Business elite waver on China as threat, savior

DAVOS, Switzerland — The Western business elite can't seem to decide whether China is a savior or a threat. Nearly everyone speaking at the World Economic Forum this week had something to say about the world's new No. 2 economy. Some jockeyed for greater access to China's markets, some pleaded for China to let its currency rise and allow more political freedoms. And Chinese participants said their country's just misunderstood. "The alternatives should not be conflict or kowtow," Australian Foreign Minister Kevin Rudd said Saturday at the forum in the Swiss Alpine resort of Davos. He said the West needs to be "frank without being confrontational" with China for the challenging decade ahead. Li Daokui, director of the Center for China in the World Economy, said the West needs a more realistic image of China and its immense challenges. It's not just a nation of skyscrapers in Shanghai, but also hundreds of millions people with poor access to drinking water, masses of rural poor, enormous environmental problems, Li said. He also urged more global patience with China's policy of holding down the value of its currency. "I think our policy of exchange rate is right," he said. "Let's wait five or 10 years" before seeing whether the Chinese strategy is right, he said. "Chinese leaders ... have a longer time horizon." Lawrence Summers, Harvard University president and until last month President Barack Obama's top economic adviser, was unconvinced. The U.S. business community's view of China "has deteriorated very substantially," and the country is increasingly seen as "representing a major economic threat," he said. "There are real issues of substance," he said. Among them, he named intellectual property rights — Obama has pressed China to crack down on the theft of U.S. technology — and China's assertive security stance in East Asia. While the U.S. struggles with near-chronic unemployment and a continuing housing crisis, China was the first major economy to power out of the global downturn and recently passed Japan as the world's No. 2 economy. China sent its biggest-ever delegation to Davos to plant its flag on a world stage previously dominated by U.S. and European companies. "Thank God for China's growth. Thank God that China stimulated its economy during the global financial crisis," Rudd said. But Rudd, a fluent Mandarin speaker, said the world has huge concerns about how China will deal with its inflation, and urged Beijing to "get the exchange rate right." John Zhao, CEO of Chinese private equity firm Hony Capital, summed up the Davos elite's relations with China by saying that despite all the attention to Chinese participants, "We're not going to quickly fall in love with each other."—AP