Out of the valley This year, conference goers in Switzerland discussed how to achieve a better balance between growth and stability
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That term was heard a lot in Davos, sometimes in reference to the new proposals for banking reform that Obama, with Paul Volcker by his side, had announced just days before the meeting began. Summers apart, there were few top American officials present in Davos this year. But the state of the U.S. political system was a constant theme of public and private meetings. The proximate cause of the chatter was the loss of the Democrats' supermajority in the Senate as a consequence of the Massachusetts special election, but it went deeper than that. Whether discussing climate change, or regulatory reform, or progress on trade issues — bilateral as well as multilateral — delegates worried about an institutional paralysis in the U.S., and a political system that had got so gummed up that it was hard to get anything done. It wasn't just non-Americans who voiced such concerns. When, at a BBC debate, I asked Barney Frank, chairman of the House Committee on Financial Services, about the chances of getting financial-services reform through Congress this year, he said he thought such legislation would pass into law. But Frank made no bones about the state of Washington or the impact of the supermajority rule in the Senate. "We are suffering a constitutional crisis in the U.S.," Frank said. "To some extent, we are England in 1910 before they reformed the House of Lords."
The Two Faces of China
If the U.S. were Sweden, worries about the health of its political system would be an interesting topic for a Ph.D. thesis. But the U.S. is the U.S. — the nation without which no item on the global agenda can be addressed. Its internal political difficulties spill outside its borders, affecting those far away. Moreover, there was a clear sense in Davos that just when the U.S. is looking like a hobbled power, a rival is galloping along. In Britain after 1945 it was common to hear that such and such a man — Denis Healey, say, or Ian Fleming — had had a "good war." China has had a good crisis. Buoyed by spectacular economic growth, basking in its role as America's banker, modernizing its infrastructure at sci-fi speed, a large Chinese delegation arrived at Davos expecting — one assumes — to have a good conference.
They did, sort of. There was a self-confidence to the Chinese in Davos I have never seen before. Immediately outside the conference hall, a chalet which in the old days had been the headquarters of Sun Microsystems had been taken over by CCTV, China's state broadcaster. Inside, young journalists, dressed as if they were ready to hit one of Beijing's smarter nightclubs, poured tea and took photographs of their interviewees. Yet that strange defensiveness that so often typifies official Chinese interventions in international arenas was on display, too. Vice Premier Li Keqiang, a member of the Standing Committee of the Politburo, and the man who is expected to be China's next Premier (the second-ranking position in the leadership) gave a long speech at a plenary session and said ... not very much. The usual platitudes about China's growth strategy and commitment to peaceful development were trotted out. On the topics the audience turned up to hear — exchange-rate policy, Google — Li said nothing. As a Chinese friend lamented to me after the speech, it was hardly inspiring.
Why are China's leaders (with the exception, in my experience, of economic boss and former mayor of Beijing, Wang Qishan) so stilted when they address foreign audiences? Part of the reason, I think, is the confusion that flows from the fact that China projects itself internationally in two different styles. In the first, China's leaders — as Li did at Davos — never miss an opportunity to say that it is really just a big developing country, with massive challenges, regional disparities of wealth and hundreds of millions of poor people. It's only just started to modernize; it shouldn't be asked to do too much. As Zhu Min, who recently moved from the Bank of China to become deputy governor of the central bank, pointed out, Britain took 150 years, and the U.S. 80, to develop the consumption-driven economy that comes from having a mass middle class. China's been going at it for only a quarter century.