23 September 2004
China, the world's fastest growing economy, will for the first time next week take part in a meeting of the elite group of seven finance ministers who set policy for the International Monetary Fund.
It is the Americans who have taken the lead in bringing China closer to the Group of Seven. This informal grouping of financial powers includes the United States, Canada, Japan, and the four largest European economies, Britain, Germany, France and Italy. Russia, with a much smaller economy than China's, also participates in some G7 proceedings.
G7 finance ministers and central bank chiefs typically meet in advance of the twice-yearly meetings of members of the International Monetary Fund. As representatives of countries with the largest voting shares in the IMF, the G7 tends to set policy for the IMF and its sister organization, the World Bank.
John Taylor, the U.S. undersecretary of the Treasury, calls the inclusion of China very important. That sentiment is echoed by Morris Goldstein, a former top official at the IMF who is now a researcher at the Institute for International Economics.
"I think it is a useful step. Valued at market exchange rates, China is the sixth largest economy in the world," he said. "It is the third largest importer and the fourth largest exporter. It's a key growth pole for the world economy. And increasingly it has had a big impact on global primary commodity prices."
For these reasons, says Mr. Goldstein, China is a major player in the world economy and it is useful for that country to be at the table where decisions are made.
Alex Kazan is an economist at the G7 Group, a consulting organization based here in Washington. He too endorses China's inclusion in the Group of Seven.
"This is an inevitable development. China is the largest economy in the world that is not a member of the G7," he said. "It's growing at a much faster pace than any other economy in the world and it is playing a much bigger role in the world economy in terms of trade and finance."
The G7 finance ministers will meet in Washington October 1. China will not attend the full meeting but will be part of a dinner session that evening. The IMF and World Bank hold their meetings the following two days. U.S. Treasury Secretary John Snow will meet privately with his Chinese counterpart before the start of the G7 talks.
Mr. Kazan of the G7 Consulting Group believes this is a first step towards China joining the Group of Seven, whose leaders meet annually. "It's a political decision as to when that happens. I would it to happen within the medium-term, within the next three to five years," he said. "Yes, I think there is a strong argument for China's inclusion."
Other analysts are not so confident. They say that China's membership in the G7 won't take place until it becomes a functioning democracy. But, these same observers note, there were similar doubts about Russia which in recent years has become a full-fledged member of the G7.