China: 'White Knight' or 'Angry Outsider'?

BEIJING, China, April 1, 2009 — -- As Chinese President Hu Jintao joins other world leaders in London to seek a way out of the global financial crisis, one pressing question is what role China will play in the G-20 summit.

Will it be the "white knight," ready to use its $1.9 trillion of foreign reserves to rescue the global economy?

Or will it be the "unhappy outsider," challenging the Western domination of the international financial system and the role of the U.S. dollar in global finance?

Finance Minister Xie Xuren expressed China's readiness last week to contribute some of its foreign reserves to boost the resources of the International Monetary Fund, which oversees the global financial system.

Central Bank Governor Zhou Xiaochuan made headlines in capitals around the world with his proposal for a new global reserve currency in international finance.

Another Chinese official, Vice Premier Wang Qishan, also called for a major overhaul of the World Bank, which assists developing countries, and the IMF, seeking more decision-making powers for China, India and other developing countries.

In effect, the senior officials have made it clear that China is willing to contribute more resources to the IMF and World Bank in exchange for a bigger say in the two institutions. They also made it clear that China should not be expected to play the role of a "rich uncle" with deep pockets. They explained China's position that its contribution to the IMF should not be based on its huge foreign exchange reserves but, instead on its low per capita gross domestic product.