China Wields Economic Leverage

Stephen Fidler / Andrew Batson China sent a strong signal with its active role in last week's summit of the Group of 20 industrialized and developing economies: The country's leaders intend to play a growing part in shaping the global economy. After years of staying largely on the sidelines at international economic forums, Beijing took on a more assertive role at the summit, pushing trade and antiprotectionism up the agenda and working to downplay other issues such as the environment. It also hinted it would not be afraid to use economic negotiations to further political goals, such as its insistence on sovereignty over Tibet. China's actions show a new eagerness to be treated as a major global player, even as it insists that it remains a developing country, whose still relatively poor population shouldn't be expected to fund large amounts of international aid. The nation's rising profile presents a sharp contrast to its historically low-key diplomacy -- it has, for example, used its United Nations veto less than the other permanent members of the Security Council. China's official media have given the G-20 summit rave reviews, painting it as an occasion where Chinese President Hu Jintao boosted his nation's stature and was listened to respectfully by rich countries. It helped that the most concrete achievements of the summit -- governments' agreement to boost funding for trade-finance programs, development agencies, and the International Monetary Fund -- will primarily benefit China and other emerging economies. Beijing played a big role in downplaying the summit's emphasis on the environment, helping sink an effort by U.K. Prime Minister Gordon Brown to commit governments to spend more cash on so-called green projects, Western officials said. As one of the world's biggest polluters, China was keen to keep green language out of the summit communique, according to people familiar with the matter. In its final communique, the G-20 reaffirmed its 'commitment to address the threat of irreversible climate change,' but serious discussions were left to a United Nations climate-change conference in Copenhagen in December, as China wished. Chinese intervention also helped push trade and protectionism up the G-20 agenda -- though the summit failed to agree on a commitment to restart the Doha round of trade negotiations, aimed at lowering barriers around the world. China also furthered long-standing noneconomic objectives in the run-up to the summit. In late October, Mr. Brown's government announced a shift in policy and recognized Tibet for the first time as part of the People's Republic of China. British officials say this change was to correct an 'anachronism': the U.K. had hitherto recognized Beijing's control of Tibet but not its sovereignty. But they acknowledged it helped smooth engagement between the two governments. In contrast, Mr. Hu's relations with French President Nicolas Sarkozy were notably strained at the summit, Western officials said, following Mr Sarkozy's decision to defy China and meet with the Dalai Lama, Tibet's exiled spiritual leader, in December. The two clashed on one of Mr. Sarkozy's main objectives: clamping down on tax havens. China wanted to ensure that two of its territories, Hong Kong and Macao, wouldn't be criticized and was concerned that China wasn't a member of the body charged with policing tax havens, the Paris-based Organization of Economic Co-operation and Development. The resolution to that clash was brokered by President Barack Obama, according to U.S. and other officials. The compromise, they said, followed a pledge by China that the two jurisdictions would be brought into line and an agreement that the G-20 would 'note' but not 'endorse' a list of tax havens that failed to share tax information. 'What makes the Chinese see red is when they see they are being bossed about by an international organization in which they don't have a place,' said an official involved in the summit.