China stepping up its role as lender of last resort upends an economic development game thats been decades in the making. The IMF, World Bank and ADB are bloated, change-adverse institutions. When Ukraine received a $17 billion IMF-led bailout this year it was about shoring up a geopolitically important economy, not geopolitical blackmail. Chinese President Xi Jinpings government doesnt care about upgrading economies, the health of tax regimes or central bank reserves. It cares about loyalty. The quid pro quo: For our generous assistance we expect your full support on everything from Taiwan to territorial disputes to deadening the West’s pesky focus on human rights. This may sound hyperbolic; Russia, Argentina and Venezuela are already at odds with the U.S. and its allies. But what about Europe? In 2011 and 2012, it looked to Beijing to save euro bond markets through massive purchases. Expect more of this dynamic in 2015 should fresh turmoil hit the euro zone, at which time Beijing will expect European leaders to pull their diplomatic punches. What happens if the Federal Reserve’s tapering slams economies from India to Indonesia and governments look to China for help? Why would Cambodia, Laos or Vietnam bother with the IMF’s conditions when China writes big checks with few strings attached? [...] If ever there were a time for President Barack Obama to accelerate his pivot to Asia its now. Theres plenty to worry about as China tosses money at rogue governments like Sudan and Zimbabwe. But there’s also lots at stake for Asias budding democracies. The so-called Washington consensus on economic policies isnt perfect, but is Beijings model of autocratic state capitalism with scant press freedom really a better option? With China becoming Asias sugar daddy, the temptation in, say, Myanmar might be to avoid the difficult process of creating credible institutions to oversee the economy. ********************** Lol, oh my gawd, China is destroying budding democracies, quick! Obama! Save the End of History!
Posted on: Mon, 29 Dec 2014 09:24:59 +0000
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