes observers uneasy, especially as China could have a destabilising influence on the world if it misplays its hand at foreign policy.
And the latest dispute with Japan comes at a sensitive time, not just in terms of China’s leadership transition, but also in terms of the fragile global economy and the upcoming US presidential election. The IMF meetings are an important opportunity for China’s policy-makers to coordinate their views on the global economy with their international counterparts; an opportunity missed on this occasion.
The US presidential debates have focused on China as a rising superpower, but not in the sense of a cold war-style ideological divide backed by military force. Instead, China’s power, and threat, is its economy and the impact that it has on others. In an increasingly interconnected world and at a time when the economic recovery is fragile, it is in no one’s interests for a territorial dispute to flare up into something that has repercussions for the global economy.
