“The US-China relationship is becoming the most important bilateral relationship in the world,” writes Stanley Crossick, the founder of the European Policy Centre, in a March blog post reflecting on the outcome of the recent G20 summit in London.
“The mix of [European, American and Asian] voices reflected in the London Summit communiqué represents substantial progress compared to the pre-crisis pattern, where the voices of the G7 countries, or more narrowly the United States and Europe, crowded out others,” writes Crossick. Despite this, he believes that “any impact of the London Summit on the global economy in the short term is unlikely”.
“China came out of the summit well,” argues Crossick, whereas Russia, the European Union and the United States will lose some of their influence:
- “Beijing has changed from a passive observer to an active global power,” while a “proposal by Governor Zhou of the People’s Bank of China to switch the basis of the international monetary system based on the US dollar to one based on SDRs (special drawing rights) was very interesting”;
- “Russia […] loses its privileged position as the only ‘unqualified’ member of the G8”.
- The EU “will lose some influence in the IMF because of the increased participation of China,” and;
- “The US has lost some influence as the crises began there, but President Obama played a highly responsible role in London and did not browbeat the Europeans on the size of their incentive packages and their refusal to increase IMF’s resources by the amount Washington wanted.”
“The European influence is to be seen in the decision to establish the new Financial Stability Board to ensure that the problem of inadequate regulation and supervision of the financial sector is resolved,” Crossick explains.
“The US was behind the emphasis on together restoring global growth. The decision to expedite the giving to developing countries more voting power in the IMF at the same time as tripling IMF resources was very much due to the Asian voice,” he adds.
“The notion of a G2 (US and China) exists but not a G3 (plus EU),” Crossick stresses. “Without China little can be achieved,” he continues.
Moreover, “China and some other developing countries will increase their GDP in 2009, but most developed and developing countries will register declines,” he adds.
Thus, though “the EU’s voice cannot be ignored,” “Beijing is likely to work more closely with Washington than Brussels,” Crossick concludes.