China stays quiet amid talk of new financial order

By Alan Wheatley, China Economics Editor - Analysis

BEIJING (Reuters) - Just as it was never realistic to think China could single-handedly save the world economy, it's probably wise to tone down any expectations that Beijing somehow holds the key to a new international financial order.

Premier Wen Jiabao promised after talks among 43 Asian and European Union countries that China would actively participate in a November 15 summit that U.S. President George W. Bush is convening to rake over the global credit crisis.

China, which keeps its own markets on a tight leash, will presumably support any drive to keep a better check on new-fangled financial instruments and cross-border money flows.

"We need financial innovation, but we need financial oversight even more," Wen told a news conference on Saturday.

But Beijing shows scant interest in debating whether a wholly new monetary regime is called for -- whether, perhaps, the current crisis has its roots in the floating exchange rates that replaced the Bretton Woods system of fixed-but-adjustable rates, centred on the dollar, backed by gold and supervised by the International Monetary Fund, that collapsed in 1971.

"I don't think China can do much. Officials have said that what is important for China is to handle its own business well, which I think is quite right," said Zhang Bin with the Chinese Academy of Social Sciences, the government's top think-tank.

NO CHANGE

To be sure, Beijing regularly rails against what it sees as Washington's irresponsible stewardship of the dollar and against market volatility that endangers the stability that China craves.