China Sees the World Differently

China Sees the World Differently
(International Herald Tribune – Alan Wheatley Reuters)

Did you know that the slide in the dollar and the surge in oil to over $100 a barrel are part of a deliberate U.S. strategy to reduce the purchasing power of China's foreign exchange reserves? That assertion was made last month at a public forum by Li Lianzhong, who heads the economic research unit of Communist Party Central Committee.

After all, no one has a monopoly on conspiracy theories.

But Li's views illustrate that despite China's integration into the global economy, a gulf in comprehension sometimes separates Beijing and the West. Indeed, mutual recriminations seem to be on the rise: What is China up to in Africa? What are the real motives of Beijing's sovereign wealth fund? Western critics want to know.

Why is Washington blocking investments by Chinese companies? Why are Western news outlets distorting coverage of Tibet? Ask Chinese skeptics.

The danger for markets is that such antagonism could erode the trust underpinning economic links, especially when slower growth is putting Western politicians on the defensive and the Olympic Games are heightening Chinese sensitivities.

"Both sides will need to learn better how to deal with each other," Jonathan Woetzel, a senior partner in McKinsey's Shanghai office, said in an interview. "There are plenty of examples on both sides of misunderstandings and inability to comprehend how the society works, which then leads to real problems when it comes to the investment process."

As Woetzel put it, Beijing's relations with the West can still be summed up at times with the Chinese saying "same bed, different dreams."

This situation could describe a visit to Beijing last week by Ángel Gurría, secretary general of the Organization for Economic Cooperation and Development, who urged closer cooperation among the 30 industrial democracies that form its membership.

Gurría said his purpose was to make the OECD more relevant and to "create a level of comfort" on both sides. The OECD is in theory well suited to ironing out wrinkles in China's relations with the West. The organization, which is based in Paris, does not lend money, so it has no conditions to impose. Rather, its members share information and establish best practice through peer reviews in what Gurría calls a "soft law approach." In short, member governments can take or leave the organization's policy advice. Perfect for Beijing.

The problem is that while China participates in a range of OECD activities, it is not a member. And Gurría, though suggesting that China might join other emerging economies in the OECD's Development Center, said Beijing had expressed no particular wish for full membership. "This is too important to be urgent, so we should let it take its own pace," he said when asked about membership prospects for China.

The U.S. Treasury secretary, Henry Paulson Jr., also says building trust with China is a marathon, not a sprint. …