DAVOS, Switzerland (Reuters) - The world turned its spotlight on attention-shy China at this year’s gathering of business chiefs and policymakers, pleading it to lead a global recovery and wave its wand to solve economic imbalances.
It got a halfway positive response.
China sent its biggest ever delegation of 54 executives to Davos, with a keynote speech from Vice Premier Li Keqiang and panel appearances from the deputy central bank governor and the head of the country’s biggest investment bank, symbolizing its status as a fully-fledged member of the world economy.
Despite that, the Chinese did their best to keep a low profile at the World Economic Forum, while firmly saying they would move at their own pace and on their terms and demanding the rest of the world pull its weight too.
China is trying to be a good citizen. Vice Premier Li and deputy central bank governor Zhu Min both pledged that Beijing would stick with moderately easy monetary policy even as the world’s third largest economy is growing rapidly.
By not curbing its runaway growth too aggressively, China is keeping the engine of world growth running and trying to spur domestic demand — a move which will help to correct global imbalances.
This stance won praise from senior officials, including the Group of 20 envoy from South Korea, this year’s chair of the global forum, and International Monetary Fund chief Dominique Strauss-Kahn.
But China does not want to rush.
Asked about Beijing’s credibility given that it made the same promises of addressing imbalances four years ago, Zhu Min said: “It’s a long process, it’s not an overnight thing. It will probably take another 5 years or 4 years. You will see improvement day by day, year by year.
“We need global coordination on structural change ... for us to increase consumption and for others to increase consumption or to increase savings,” he said.
The West is keen on China to play a bigger leadership role. It may even secretly envy China’s command economy.
“The world wants to hand the baton off to China,” said Stephen Schwarzman, chief executive of Blackstone.
“One reason why the West looks at China and perhaps overvalues its ability to be a global leader is simply the fact that it can make decisions when other parts of the world know what the problems are but can’t quite get there in terms of making decisions.”
China has started taking a role not just as the world’s growth leader but also with other pressing global issues, such as climate change.
Li said China would tackle climate change and ensure that economic growth became more efficient with regards to the use of resources and environmental concerns.
“The Chinese position has been quite positive and even in the climate change area it became more flexible,” Il Sakong, South Korea’s chief G20 envoy and presidential adviser, said.
But despite its meteoric growth, rural parts of China are still struggling with poverty and underdevelopment, suggesting that Beijing will want to focus on problems at home first and foremost.
Li Daokui, Director of the Center for China in the World Economy at Tsinghua University, said China was like the 16-year-old prodigy basketball player Yao Ming — who is already two meters tall but very young and going through growing pains.
“The height is there. However, the muscle isn’t there. The skills, the capacity isn’t there and moreover, the reading ability of the rules of the game isn’t there,” Li said.
“We are very busy dealing with domestic issues.”
The power shift toward the East will also transfer decision-making authorities away from the G7 to G20.
However, the consequences might not be all good, with power more evenly distributed in a multi-polar world. “One must expect in such a situation there will be more consolidation but more difficulty to arrive on any consensus. Therefore economic growth will slow down,” Tony Tan, chairman of Government of Singapore Investment Corp, said.
“It’s not a very optimistic prospect. When countries are rising, developing, it’s not a stable situation and I think the world will be forcibly a more uncomfortable place in years ahead.”
Any number of potential flare-ups — such as recent rifts between Beijing and Washington — could also jeopardize the willingness of China and the West to work together.
China threatened on Saturday to impose sanctions on U.S. arms firms and cut cooperation with Washington unless it cancels a newly-announced $6.4 billion arms sale to Taiwan, in an unprecedented move signaling China’s growing global power.
The dispute deepens a rift with Washington, which already encompasses trade, currency, Tibet and the Internet.
Editing by Mike Peacock