Emerging economies and realities: Despite their reliance, US keen on halting China’s economic influence

The recent Asia Pacific Economic Cooperation (APEC) meeting in Beijing has once again highlighted the United States’ fervor for grandstanding acts of stealing the spotlight away from its rivals, or at least halting the advances of emerging economies and political powers beyond the Western hemisphere, whether it be at home or abroad.

Just a day before the APEC summit, US President Obama gathered participants to the US-led but China-excluded Trans Pacific Partnership (TPP) held in the US embassy in Beijing. The TPP is essentially a regional trade agreement that aims to undermine China’s own Free Trade Area of the Asia Pacific, which is a broader framework for bringing closer integration of Asian economies.

This display of intent comes at a time when the TPP is yet to resolve long standing issues that has halted it from becoming a fully functional economic bloc. There are still protectionist issues to be settled between Washington and Tokyo, for instance, and New Zealand’s intention to “pull out of the negotiations if politicians in the US used them as a vehicle to try to contain the rise of China.”

IMF and World Bank: Tired economic powerhouses

As the United States’ economic and military influence further erodes, the vacuum it is creating is more and more being filled by emerging powers consisting of China, Russia, Indian, and Brazil, which together in July 2014, account for roughly 20% of the world’s economy based on GDP and 30% based on Purchasing Power Parity, which is a more accurate measure of world economy. In July, BRICS proposed a $100bn New Development Bank to meet infrastructure and development projects at a time when the West continues to erode its role in global trade.

The ongoing shift in global influence from West to East has rendered the traditional economic clout of the West, through the World Bank and International Monetary Fund, unable to meet the enormous investments that are required by developing economies in the Asia Pacific region and Latin America. Indeed, both lending institutions have become hostage to their colonialist approach to development, such as in leadership, voting rights, capitalization, headquarters, and staffing, which are all dominated by the United States.

The perception that emerging economies are still heavily reliant on advanced economies for market access and demand is quickly coming to a pass. In its International Trade Statistics 2014, the World Trade Organization concluded that “more than half the exports from developing economies were sent to other developing economies in 2013.” It also revealed that “countries in Asia sent more than 60% of their exports to other nations in Asia and to Africa and the Middle East, compared with just over 15% each to North America and Europe.”

As has been observed in the past decade, this tectonic shift in global economic activity will only continue to progress to reach other economies not held hostage by the traditionally two-edged economic and political policies of the West.

EU 'quietly' Seeking BRIC Assistance Regarding Greece Debt

Early this week, a news headline from Bloomberg and The Wall Street Journal caught my attention regarding lobbying the BRIC countries (Brazil, Russia, India, China) to 'quietly' assist the EU, specifically Greece.

In seeking for the quiet assistance, in a telephone interview, The Institute of International Finance Inc. (IIF) Deputy Managing Director Hung Tran said that “If you have the extra 20 billion which we are seeking from other countries, that of course would increase the amount of debt retirement that Greece can have.” He also added that “We have been in preliminary discussions with some countries and the reaction we received is an open mind and request for more information and discussion.” the IIF represents 440 of the world's largest banks, insurance companies and investment firms.

Basically, this allows BRIC countries to pool their resources into a new account via the IMF, which in turn would be loaned to the Greek government. The goal is to allow lower Greece's burden by as much as $25 billion and lower the country's debt-to-GDP ration to about 91% by 2020, assuming the world is headed on a better economic climate.

It is quite lamentable that the IMF and World Bank cannot continue to support a faltering economy such as Greece's. As the EU financial juggernaut becomes exhausted, so as the countries that it persuaded to join this exclusive 'club' of supposedly advanced economies.

Just last May, when the IMF chief Dominique Strauss-Kahn was on the headlines, concerns about who should head the IMF cropped up. Despite the fact that the global economy is now concentrated in the East (BRIC), we still failed to see a BRIC leader in the IMF. Indeed, the West has a short memory, having forgotten Strauss-Kahn's statement just a few months ago that India and China's economy are the ones that really lifted the global economy out of the recession.

Fast forward to this day, how hypocritical is it to witness that the West is asking for assistance, albeit quietly? Why be quiet about a matter that will save the Euro zone? If the economies of Portugal and Spain crashes as well, do you really need to ask for assistance, discretely? Financial ministers from BRIC countries will be meeting with the IMF today; for now, let us standby and wait for further developments.