Economic Blaming Game

Finance ministers and governors of central bank of twenty developed and emerging countries shared a common notion that China needed further structural reform in its economy. To United States, they reconfirmed necessity of careful consideration in raising interest rate. Group 20 meeting proved that two greatest economies are causing uncertainty of world economy.

Japanese media attributed current volatility of world economy to China. The communiqué of G20 meeting indicated frustration on current situation of world economy, saying “global growth falls short of our expectations.” Newspapers recognized that message as concern on Chinese economy, which has been showing instability in monetary policy. Parties required China to take measures for structural reform on the notion that China’s decline was becoming risk of world economy.

China itself exacerbated this negative reputation on China. Mainichi Shimbun reported that Governor of People’s Bank of China, Zhou Xiaochuan, used the words of “bubble has burst” three times in his opening remark at the discussion on world economy Friday night. The paper focused on the fact that China made opening remark, instead of ordinary Western countries, as effusion of concern in the parties. Japanese Financial Minister, Taro Aso, reportedly criticized China in the meeting, saying “volatile market is a mirror image of structural problems in China.”

Opaque situation of Chinese economy enhances world concern. “The point is whether Chinese administration is controlling situation with efficiency and order,” told U.S. Secretary of Treasury, Jacob Lew. By appealing their effort of urging China to take structural reform, parties tried to ease concern in international markets. Although China promised to expand its internal demands, to get rid of independence on exports, no one was sure about stability in Chinese economy.

It is not only China to be concerned. Expectation on higher interest rate of U.S. Federal Reserve later this year has already caused concern of flowing out of money from emerging economies. Brazil, Russia or Turkey has seen steep decline of value of its currency. Emerging countries requested U.S. to maintain clear communication with markets in the meeting. Even one on the Chinese experts indicated last month that worldwide decline of stock price was related to interest rate hike of FRB and not caused by China.

World economic leaders have no time for playing blaming game, anyway. It is necessary for China to seriously take its responsibility and for the world to closely watch the situation. Japan would not play a major role as long as deteriorated communication in the top level of the governments continues.