G20 Summit has become a G2 Summit
The dialogue between the U.S.A and China will become the most important contribution in the London April 2nd – 3rd 2009 meeting.
TThe U.S and China will play front figures in the Summit in London 2009, and will give a guiding star for the G20 countries in the years to come. The Economist wrote this in a coloumn the other day.
The power structure in the world has become polarized between the U.S and China, replacing some of the old patterns of power existed in the 90’s.
The U.S is severely damaged during this economic crisis, and the supreme world power is no longer alone on the arena to compete for this role.
The leadership of China has not yet told the world what kind of demands and offers they bring to the summit in London. However, signals before the meeting indicates that China would like to contribute to the IMF capital fund, in exchange for more influence in the IMF.
The CEO of IMF, Dominique Strauss-Kahn, has told that IMF need to double its reserves to 500 billion USD. Experts have indicated that the fund will need to be tripled. IMF is in need of extra capital in order to sustain the support to the damaged economies around the world. There are few countries with the amount of money needed for this capital expansion in IMF, apart from China.
Leaders around the world has become more silent about human rights issues before this summit, and this may be a signal that the leaders of these countries have become aware of Chinas power.
The central bank boss in China suggested a short time ago to replace the USD as world currency and to be replaced by a new currency which should be controlled by IMF. We might see a China which will broadens its influence of power through IMF and other global important institutions, and this could be the first step.
The leadership of China has become more and more visible with its power to influence global political arena. However, previous leader Deng Xiaoping gave his successors an advice not show Chinas potential of power, and keep a low profile in order to hide the capacity of influence of China.
China has been in the spot light the last few years when it comes to cyber crime and cyber espionage.
Canadian researcher discovered a large international cyber espionage effort recently. China denies they are behind these efforts, and has also denied previous accusations when british and American intelligence independent of each others revealed extensive cyber espionage efforts during the last 18 months.
Another signal of Chinas power of influence is its increase in defence budgets by 15% during the times of economic crisis. This effort demonstrate the economic power of the country, and is one of the first times we see China demonstrate an openness about this issue, as if they want the world to know about it, and be reminded about its power.
Another signal of power of influence is when China decided to cancel a meeting with EU when EU leaders decided to have a meeting with Dalai Lama December 2008.
EU has become the largest trade partner to China. This also makes EU dependent upon China and vica versa. This dependency will maybe be played out as a negosiation card in the G20 Summit in London.
The G20 meeting can become a G2 meeting, as it’s the first time the Chinese and American leaders are meeting, and they need to touch base on each others standings. It will take time before any decisions of importance can be made between the two countries as it will have major ramifications to the global economy.
China would like some concrete to come out of this meeting that is for sure, as they are hungry for power and to put some directions that will increase its power in the global financial markets. China has already demonstrated towards the U.S that they have economy enough by buying up state bonds in the U.S. This card can also be revealed to the U.S as a trade to get more influence in major institutions in the world and to set directions of what currency should have more influence in the next decade.
G20 could therefore have become the G2 Summit where the rest of the world has to sit in and listen to what is decided and what is to come.
Germany and France want to play an important role in this Summit, by making strict demands to the Summit participant ahead of the meeting for regulations of the financial market, especially the hedge funds.
Russia has indicated that they want their currency to play a more active role in the financial system. However, they have made their position very difficult as they have used the oil and gas in an energy political power game, which both the U.S and EU dislikes very much.