[Viewpoint] China doesn’t kowtowChinese Premier Wen Jiabao made an interesting remark at the opening plenary session of the World Economic Forum meeting in Dalian last week. When he was asked by the WEF chairman about China’s role in helping the global economy weather the tough challenges presented by deficit and debt problems in the United States and Europe, he politely expressed confidence in the ability of U.S. and EU leadership to combat their difficulties and offered to extend business cooperation and investment.
But the volatility of the U.S. dollar due to deficit worries and the sovereign debt crisis in the euro zone are disturbing emerging markets as well, and China called upon those countries to “put their house in order.” China will then play its part in maintaining economic stability and growth.
China’s assertiveness and undeniably patronizing tone comes from its wealth. Cash-poor European countries look enviously at China, which sits on the world’s largest foreign exchange reserves. China last year purchased Spanish government bonds and pledged to buy Greek bonds despite their near-default risk status. It is also considering buying Italian treasury bonds. China is offering an indispensable helping hand to cash-stricken EU nations at a time when even their EU neighbors are shuffling to the exits.
Europe’s desperation is no secret. Christine Lagarde, managing director of the International Monetary Fund, welcomed emerging economies coming to the aid of Europe by purchasing risky bonds. The EU, which is used to being the giver, is awkwardly coming to grips with the unfamiliar position of being at the receiving end.
And the EU is faring poorly in its newfound role. While appreciating the bond purchases, which is tantamount to charity, the EU cannot shake off its condescending and suspicious attitude toward its new benefactor. European countries still want to protect their real estate and companies from Chinese capital.
A bid by a Chinese billionaire to purchase a huge plot of farmland in northeastern Iceland has sparked controversy in the country and across Europe. Huang Nubo, chairman of Zhong Kun Group and 161st on the 2010 Forbes list of the richest Chinese, sought approval from both Chinese and Icelandic authorities to buy 300 square kilometers (74,132 acres) of land that takes up about 0.3 percent of Iceland’s total land territory to create an eco-friendly resort.
European media suspected a hidden agenda: that Beijing wanted to gain a foothold in Iceland, with its proximity to the Arctic seabed, for natural resource exploitation and for its strategic location in the mid-Atlantic between Europe and the U.S. They cite Huang’s past career in the Communist Party and Chinese government agencies to imply a connection with the Beijing regime. Some even jumped to the conclusion that China’s currency swap of $500 million with Iceland last year could have been bait for the business deal. The Icelandic government is also unsure.
Huang pledged $8.8 million for the land and plans to invest 10 or 20 times that sum to complete the resort - a lucrative business deal no country would normally think about twice. The controversy illustrates Europe’s dubiousness about China.
It is snobbish for Europeans to accept China’s financial help but not consider the country as an equal business partner. But China is not a country that kowtows. It specified its price for future aid. At the WEF forum, Wen demanded that European countries recognize China’s “full market economy status.”
Under the terms of China’s WTO membership, China would be recognized as a full market economy in 2016. But Beijing is demanding such recognition early as a sign of “goodwill.” It is “the way friends should treat each other,” he said.
It is meaningless to point fingers at who is right or wrong. Such pride does not benefit anyone at a time when coordination and cooperation is imperative for the global economy. Both parties may need time to adjust to their changes in status. But when business has to be discussed, it is time to get off the high horses.
*The writer is social news editor of the JoongAng Sunday.
By Nam Yoon-ho