China speaks with authority at Italy summit

By Simon Rabinovitch - Analysis

L'AQUILA, Italy (Reuters) - Six years ago, China attended its first Group of Eight summit as a quiet observer on the sidelines. This week in Italy, it stirred the pot in a debate about the international financial system.

The Asian power's trajectory towards centre stage in such a short time and its willingness to broach difficult issues are emblematic of a growing diplomatic assertiveness, especially in the financial sphere.

The turnaround for the G8 has been equally abrupt. Inviting China and other developing countries in 2003 was seen at the time as a forward-looking, almost charitable act of inclusion.

The club of rich nations now frets that China is reluctant to fully engage with it, a sense of insecurity was piqued when Chinese President Hu Jintao hastily withdrew from the Italy summit because of domestic unrest.

An unusually assertive speech by the head of China's delegation on Thursday, however, showed that it meant business.

State Councillor Dai Bingguo indirectly questioned the dollar's dominance by calling for a better reserve currency issuance and monitoring system.

It was the first time a high-ranking Chinese leader had voiced such a demand in a formal speech, let alone in such a powerful multilateral forum. Previously, the idea had only been aired in relatively technical central bank reports.

China's willingness to inject reserve currencies into the discussion was all the more striking for the insistence of Japan, Britain and Canada that it was inappropriate to question the dollar's status at a time of global financial crisis.