IMF Meeting Reveals Shift in Power To Asia From "West"

Shock of recent IMF meeting: extent to which Western leaders openly acknowledge Asian econ global dominance 4 present & future Analytically good but unclear how they will deal w new situation, both as "group" of some sort & individual countries
 
Oct. 19, 2010 - PRLog -- In Asia, it's a truism that, as Chairman Mao put it, "the wind comes from the East",

at least when it comes to the world economy.

But what was so shocking about the most recent IMF meeting in Washington

was the extent to which Western leaders now openly acknowledge the same reality -

not just about the present, but well into the future as well.

While that recognition is positive on the analytical level, it remains unclear, as this piece points out,

how they are going to deal with this new situation -

both as a "group" of some sort, and as individual countries.

At a private dinner before the recent IMF meeting in Washington finance

officials from seven world economic powers focused on the most vexing

international economic problem facing the Obama administration.

Over seared scallops and beef tenderloin, Treasury Secretary Timothy F.

Geithner urged his counterparts from Europe, Canada and Japan to help

persuade China to let its currency, the renminbi, rise in value.

Later the annual meetings of the International Monetary Fund ended with

a tepid statement that made only fleeting and indirect references to the

simmering currency tensions.

The divergence between the mounting anxieties over Chinese policy and the

cautious official response was a striking display of the difficulty of securing

international economic cooperation, two years after the financial crisis

began.

Above all, officials say, the crisis has shifted influence from the richest powers toward Asia and Latin America,

whose economies have weathered the recession much better than those of the United States, Europe and Japan.

“We have come to the end of a model where seven advanced economies can make decisions for the world without the emerging countries,”

said one European official involved in the weekend talks.

“Like it or not, we simply have to accept it.”

The shifting dynamics have most noticeably affected the United States,

which pushed more forcefully than its counterparts for stronger pressure

on China but has been unable to persuade them to stand with it at the

forefront of the debate.

In general, the Europeans have taken a far more conciliatory line toward China.

The French finance minister, Christine Lagarde, said, “It’s not

helpful to use bellicose statements when it comes to currency or to trade.”

In interviews, American and European officials involved in discussions over

the Chinese currency outlined several reasons a unified position

has been so hard to forge.

For one thing, China has moved adroitly to deflect criticism of its currency

policies, by pledging to move at a gradual pace and by pointing to other

sources of global imbalances.

This leaves Western diplomats struggling to strike the right balance between forceful rhetoric and patient cajoling in

pressuring China to act.

Another factor is that the most dire part of the crisis has passed,

and many countries are now more concerned with their own national economies and no longer feel the urgency to act in concert.

“We are moving from a consensual to a more confrontational period in

global economic governance,”

said Thomas Kleine-Brockhoff, senior director of policy programs at the German Marshall Fund of the United States.

Complicating the effort is a dispute between the United States and Europe

over how to change board representation within the I.M.F. to give greater

voice to the fast-growing economies that are propelling global growth.

The Americans want emerging countries, especially China, to have more

representation, and conceivably take on more "responsibility",

although it's unclear WHO is going to define "responsible."

But Europe is reluctant to give up some of its positions on the board.

And significantly, in the eyes of many countries, the United States has lost

some of the standing it needs to shape global policy.

Not only is Wall Street viewed by many as having initiated the world financial crisis,

but also, a number of countries fear that policies by the Federal Reserve are pushing down the dollar’s value.

“Other countries are no longer willing to buy into the idea that the U.S. knows best on economic policy,

while at the same time the emerging markets have become increasingly influential and independent” . . .

To read more at http://www.economywatch.com’, go to:

http://www.economywatch.com/economy-business-and-finance-...

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