The Telegraph
Since 1st March, 1999
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China steals the show
- Biggest lender to US grabs attention of media and NGOs

Cancun, Sept. 15: There is a side show in Cancun: a side show which is potentially more significant than the main show of the World Trade Organisation’s (WTO) fifth ministerial conference.

The side show is China. The Chinese delegation here has all the swagger of a country, which is now the biggest lender to the US — yes, to the US, which is the world’s biggest economy.

Did you know that China now holds $290 billion in American government debt in US treasury bonds' That is in addition to China’s annual trade surplus with the US which has crossed $100 billion! This alone should be some food for thought for those in India who question New Delhi’s wisdom in seeking an accommodation with Beijing.

Cancun represents China’s maiden participation in an international economic event of this scale since it became People’s Republic of China more than half a century ago.

China was kept out of the WTO until December 11, 2001. So this is the first time China is taking part in a WTO ministerial meeting as a member. The Chinese delegation here is one of the most sought after delegations among the media, the non-government organisations (NGOs) and even by other delegations. It is also one of the most opaque.

But commerce minister Arun Jaitley used his persuasive powers — and the goodwill created by the Sino-Indian co-operation in the Group of 22 nations here — to convince Lu Fuyuan, his Chinese counterpart, to be the virtual spokesperson at Cancun for developing countries on export subsidies.

Once Lu launched himself on the subject, there was no turning back. China was forced by the US and the ‘big boys’ in the WTO to eliminate export subsidies as the price of joining the global trade body.

The Chinese don’t turn the other cheek when they are slapped on one. So, now with all the traditional passion of an offended Chinese nationalist, Lu wants the rich nations to do what China was forced into about two years ago.

Lu’s only problem is that he is not articulate like Jaitley. Not even in Chinese. So, his ambassador to the WTO, Sun Zhenyu, steps in with equal missionary zeal.

The best way to get to the Chinese delegation is through the Chinese media, which has an army of reporters here. Unlike the Indian newspersons from the “free press”, the Chinese media here is an extension of their delegation to Cancun.

For the present, Indian reporters are a good flavour with Chinese newspersons. If they like you, they will take you to the Chinese delegation.

The Chinese delegation’s statistics, their public documents and what you read — between the lines — in their howsoever cryptic comments all point to one thing. In the second half century of the People’s Republic’s existence, China intends to catch up, if not overtake, the US as the world dominant economic power.

It may come as a surprise to many Indians that China is now keeping helping the US economy to stay afloat. Consumption is at the core of the American economy and the Chinese are feeding America’s penchant for more debt by lending to the US.

Economists predict that by next year, America’s debt will be six per cent of its gross domestic product (GDP).

The biggest emerging global trade dilemma is not being discussed at the WTO here. It is that huge Chinese savings are being pumped into the US economy so that Americans can keep buying Chinese goods.

A day after the WTO meeting opened here, the US department of commerce released July trade figures in Washington. It showed that America’s trade gap with China widened to a record $11.34 billion in July compared with $9.9 billion in June.

The respect that China’s delegation is getting in Cancun is a reflection of Beijing’s win-win situation with regard to the US. That China is now America’s biggest creditor. And the Chinese even profit from it by selling more and more to the US.

Where will it end' Either the US will become insolvent when some of its creditors finally decide that it is no longer viable to lend money to Americans.

The other likelihood is that China may go into political turmoil or its economy may run into trouble and the nature of its ties with the US may change altogether.

Which is why, hinting at a conspiracy, Chinese reporters here say they have serious doubts about how the SARS disease began in China. After all, they point out, it put a brake, altogether brief on China’s economic activity.

Not everyone here, though, is in awe of the Chinese. The Mexicans, hosts to WTO in Cancun, are bitter. They continue to lose jobs and factories to China. “Mexico has nearly lost the battle on low-skilled, labour-intensive industries where it cannot compete with China...” investment company Merrill Lynch said in a recent report.

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