China: The New Lender of Last Resort

So it’s come to this.  Or perhaps, not.  With the European banking system on the verge of a Lehman-esque financial crisis, China has stepped into the fray, with Chinese Prime Minister Wen Jiabao stating: ‘Countries must first put their own houses in order,’ in comments that pertained to the Chinese making a capital injection into the beleaguered European banking system.

These are sentiments with which I agree.  But it’s telling that global economic opinion has shifted so significantly in recent years to form the idea that China has the cash to burn on bailouts for economic failures.  Their economy has been growing, much more so than anywhere else in the world, so that the expectation is that if they have the cash on hand (they do), they ought to step up to the plate and take the global leadership role that their economy mandates.  The United States’ power is declining in relative terms to that of China, but I don’t think that’s a necessarily bad thing, if the Chinese leadership rise to the occasion.  The US, simply put, can’t dominate the global decision making process in the way that we historically have, frankly, because we’re broke.  We simply don’t have the dollars to help other countries out of their economic malaise.

China is a rising power.  And if they step up to bat, that’ll allow some of the challenges to shift from us to China.  It’ll give us some breathing room, and give the People’s Republic some responsibility.  With that responsibility, obviously, comes power.  But I don’t think that’s any reason to fear Chinese domination.  When states accrue more power and influence, historically, the fear is that their rise will be so sudden and violent that they’ll seek a massive revision to the global balance of power.  It’s not in China’s best interest to seek a radical overhaul of a system in which they’ve benefited greatly.  So, the best course of action would be for them to incrementally and gradually assume more powers and responsibilities.  If we have any sense, we should be more than willing to hand some of the reins, and, with it, the obligations, that increased power brings.  Let them carry some of the burden for us.  We’ve been hauling it long enough.

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