Several events this year mark China’s rise in international monetary affairs. On 26 January 2016, the International Monetary Fund (IMF) increased China’s voting share from 3.82 percent to 6.09 percent. On 1 October 2016, the Chinese Yuan (CNY) will become the fifth currency in the basket of the IMF’s basket of leading international currencies, which so far consists of the US Dollar (USD), the Euro, the Japanese Yen and the Pound Sterling.
China has a good record in leaning against the wind of global economic turbulences. In the aftermath of 9/11, China helped to prop up financial markets by abstaining from a panic sale of dollar-denominated assets. Seven years later, during the US sub-prime crisis, the Chinese government launched the world’s largest fiscal expansion program to prevent a long worldwide recession. Today, China pays the price for this overinvestment as excess capacities in many industries now plague the country in times of lower domestic and international demand.
After the G20 summit concluded in Hangzhou, commentators in China’s party-led media presented proud accounts of how first-time host China successfully steered the meeting on global economic governance. The international gathering benefited from “Chinese wisdom”, according to accounts in party-state media.
If Deng Xiaoping were alive to attend the G20 summit in Hangzhou this September, he would probably conclude that things have gone according to plan. The 21st century was supposed to be the time when China would join the club of wealthy nations and return to the international stage – having been preoccupied with wars, revolutions and the recovery from all this frenzy throughout the previous century.
One question will overshadow the G20 summit in Hangzhou like no other: Where will global growth come from? The G7 leaders already made that clear at their summit in Japan in May when they declared: “Global growth is our urgent priority.”
Over the past decade, China has made remarkable strides in its nuclear weapons capabilities. The military parade last September, ostensibly to commemorate the 70th anniversary of the end of the Pacific War, rolled out a series of new nuclear-capable missiles in a gesture to underline China’s military advances.
European Commission president Jean-Claude Juncker has all but declared a trade war on China. “The EU will defend its steel industry,” he said after the EU-China summit in Beijing in mid-July 2016. “We will use all the means at our disposal.” China should stop dumping steel on European markets, he said, or else the EU would not grant China the status of a market economy under WTO rules, which Beijing hopes to secure this year.
Weaning China off dependence on foreign knowledge is a long-standing goal of China’s leadership, embodied in successive policies to promote technology transfer, research output and patent filings. China’s president Xi Jinping recently declared that “the situation of our nation being under others' control in core technologies of key fields has not changed fundamentally, and the country's S&T foundation remains weak.”