WCA September 2010

From the americas

“It worked,” President Obama asserted in the opening paragraph of his 16 th June letter to fellow G-20 summiteers. Indeed it did, as witness China’s decision on the eve of the summit to allow more flexibility for its currency. Such a move was unthinkable while policymakers in Beijing were still uncertain about the stability of global markets. “China had been reluctant to take this step because it wasn’t sure how long the financial fires would burn,” wrote Mr Ignatius in the Washington Post . That China has taken this step means that people the world over may breathe a little easier; or, at least, they can stop holding their breath. The White House re-commits to a holdover from the Bush administration: the free-trade pact with South Korea On 26 th June, in Toronto, President Lee Myung-bak of South Korea said, “We very much welcome and thank President Obama for proposing a date for us to look forward to, and we will work towards that date and objectives.” The occasion was the two-day summit meeting of the Group of 20 economies, following a smaller meeting by the Group of 8 powers. Trade

But this should not obscure the truly substantive improvements signalised by the Chinese action – not only in US-China trade relations, and not only for Americans and Chinese. ‘Potent partner’ “[President Obama] gets little credit for economic success at home, where the unemployment rate remains shockingly high. But if you listen carefully in Toronto, you will hear a few sighs of relief, including among some important Chinese leaders.” Thus did columnist David Ignatius wind up an op-ed piece in the Washington Post , after deftly recapping some narrowly avoided recent perils. A scant year before Toronto, he recalled, China was wondering whether it had made the wrong bet in relying on the US to manage the global economic system. The financial meltdown of 2008 was so disastrous that the Chinese feared the US-built financial architecture was “quite literally, out of control.” Now, Mr Ignatius wrote, “The United States is once again in the driver’s seat on global economic policy, with China emerging as a potent partner.” (“For the G-20, Order Is Restored with America’s Leadership,” 25 th June). He observed that restoring confidence in the soundness of the global economy – especially in Beijing – had been among the Obama administration’s most important tests over the past year, “beyond containing oil spills or even fighting the Taliban.” To a greater degree than sceptics thought possible, the US rescue operation has been successful.

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Wire & Cable ASIA – September/October 2010