Wednesday, October 10, 2012

Why Did the Heads of China’s Finance Ministry and Central Bank Skip the IMF-World Bank Plenary?

Xie Xuren, China’s Minister of Finance, and Zhou Xiaochuan, Governor of the People’s Bank of China, failed to show up at the IMF-WB plenary session and sent their deputies instead. This is being interpreted as part of the Chinese government’s retaliation for the Japanese government’s purchase of the Senkaku Islands that they did not already own from their Japanese owner. I don’t get it.

This was a purely symbolic act. Unlike the reported slowdown of customs procedures or the 2010 cutback of rare earth exports, it had no effect on the real world. It makes no sense to keep the world in the dark about what your act symbolizes. So what gives? My guess is that Xie and Zhou were merely protecting their asses.

These two men are technocrats who first made their mark in the fiscal and financial arenas in the 1990s and kept moving up. In other words, these are B-list leaders. If you don’t believe me, just look at the CVs for Xi Jinping, the next Chinese President, and Li Keqiang, the next Chinese Prime Minister. They never served as state minister. And no, it not a coincidence; neither did the current occupants of the offices Hu Jintao and Wen Jiabao.

And now, there’s a massive transition of power going on in China and this is their chance to max out, say, Xie as State Council member and Zhou as the next Finance Minister. But the B-list hangers-on of the A-list people, who concentrate their efforts on the domestic CCP snakes-and-ladders game for influence and riches, must view these two men of the world with some suspicion mixed with envy for their global connections. So isn’t it likely that many of them would have brought their knives out if the pair had shown themselves at the plenary, where it could have been difficult to avoid engaging their Japanese counterparts/hosts in a photo-op planned or not? Likewise would they not have capitalized on the negative worldwide media coverage if the two did show but subsequently shunned their hosts, injecting undesirable discord to a global economy at a most difficult crossroads?

I think Xie and Zhou took the safe way out. And that fits to a T the typical profile of the Chinese leadership as a most cautious, risk-averse lot.

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