G-20 SUMMIT

U.S.-China relations in focus at 'G-2' summit

By Jaime FlorCruz
Beijing Bureau Chief

BEIJING, China (CNN) -- If money is power, China is now in a powerful position to play a critical role at the Group of 20 summit in London.So powerful, in fact, that some analysts speak of a "G-2", referring to the first meeting between the new U.S. president and his Chinese counterpart on the sidelines of the G-20. What matters most in the G-20, some say, is Barack Obama and Hu Jintao's meeting on the eve of the summit. "This is a summit of symbolism, where the meeting itself is the message," said China analyst Victor Gao.

To be sure, the closest U.S. allies are Great Britain in Europe and Japan in Asia. But with its growing economic and military clout, China is now a major player at the G-20.

China "appears to be actively setting the agenda," said Glenn Maguire, economist at the investment bank Societe Generale. China is awash with cash, its economy is still growing and its banking system is solvent. It is seeking a bigger role as global powers seek to reshape the economic and financial framework."It's almost impossible for China to engineer enough of an increase in domestic consumption to make up for the contraction in demand that we're seeing in Europe and the United States," said Michael Pettis, who teaches economics at Peking University. Put simply, Hu Jintao needs President Obama to succeed with his economic prescriptions -- and vice versa.

Such a congruence of goals is viewed positively in Beijing. "The degree of close U.S.-China cooperation in the process of coping with the global financial crisis will directly affect how fast the global economy can extricate from the difficult time," said a commentary in Global Times, a state-run Chinese newspaper.Rather than alluding to a goodbye to the U.S. dollar, Zhou may as well be making a case -- implicitly -- for including the (Chinese) renminbi into the list of currencies when the International Monetary Fund and the World Bank work on the SDR in the future," Zha explained.

Meanwhile, China hopes the G-20 meeting will reach a consensus on how to deal with the global crisis.Said Victor Gao: "It is equally important to identify the root causes, and make fundamental changes to the international financial system, including cross-border financial regulation, increasing transparency, bringing the hedge funds into the regulatory framework, enhancing risk management, and preventing countries from excessive and irresponsible financial and budgetary activities," Gao said. Pointing the finger squarely at the United States, he said China hopes the U.S. will learn from its mistakes to avoid a repeat of the crisis.

Before leaving Beijing for London, President Hu Jintao remained circumspect. "We will continue our contribution to international economic development," he said in an interview with Xinhua News Agency. He called for efforts to resist trade protectionism while also calling for a revamp of the international financial system. 

My comment

This week's London Summit brings together the leaders of the world's 20 largest economic powers, known as the Group of 20, to discuss the global financial crisis and decide new measures to set the world on a more stable economic footing.