More Chinese big ideas

Earlier this week, I did a post on Chinese central bank governor Zhou Xiaochuan’s essay calling for the replacement of the dollar as the world’s reserve currency.  Today’s FT contains another instalment of big picture thinking from China on the global economy – this time from Yu Qiao, an economics professor at Tsingua University’s School of Public Policy and Management.

Like Zhou, Yu is explicit on Chinese worries about the potential erosion of the value of their rather large stash of US dollars – $1,200 billion of T-bills alone.  “Most of Mr Obama’s stimulus spending is devoted to social programmes rather than growth promotion,” he notes, “which may exacerbate America’s over-consumption problem and delay sustainable recovery”.

What’s more, he continues, that could in turn end up doing exactly what Tim Geither was worried about in the wake of Zhou’s essay: an erosion of the dollar’s role as reserve currency.  Here, interestingly, there’s what looks like a signal of preparedness to moderate the position set out in Zhou’s essay. Yu says explicitly that,

No other international monetary system offers a viable alternative. However, we can make the main reserve currency power more accountable by creating an instrument to help manage the global crisis.

Admittedly, Yu is an academic and not a member of the government.  But it’s very hard to imagine that a senior Chinese professor would directly contradict his government’s position, on such an acutely political issue, in a time of such severe risks, in the FT, the day before the G20 summit, without clearance.  At the same time, using this approach avoids losing face for Zhou – and may signal a willingness to talk, rather than a definite climbdown.

So what does Yu propose as an alternative way of safeguarding China’s assets, if not reform of the dollar’s reserve currency role?

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NGO photo-op of the week

As well as looking out for the pointless initiative of the week to emerge from the London Summit, another important contest to keep an eye on is NGO stunt of the week. 

In that vein, please doff your hats (so to speak) for Paul Hilder, campaigns director of, who takes an early lead in managing not only to persuade the IMF’s Dominique Strauss-Kahn to accept Avaaz’s petition – but also in retaining a straight face while doing so in a very fetching green hard hat.

Paul is now here at G20 Voice with me and still in possession of said hard-hat, so he seems to be growing quite attached to it.  (Either that or it’s all kicking off outside…)

Looking in the wrong place?


Space Hijackers have driven their armoured vehicle through the City, making it as far as the Royal Bank of Scotland – much to the amusement of everyone bar the police.

Like Charlie, I wonder whether they – the police – are making a mistake by fixating on demonstrators, rather than lower probability/higher impact threats, and on the capital, rather than the rest of the UK.

After all, the attack on the 2005 G8 came from Islamist terrorists and was not on Gleneagles itself (where security was suffocatingly high).

Following that pattern, I’d expect the threat level to be highest tomorrow morning – and in a city other than London, where many fewer security precautions have been taken. Given the Lahore cricket attacks, I wonder whether tonight’s football international at Wembley might be a target.

Panic not necessary. But a good time to be vigilant…

Stiglitz / Stern / Roubini / Buiter / El-Erian / O’Neill: climate is central to G20

A veritable flotilla of economists has written a letter to the FT this morning, setting out four key targets for the G20.  Among them are Nick Stern (of Stern Review fame); former World Bank chief economist Joseph Stiglitz (currently running the UN General Assembly panel on economic reform); Jim O’Neill (head of research at Goldman Sachs and originator of the BRIC acronym); Mohamed El-Erian (CEO of Pimco, probably the most important bond trading house in the world); Nouriel Roubini (Dr Doom); and various other luminaries.

Their first three demands are pretty straightforward.  First, move fast and have the IMF monitor policy implementation; second, initiate a ‘clear and independent’ process for IFI reform; third, intervene to restart trade credit.  But then comes this:

Fourth, the G20 should shape the economic recovery so that we do not repeat the mistakes of the past. We must develop policies that lay the foundations for strong growth over the next few decades that is not based on unsustainable bubbles. There must be a commitment to a green recovery and, most important, a clear commitment to reach a strong, effective and equitable agreement on climate change at the Copenhagen meeting later this year.

Admittedly, not long on specifics – but other than Nick Stern, I wouldn’t have expected most of these names to put climate change so high on their G20 shopping list.

G20: Careless Talk [could] Costs Lives (updated)

While Alex blogs live from inside I will be doing my best to follow events outside – via Twitter, Flickr and SMS. But is it safe to go outside?

The ‘experts’ expect anarchy on the streets of London and even the possibility of a terrorist attack.  For example:

Michael Clarke, the head of London’s Royal United Services Institute think-tank, said small terrorist groups may use the cover of planned protests by environmentalists, anti-war protesters and labor unions to mount an attack.

