By Brian Klein, Special to CNN
Editor’s note: Brian P. Klein is an economic consultant and former U.S. diplomat who was based in China. The views expressed are his own.
In a rare and telling diplomatic snub this week, China refused to send People’s Bank of China Governor Zhou Xiaochuan to the IMF/World Bank meeting held in Tokyo. The slight, related to the ongoing stand-off with Japan over a disputed island chain in the East China Sea, says more about China’s prospects for greater global leadership than a bilateral territorial disagreement.
For several years now, China’s economy has grown along with its ambitions for recognition. Internationalizing the yuan as a reserve currency, more influence over international lending institutions and respect as a leading business and financial center have been chief among them.
But the meeting boycott this week marks the latest in a string of retaliatory acts, including using informal trade measures meant to punish countries acting in ways China dislikes. Imports from the Philippines, for example, were suddenly subjected to enhanced inspection and quarantine over a dispute in the South China Sea. Rare earth exports critical to Japan’s electronics industry were also halted in a 2010 island spat after Japan detained a Chinese fishing vessel captain whose ship rammed a Japan Coast Guard vessel. These steps suggest a troubling and regressive tendency in Chinese foreign economic policy.
Since joining the World Trade Organization back in 2001, Beijing has enjoyed many of the benefits of membership while at the same time using protectionist measures to give domestic industries significant advantage. Trade has been used increasingly as a political tool contravening over a decade of engagement to keep these two policy spheres apart.
Refusing to attend the annual international finance meeting will further damage China’s hopes for greater recognition. At a time when the risks of global recession are increasing, retrenchment adds doubts about any potential leadership role. While Beijing might think its status as the world’s second largest economy makes it vital to any discussion, the reality is that the world continues to turn without it.
Xi Jinping and the rest of China’s new leaders in waiting inherit a country in transition. Rising domestic wage pressure, a slowing economy, and renewed doubts about the security of joint venture intellectual property suggest China’s global economic influence may soon flag, not inexorably rising. If slower growth becomes a trend rather than a temporary blip and anti-Japanese business sentiment grows into a broader missive against foreign companies, the lure of China’s growing market would dim significantly.
Embracing the complexities of international discourse rather than shying away from them mark an important maturing stage. Equally important are policies that further open and encourage reform that increases international participation in China’s domestic economy. This enhances both the perception and reality that China is dedicated to continued global integration. Pulling a no-show at an international gathering in a neighboring country does not.