The third largest economy in the world will benefit from most of the decisions taken during the London summit of the G-20. The greatest victory belongs to Chinese President Hu Jintao. The logic is simple: it pays to be ‘Made in China.’

G-20 plans to revive international trade, particularly devoting $250 billion to finance new global trade transactions. All that will be beneficial to the interests of China whose enormous export machine has been hit hard by the effects of the financial crisis. One third of China’s growth relies on the export of cheap goods.

The second victory of Mr. Hu is having the voice of China heard. China took the floor, often to stir the air. Everyone listened. The latest G-20 summit resolutions will give China a lot more leverage at the IMF and World Bank.

The G-20, however, has not moved forward on the issue that mattered most to China: the true re-establishment of international trade. While China has a huge trade surplus, it expresses the wish to see the world move towards a more balanced future, with a concerted period of transition. It wants neither an excessive appreciation of the yuan, which would ruin its exports of cheap goods, or a depreciation of the dollar. Thus, the G-20 does not correct the shortcomings of China. It has, however, given Mr. Hu the feeling of having gained importance.

Image

Via Market Watch