Along With Aid to Other Nations, Beijing Offers Up Criticism of the West
BEIJING -- With Jamaica's currency in free fall, unemployment
soaring and banks heavily exposed to government debt, the
Caribbean island's diplomats went into crisis mode earlier this
year. They traveled to all corners of the world to seek help.
Jamaica's traditional allies, the United States and Britain,
were preoccupied with their own financial problems, but a new
friend jumped at the opportunity to come to the rescue: China.
When contracts for loan packages totaling $138 million were
signed between the two countries in March, China became
Jamaica's biggest financial partner. Headlines in Jamaica's
leading newspapers, which only a year ago were filled with
concern about China's growing influence in the region, gushed
about its generosity.
"The loan couldn't have come more in time and on more preferred
terms," E. Courtenay Rattray, Jamaica's ambassador to China,
said in an interview. While the island nation continues to value
its close relationships with Western powers, he added, in some
respects Jamaica has more in common with China. "Those are
developed countries. They don't have such an in-depth
understanding of the development aspirations of Jamaica as does
China," he said.
Overseas aid and loans are just one way China is asserting
itself in its new role as a world financial leader. While
polishing China's own image, Premier Wen Jiabao and other top
leaders have blamed the West for the global economic crisis.
Chinese officials increasingly are challenging the primacy of
the dollar, warning other countries about the danger of keeping
reserves in just one or two currencies, such as dollars and
euros. And as the global economic crisis has eroded faith in
U.S.-style capitalism, there's growing talk that a new "Beijing
Consensus" will replace the long-dominant Washington Consensus
on how developing countries should manage their economies.
Coined by British economist John Williamson 20 years ago, the
term "Washington Consensus" refers to a standard set of policies
-- including privatization of state enterprises, free trade,
deregulation and restraint in public spending -- that the
International Monetary Fund, the World Bank and the U.S.
Treasury Department have long urged on debt-ridden nations,
particularly in Latin America.
A fierce debate has broken out among academics and financial
policymakers about how to define the Beijing Consensus, or even
whether such a thing exists; many say that it is a loose package
of political points rather than an economic model, and that
there is no formal effort by the Chinese government to promote
it. But some experts are already calling it a challenge to the
existing order.
"It is very possible that the Beijing Consensus can replace the
Washington Consensus," said Cui Zhiyuan, a professor of public
policy at Tsinghua University who edited a recent book on the
subject. "Since the crisis, the world doesn't have as much
confidence in the U.S. economic model as before."
In a report last month titled "The Beijing Consensus," South
Korea's Ministry of Strategy and Finance sounded an alarm over
China's aid and loans. Developing countries that accept Chinese
assistance, it warned, may lower their guard and gravitate
toward a Chinese-style economic model.
Jamaica's Rattray dismissed those fears as overblown. China's
financial assistance to his country came with "no requirement to
adopt specific macroeconomic policy approaches," he said, and
there is "no debate about the government of Jamaica's commitment
to a free-market economic model."
Cheng Enfu, an economics researcher at the Chinese Academy of
Social Sciences, a government-affiliated think tank, said he
defines the Beijing Consensus as promotion of economies in which
public ownership remains dominant; gradual reform is preferred
to "shock therapy"; the country is open to foreign trade but
remains largely self-reliant; and large-scale market reform
takes place first, followed later by political and cultural
change.
The global economic crisis, Cheng said, "displays the advantages
of the Chinese model" and has already expanded China's
influence. "Some mainstream economists are saying that India
should learn from China; Latin American countries are trying to
learn from China. When foreign countries send delegations to
China, they show interest in the Chinese way of developing,"
Cheng said.
Barry Sautman, a political scientist at Hong Kong University of
Science and Technology, said in a research paper that Western
academics often deride the Chinese model as "economic growth
without the constraints of democratic institutions." But, he
argued, the emerging Beijing Consensus "takes seriously some
aspirations of developing states often ignored or opposed by the
West," such as "a more equitable international distribution of
wealth and power."
As Beijing grows more assertive in international finance, it is
working inside as well as outside existing organizations. In
January, it joined the Inter-American Development Bank -- which
is active in Latin America and the Caribbean -- as a donor
country. It is in talks with the IMF to increase its
contribution to the fund in exchange for more of a say in IMF
policies. And in Asia, it is leading the push by the Association
of Southeast Asian Nations for a regional fund that will compete
with the Asian Development Bank.
This week, China's allies Kazakhstan and Pakistan -- both of
which recently got new loans from China -- threw their support
behind calls from China's central bank governor, Zhou Xiaochuan,
to create a new world or Asian reserve currency to replace the
dollar. Venezuelan President Hugo Chávez, who also signed a
credit line with China recently, has backed the proposal.
In the past five months, China has signed $95 billion in
currency swap agreements with six countries that now hold part
of their reserves in yuan. The government has also begun to
allow companies in southern China to settle contracts with
foreign neighbors in yuan instead of dollars or euros.
Nouriel Roubini, a professor at New York University who as far
back as 2006 predicted a U.S. economic collapse triggered by a
housing bubble, said in an interview that the financial crisis
has shown that "different countries grow in different ways, and
nobody has the monopoly on that type of wisdom." While he does
not expect any immediate change in the international monetary
system, he said, in five to 10 years "the Chinese currency could
be the new reserve currency."
But Michael Pettis, a senior associate at the Carnegie Endowment
for International Peace and a professor of finance at Peking
University, says China's recent moves are more about public
relations and aiding diplomatic allies than a true effort to
remake the global financial system or to push a new model of
development. Beijing has long used foreign aid to encourage
developing countries to stop recognizing Taiwan -- as Jamaica
did in 1972 -- and the talk about creating a new international
"supercurrency" may be mostly a warning to the United States not
to cover mounting deficits simply by printing money.
"It's about signaling concern about U.S. monetary policy,"
Pettis said.
At an economic forum in the southern Chinese city of Boao last
weekend, China's leaders seized every opportunity to criticize
Western countries and institutions.
China's top banking regulator, Liu Mingkang, called the recent
Group of 20 meetings in London and Washington "mainly lip
service without many concrete actions." Former vice premier Zeng
Peiyan said that if the United States wants to continue
receiving "foreign funding support," it should guarantee the
value of its Treasury securities to countries that buy them. And
Zheng Xinli, deputy head of the China Center for Economic
Exchanges, an influential new research center, called for a new
Asian development bank to compete with Western-dominated
institutions.
By Ariana Eunjung Cha, Washington Post Foreign Service
Researchers Zhang Jie in Beijing and Robert E. Thomason
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