It’s a common trick to make yourself look bigger than you are to win a fight. Rather rarer is for one of the world’s largest and fastest-growing economies frantically and consistently to try to hide its size. China, the 500kg panda in the global economic room, is trying an increasingly unconvincing tactic of squeezing itself into a corner and hoping no-one notices it is there.
Whether China’s GDP really is now surpassing America’s, as the International Comparison Program
reported last week, is a matter for
statistical debate – intense but inevitably inconclusive, given the uncertainties involved. What is clear is that China would prefer to take silver rather than gold in this particular event, an outcome for which Beijing
lobbied hard during the assessment.
China has repeatedly refrained from accepting that it is a leading power in the world economy with responsibilities to match. Yet a close examination of Beijing’s actions in a variety of different arenas shows not that China wishes to punch below its weight all the way down the fight card, but that it is choosing its bouts with great precision.
China’s manoeuvre during the GDP assessment is a close repeat of events in the International Monetary Fund a few years ago, when the fund’s members revised the “quota” contributions which determine each country’s voting share on the IMF board. While joining in the general clamour for more representation for emerging markets, China nonetheless lobbied quietly and successfully for its own quota to remain fractionally
below Japan’s. Accepting it was the pre-eminent economic power in Asia was clearly more conspicuity than it was prepared to countenance.
A slightly higher quota would have been largely ceremonial: it would have given China a marginally larger share of power in a board where most votes are unanimous, and it would not have removed the de facto US veto over particularly important decisions. But that, in a way, was the point. A symbolic increase in power was not sufficient reward for China to accept a larger proportion of blame when the fund is accused of imposing harsh conditions on its borrower countries.
In other international fora, too, China has steadfastly ignored efforts by others to increase its prominence. Before the elevation of the G20 as a policy forum as a result of the global financial crisis, a characteristic call of the global governance commentariat was for China to be invited to join the G8. The reality was that Beijing had already rejected numerous membership feelers put out by the existing constituents. It had no wish to be the odd emerging market out (plus Russia) and thus give the US a new and highly visible arena to expand its inexhaustible campaign of battering away at the Chinese government to allow its currency to rise.
Similarly, China resisted entreaties from Washington to play a greater role in the Doha round of trade talks, choosing instead to leave the representation of the developing world largely to Brazil and India. Having already caused great economic dislocation and aroused widespread resentment with its astonishing export performance in the real world, Beijing wisely saw no point in compounding its PR problem by throwing its increasing weight around in the negotiating room as well. China did suddenly
spring into action at the fateful ministerial meeting in 2008 when the Doha round in effect died, backing the other emerging markets in their defiance of the US and EU. But the round was already on its knees and slumping towards the canvas before Beijing helped administer the knock-out punch.
It would be wrong simply to conclude that China is a self-effacing diplomatic recluse. When its own interests as an industrialising export-oriented economy are directly threatened, Beijing moves ruthlessly to advance them, particularly when it can act under the political cover of a coalition.
Even though it argued to restrain its voting weight in the IMF, for example, China fought even more ferociously to prevent the IMF publishing any official conclusion that the renminbi was “fundamentally misaligned”. The issue so alarmed the fund’s then managing director, Dominique-Strauss Kahn, that he
prevented formal discussion of China’s economy in the executive board for more than three years, concerned about the dispute that might ensue.
When the G20 rose to prominence, and China was surrounded by a cadre of like-minded emerging markets (and, on this occasion, the export powerhouse of Germany), it
successfully fought off a variant on the undervalued currency campaign – this time a proposal by the US for governments to set binding targets for current account surpluses.
And at the Copenhagen climate talks in 2009, China corralled other emerging markets into blocking the setting of targets for carbon emissions, including squashing opposition from small island nations who felt that the rising sea levels threatening their very extinction were probably more important than bashing the US.
China is neither an instinctive isolationist nor an instinctive multilateralist. It was, after all, an observer and supporter, if not actually a member, of the Non-Aligned Movement of countries during the Cold War which sought to maintain independence from the influence of both Moscow and Washington. Rather than relying on existing multilateral fora, it has begun to create institutions which it can dominate, such as the
Asian Infrastructure Investment Bank, but they are in their early stages.
Through actions like the GDP campaign, Beijing does not seek to withdraw itself entirely from global economic policy-making. It does, however, want to be able to choose exactly when and where to engage. China optimises its risk-reward ratio by selecting issues that will have both a direct impact on its economy and in which it can gather allies. Accepting that it is the largest global economy, and thus volunteering for the title of undisputed heavyweight champion of the world, would severely circumscribe its ability to pick its fights.
The half-tonne Chinese panda cannot indefinitely manage to pretend to be asleep and escape notice. But its insistence that it is not, in fact, the largest animal in the room suggests strongly that it will be a long time before it comes out of the corner and starts running the circus.
