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"I believe that to meet the challenges of our times, human beings will have to develop a greater sense of universal responsibility. It is the foundation for world peace."

An illusion of Global Governance

May 3, 2009

By Jonas Parello-Plesner
Asia Times
May 2, 2009

Since the onset of the financial crisis there
have been suggestions to form a Group of Two
(G-2) consisting of the United States and China.
This proposal is based on the facts that China is
the largest creditor of the US, the US is China's
biggest export destination, and the strong
interdependence of their two economies provides a
foundation for joint action that can shape the
global economy. This thinking is tempting when
the Group of Eight is seen as reflecting an
outdated balance of power and the Group of 20 is
considered too diluted to respond to global challenges.

Yet a G-2 would give a false assumption about
stronger global governance and China would
probably not deliver in such a format. Let me explain why.

China's main focus is still its own economic
development. Re-read Premier Wen Jiabao's
statement at Davos on January 29, "[The] steady
and fast growth of China's economy is in itself
annimportant contribution to global financial
stability." Or look at the closing statement of
the National People's Congress: "We have prepared
enough backup firepower to deal with potential
greater difficulties, and new stimulus packages,
if necessary, will be launched."

The main priority is, very naturally, on getting
the Chinese economy going. That continues to be
the source of the Communist Party's legitimacy.
If that link is broken, it could spell trouble.
At the same time, 2009 is a sensitive year, full
of anniversaries that involve such issues as 1959
Tibetan uprising and the 1989 Tiananmen
demonstrations. Social disturbances because of
the financial crisis could be on the rise. China
will in many ways be inward-looking.

The responsibility gap

Some Chinese are flattered by the suggestion of a
G-2. It suggests China is a global power. It
isn't yet, and the Chinese realize that. None of
the Chinese experts in government, think-tanks,
and scholars that I have talked to are
enthusiastic about the concept. They all
underlined the potential responsibility gap on
China's part as part of a G-2. Some even saw it
as a potential trap for China that could expose
it on the world stage. China is active in
international reform now because its focus on
internal growth converges with a more active
foreign policy in financial and monetary matters.
China is on the center court of international
decision-making to protect a system of economic
globalization that has provided China with many benefits.

That is reflected in diplomatic efforts
undertaken with regard to financial reform and
the International Monetary Fund, as well as
floating suggestions regarding a new reserve
currency. China is worried about the future value
of its assets in dollars. Japan, South Korea, and
Taiwan have similar concerns about foreign currency assets.

China's new activism should be encouraged as part
of its transformation into a responsible
stakeholder. Nevertheless, China might not
maintain its current profile - much depends on
the duration and severity of the financial crisis
- and could return to its more traditional "stay
low" diplomacy if external conditions for
continued internal growth are again secured.

Don't put all your American eggs in one basket.
Former National Security Council director Dennis
Wilder has argued that the US "will, however, pay
a heavy price with our long-term friends and
allies in Asia by referring to increased economic
cooperation with China as a new G-2". A G-2 would
antagonize allies and friends - both of China and
the US - without providing extra value. If it's
only size that counts, then why not form a G-2
consisting of the European Union (the world's
largest economy) and Japan (number three) instead
of between number two (US) and four (China)?

Furthermore, economic cooperation between the US
and China is much needed but world governance is
still about more than economics. Will China
really help in securing Pakistan or in
Afghanistan? European soldiers are serving
alongside Americans in Helmand, not Chinese. Will
China really secure a nuclear-free Korean
Peninsula or does it still prefer stability and
crisis avoidance to crisis resolution?

Here, US cooperation with allies in South Korea
and Japan is essential. And if there was a
comprehensive settlement with North Korea,
Europeans would be asked to contribute as they
did with the Korean Peninsula Energy Development
Organization in the 1990s. China's foreign policy
is still deeply rooted in non-interference and at
its best conflict-avoidance, although Beijing is
moving toward a more responsible stakeholder-approach in multilateral settings.

China might also introduce its parochial concerns
into global governance if given a G-2 role. Look
at China's recent annoyance at India's loan from
the Asia Development Bank, presumably because of
the unresolved border dispute. Should
International Monetary Fund loans in the future
be given on conditions over a country's view of
Taiwan or the situation in Tibet?

The US-China relationship is one of the most
important bilateral relationships. There is need
for tight coordination between the US and China
and perhaps some version of a Plaza Accord would
benefit both countries. Yet, to turn that into a
G-2 will create an illusion of global governance
that will not deliver on its promise.

Jonas Parello-Plesner
( works as senior
advisor with the Danish government on Asian
affairs. He is on the board of editors of the
Danish magazine Raeson ( He is
currently on research leave studying East Asian
political integration meeting with think tanks,
experts and commentators in East Asia's major
cities. The views expressed are entirely his own.
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