FOCUS: China Seen Seeking Practical Outcome From G8 Summit
July 07 2009 - 6:21PM
Dow Jones News
When Hu Jintao meets other leaders at the mountainous,
earthquake-ravaged town of L'Aquila, China's president is unlikely
to make any earth-shattering statements, but will adopt a practical
approach amid debates over the world's hot economic and political
issues.
China's Vice Foreign Minister He Yafei said earlier that the
annual summit of the Group of Eight powers is "not representative
enough" and that the Group of 20, which will hold a forum in
Pittsburgh in September, has played an important role in tackling
international issues such as the financial crisis.
Taking that as a clue, observers believe Hu's activities in
L'Aquila will focus more on laying ground about how China wants to
play its role in the G20 summit, apart from making a persistent
call for giving emerging nations a stronger voice in global
matters.
"Hu will likely target more practical outcome" at the summit,
such as seeking ways to consolidate China's still-fragile economic
recovery, and use the summit as a channel for "valuable dialogues,"
said Eurasia Group analyst Nicholas Consonery.
Hu will likely give a nudge to the widely watched issue of
diversifying the international monetary system and call for more
global coordination in regulatory scrutiny, Consonery said.
However, he will shy away from being too critical in any formal
statements, Consonery noted.
In addition, analysts expect Hu will use bilateral meetings on
the sidelines of the summit to strengthen economic and trade ties
with developed and emerging countries. He also wouldn't ignore any
opportunities to express China's objection to trade protectionism,
they say.
"Beijing will take quite a strong line against trade
protectionism, primarily due to its strong desire to reinvigorate
the flagging export sector amid the economic downturn," said IHS
Global Insight analyst Sarah McDowall.
However, China itself has aroused international criticism in
recent weeks due to its policy of giving exporters larger tax
rebates, and banning government agencies from purchasing imported
goods, except where there is no existing substitute, McDowall
said.
But Beijing is likely to continue with its current trade
practices, she said. China can't afford to retract its preferential
quotas and export duties while its economic-stimulus program has
spurred a wave of infrastructure projects across the country, which
will benefit from cheap access to materials, she said.
A Chinese foreign-ministry official said Hu will hold bilateral
meetings with South African President Jacob Zuma and Mexican
President Felipe Calderón Hinojosa on Wednesday, the opening day of
the G8 summit, and will meet U.S. President Barack Obama on
Thursday.
South Africa will be a key country for China to secure supplies
of resources, such as iron ore, to feed its strong domestic demand,
especially after Chinese companies' expansion into Australia's
mining sector met setbacks recently.
Rio Tinto PLC (RTP) last month walked away from a US$19.5
billion alliance with Aluminum Corp. of China Ltd. (ACH) , turning
instead to a giant rights issue to pay down its debt.
Consonery said it also "makes sense" for China to discuss with
Mexico about bilateral currency swaps, as well as the possibility
of using local currencies for trade settlements. Doing so would
help foster China's exports and push forward yuan's
internationalization as Beijing's long-term goal, he said.
"Certainly China will like to see that to happen," he said, but
he added it is unclear if Mexico will welcome such an idea. China
has reached currency swap agreements with a number of countries
including Argentina.
Any small pickup in exports will greatly help revitalize China's
economy, which has been recovering slowly.
China's first-half exports fell 21.7% from a year earlier, Vice
Commerce Minister Yi Xiaozhun said Saturday, a slight improvement
from the 21.8% decline in the first five months of the year.
But Commerce Minister Chen Deming, who will accompany Hu to the
L'Aquila summit, said Tuesday that China's exports are likely to
continue to get hurt by the weak external demand in the second
half.
-By Victoria Ruan, Dow Jones Newswires; 8610-6588-5848;
victoria.ruan@dowjones.com