China breaks 30-year tradition with Davos
January 30, 2012 Category Macro-economy, Weekly
China broke with a 30-year tradition by not sending high-level officials to the World Economic Forum (WEF) at Davos, which falls this year in the middle of Chinese New Year festivities. Beijing approached WEF organizers early in 2011 and suggested they move this year’s gathering to an earlier date, making it possible for senior Chinese officials to attend the event. “Can we imagine that this event takes place in Christmas?” asked Cheng Li, a China specialist at the Brookings Institution in the U.S. “A more telling point is that nowadays an international economic forum without the presence of China is an embarrassment, not for China, but for the forum organizers.” China was still represented by Zhang Xiaoqiang, Vice Chairman of China’s National Development and Reform Commission (NDRC) and a regular Davos participant. Since 1979, when China formally joined the World Economic Forum at the dawn of Deng Xiaoping’s open-door reform, it has been represented by Vice Premier ranking officials, and even Premiers. In January 2009, Premier Wen Jiabao delivered a keynote speech at Davos. Some observers believe that absence of senior officials this year may reflect Beijing’s focus on internal issues, especially in the run-up to the once-a-decade leadership shuffle this year. U.S. Treasury Secretary Timothy Geithner sharply criticized China’s state-led economic system at the Davos meeting. “China does present a really unique challenge to the global trading system, because the structure of its economy, even though it has more of a market economy now, is overwhelmingly dominated by the state,” he said. Chinese policies, including subsidized prices for energy and land and preferential access to capital, have been “very damaging” to trade partners, he said. “That’s why it’s very important that we get China to move comprehensively not just on the exchange rate but on dialing back its subsidies and distortions.” On the issue of the Chinese currency, Geithner argued that though the yuan has appreciated, it remains undervalued and is “still below almost all measures of fundamentals.”
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