China silent on bailout assistance
BEIJING - China got what it wanted in Washington's financial summit - a promise of a bigger role for developing countries in global finance - but gave no sign yesterday whether it will respond by using any of its $1.9 trillion in reserves in a bailout fund.
China has been pushing for developing countries generally - and itself specifically - to have more influence at the International Monetary Fund and other global bodies. Analysts say that might be Beijing's price to give in to foreign appeals to dip into its reserves and contribute money toward an IMF emergency loan fund for struggling countries.
The Washington summit was an "important and positive" step toward "the reform of the international financial structure," foreign ministry spokesman Qin Gang said in a statement. It made no mention of possible bailout contributions, and a man who answered the phone at the ministry press office said he had no information.
Leaders from 21 nations, including China, and four international organizations attended the emergency two-day summit intended to address the financial crisis sweeping the globe.
Summit participants vowed Saturday at the conclusion of the two-day conference to cooperate more closely, keep a sharper eye out for potential problems and give bigger roles to fast-rising nations. But the leaders avoided many of the harder details, leaving them to be worked out before their next summit, after President George W. Bush is gone and President-elect Barack Obama is in the White House.
China says it will cooperate with the IMF but Chinese officials say its most important role will be to preserve global growth by keeping its own economy healthy. Beijing announced a $586 billion stimulus package last week, at a time of slowing economic growth and fears that falling exports could lead to layoffs and factory closings.
"China's economic power is growing, so China could contribute and help ease the financial crisis," said Wu Jinglian, a prominent economist and cabinet adviser. "But the first priority is to keep our own economy growing. That will benefit every country in the world."
British Prime Minister Gordon Brown has appealed to Beijing and oil-rich Middle Eastern governments to contribute to an IMF fund for emergency loans. Japanese Prime Minister Taro Aso repeated that appeal in Washington and pledged $100 billion to the fund.
Other developing Asian economies came away from the Washington meeting with a promise of more financing that analysts said should help credit-starved exporters and calm markets from South Korea to India. The statement promised greater access to IMF lending for developing countries but gave no details on the size or possible conditions of lending.
"That will be extremely important if it can be done," said Michael Buchanan, chief Asia economist for Goldman Sachs.
"We have seen evidence of trade financing, as well as financing more generally for emerging markets, deteriorate," he said. "If the G20 and IMF and donor countries can provide financing, that will help to alleviate that. That will be very significant."
Exporters throughout Asia that depend on credit to pay for raw materials and to finance shipments say business has plunged as access to lending dries up.
Access to IMF loans could help governments in South Korea, India, Indonesia, and other economies where investor anxiety about a possible scarcity of foreign currency has driven down exchange rates, said Citigroup economist Yiping Huang. South Korea's won has fallen by 33 percent against the US dollar this year as investors pulled capital out of the country.