Beijing urged to join forces at G20 for debt rules
Two influential mainland economists have urged Beijing to team up with other developing countries at the next G20 talks to push for stronger regulations on sovereign debt and rating agencies.
The call came after worries about the US and European debt crises plunged world markets into turmoil last week. Many developing nations - particularly the so-called BRICS countries of Brazil, Russia, India, China and South Africa - hold large quantity of US treasury bonds.
The mainland experts said that given the developing nations had much at stake, they should take group action to force developed countries be more responsible and to help stabilise the markets.
Lu Zhengwei, chief economist at the Industrial Bank and a respected voice in the mainland's investment sector, said Beijing should team up with others to push for global disciplinary action over sovereign debt.
'The IMF should set a limit of a country's net sovereign debt in proportion to its annual GDP,' he said. 'This way none of them can keep borrowing without fixing their international problems. It's clear that sometimes, governments, not the economy, have been the culprits of an economic crisis.'
Lu said there also should be some standards for the international rating agencies. 'They have monstrous influence over the markets but they are entirely unregulated. Some decisions - like not sending warnings when they should or sending out alarms [when it's not necessary], are really questionable and based on flawed methods,' he said.
Lu said China could use the Group of 20 platform - the gathering of the G8 countries, the EU, and 12 major emerging-market economies - to push for these agendas.
Wang Jun, senior economist with the Beijing-based China Centre for International Economic Exchanges also said the emerging economies should team up at the next G20 meetings.
Wang said the emerging economies were victims of high inflation that was partly brought about by the easy credit policy of developed countries, particularly the US, and should unite to protect their interests.
He said it would be 'unwise' for China to take unilateral approach. Beijing should forge a coalition with other countries facing similar problems and try to work within established international frameworks such as the G20 and IMF.
Lu agreed: 'Beijing should learn to talk in a group context, and in the language of other victim countries.'
