Ministry: The ‘Beijing Consensus’ poses risk

China’s tenacious economic growth, although dented by the ongoing economic turbulence, is being hailed by many Koreans as just what is needed for their ailing economy.

But looking at how China paves the way for growth and how strategic minded it is could leave many locals also wary of the country’s largest trade partner, according to the Korean government yesterday.

In a special analysis report titled “Beijing Consensus,” the Ministry of Strategy and Finance sounded an alarm over China’s economic influence on the global stage, which has gained momentum during the economic crisis.

It said China’s hefty currency swap deals, as well as its increasing aid and investments in foreign countries are letting beneficiary countries lower their guard and making them more accepting of a Chinese-style economic model.

That could be a threat to Korea, which is also bidding to increase influence over those developing countries that are rich in natural resources, the ministry said.

“The Beijing Consensus is increasingly becoming a buzzword these days and that has significant implications for our government to deal with in the future,” said Cho Won-kyung, an official of the ministry.

The term Beijing Consensus is used in reference to as well as a foil to the Washington Consensus. As the finance ministry explained, the Washington Consensus originated from a 10-point market-oriented policy prescriptions that the U.S. pushed crisis-plagued South American countries to adopt in return for aid in the late 1980s. It is often described as an expansion strategy for U.S.-style capitalism.

The Beijing Consensus is summarized by several key concepts used by the Chinese government to describe its growth model, such as step-by-step economic reform, balanced development strategies and the “peaceful rise of China.”

Currency swaps are helping China to boost the Beijing Consensus, the finance ministry said. As of the end of last month, China signed a combined 640 billion yuan ($93.7 billion) currency swap deal with six countries, including a 180 billion yuan deal with Korea signed on Dec. 12.

Overseas aid for less affluent countries is another main channel for China’s increasing influence. The size of its overseas aid rose from $1.5 billion in 2003 to $27.5 billion in 2006.

The recipient countries are mostly in Africa, Southeast Asia and South America. African countries received $33.1 billion worth of aid from China over the five years ending in 2007, while South American countries and Southeast Asian countries received $26.8 billion and $14.8 billion, respectively, in the same period, the ministry said, citing U.S. Congressional data.

It is also gearing up for large investments in those countries to acquire natural resources. China has invested or made loans worth more than $60 billion in 12 countries including $16 billion in Venezuela, which exports oil to China, the ministry said.

“The increasing influence of China could put Korea’s diplomatic efforts to secure natural resources in peril,” the ministry said in the report. “Korea needs to come up with economic policies in response to the expanding Beijing Consensus.”

By Moon Gwang-lip [joe@joongang.co.kr]