“The protests will cause uncertainty and chaos, and if they turn violent could complicate the lives of those police and security service staff who are looking for terrorists,” said Clarke, who sits on British government’s National Security Forum, an advisory panel of security experts.

So to be clear. Terrorists may use the cover of legitimate protests to stage an attack while the protests themselves are going to cause uncertainty and chaos. As Professor Clarke sits on the National Security Forum I wonder if he and the forum have been briefed by the intelligence agencies – or is this a personal opinion?

If ‘chaos’ is going to happen and there is the potential for a terrorist attack why hasn’t the Security Service (MI5) raised the threat level to CRITICAL – meaning an attack is expected imminently. From what I can gather the Security Service is trying to play down such a threat – concious that legitimate protest is important in this country but keeping a watching brief as events unfold. As has been proven in the past millions of people can walk the streets of London without causing large scale rioting. My concern is that talk of anarchy and rioting by securocrats, ‘experts’,  and the Met Police turns into a self-fulfilling prophecy.

The aim of Government and the Met Police must surely be to reduce the potential for rioting and attempt to diffuse an already volatile  situation – rather than fuelling speculation in the media on what nightmare scenario might happen.  This could have been done through dialogue (better briefing on what is going on (Operation Glencoe)) while reiterating key messages about their role to police a largely peaceful protest, rather than the drip drip of banal information by mid level police officers which sub-editors happily snap up. Hardly the most constructive, mature and sensible way to police an event.

Hundreds of hours have been spent designing the route and security requirements for the demonstrations tomorrow but there will always be the potential  for smashed windows and cuts and bruises – the important thing is to limit those opportunities – to take the sting out of the tail. Designated routes have been identified and signposted and security folk at banks and major buildings in the city will also have been planning for months: Executive boards will have been briefed on what to expect. The last thing politicians, protesters and the public need are police officers, and experts speculating on the potential for massive violence.

Of course there will be idiots who want to be violent – and the security services and the Met Police will have been collaborating with national police forces to ensure those violent protesters are identified and  their conversations and plans monitored. But more work should have been done trying to diffuse the situation.

In the next couple of days the key will be to nip the potential for violence in the bud – allowing the  demonstrations to continue but diffusing the protesters energy so that it doesn’t spill over into other parts of the crowd. The Met Police, experts and the mainstream media could have approached the security of the G20 in a more mature fashion – at least it would have meant we could focus on the meat of the G20 discussions rather than the armour protecting them.

Update:  Editors and sub-editors are at it already. From the New Zealand Herald: Fear terrorists will use G20 protests

G20 pointless initiative award: the race is on!

With a summit close at hand, one thing we can be sure of is that pointless ‘initiatives’ can’t be far behind. The criteria for such ‘announceables’ are simple: they must grab headlines and create the impression that something is happening, while avoiding any domestic implementation commitments or – horror! – funding obligations.

So while you’re getting ready to play G20 bingo (SDR issue? tick! tax haven rules? tick!), it’s also a good moment to launch the hunt for the pointless initiative of the week.  One strong candidate has already emerged: DFID has proposed

a new ‘Global Poverty Alert’ system that would link international organisations, aid agencies and research groups into a single network that would provide instant updates on the impact of the economic crisis on the poor. This would include ‘real-time’ updates using text messaging and emails. The proposal will be put forward at next month’s G20 meeting in London.

Excellent work! Really visionary stuff. Now, how might it work? Hm. Well, what if we designed something that allowed lots of users to join, and post updates on poverty? We could let them post links to stuff on the web, too. And to keep it punchy and accessible, we could limit posts to 140 characters or less.  I … um … oh.

Er… perhaps if we built a… large wooden badger?

Spot la différence

Evening Standard, this afternoon:

France today laughed off a claim that Nicolas Sarkozy had threatened to “walk out” of the G20 summit. They said a report that the French President could “wreck” the event as “unfounded, and like some kind of April Fool’s joke”.

The copy of Le Figaro that I found outside my hotel room this morning:

«Rien ne serait pire qu’un G20 a minima. Je préfère le clash au consensus mou … Si ça n’avance pas à Londres, ce sera la chaise vide ! Je me lèverai et je partirai»

Now I admit my French may only by GCSE standard (and pretty rusty at that) – but I’m fairly confident that this translates more or less as follows:

Nothing would be worse than a minimal G20. I prefer the clash to the soft consensus.  If things don’t move forward in London, it will be the empty chair!  I’ll get up and I’ll leave.