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Sun 6 Nov 2011 03:18 PM

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Mona Lisa will look great hanging on China’s wall

Bailing out the debt-hit eurozone means a bigger payoff for China than meets the eye

Mona Lisa will look great hanging on China’s wall
Hu Jintao, Chinas president, lines up alongside Nicolas Sarkozy at the G20 meet in Cannes, France

Oh, to be a fly on the wall to hear what Chinese officials
want in return for saving the euro.

Yes, President Nicolas Sarkozy, we will take France’s Arc de
Triomphe and the Louvre as collateral. The Mona Lisa will look grand hanging in
Beijing. Toss in the Champs-Elysees and Louis Vuitton’s flagship store and
we’ll consider swapping more of our $3.2 trillion of reserves for your bonds.

Hi, Prime Minister Silvio Berlusconi. Aside from invitations
to your bunga-bunga parties, we would be happy with Italy’s Roman Forum, Venice
and those Tuscan vineyards of which our nouveau riche are so fond. Keep the
leaning Tower of Pisa - we’re leaning toward the Eiffel Tower. At least it’s

Greece’s Acropolis, Ireland’s Ring of Kerry, Spanish cities
like Bilbao, a Portuguese castle or two, Finland’s Nokia Oyj and Germany’s
Mercedes-Benz brand could end up in China’s shopping cart. Or Beijing could
resist instant European gratification and focus on the real prize: acceptance
of China as a market economy long before it’s deserved.

It’s a bigger payoff than meets the eye. By bailing out the
euro zone, China would silence some critics on the yuan, trade practices, human
rights, climate change, territorial disputes, intellectual-property rights and
its support of dodgy regimes from Sudan to Myanmar. Talk about money well spent
as China gears up for a major leadership shift in 2012 amid increasingly
unsettling global trends.

Buying Europe’s vote won’t cost China very much, but the
price may be much greater for the future of the world financial system. It’s no
wonder Sarkozy is under fire from opposition leaders for so publicly seeking
China’s help.

“It’s shocking,” Martine Aubry, general secretary of the
Socialist Party, told Journal du Dimanche. “The Europeans, by turning to the
Chinese, are showing their weakness. How will Europe be able to ask China to
stop undervaluing its currency or to accept reciprocal commercial accords?”

Consider what Chinese Premier Wen Jiabao said in September:
“We have on many occasions expressed our readiness to extend a helping hand,
and our readiness to increase our investment in Europe.” At the same time, Wen
said, “they should recognize China’s full market-economy status” before the
2016 deadline set by the World Trade Organization. “To show one’s sincerity on
this issue a few years ahead of that time is the way a friend treats another

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Playing the friend card has gotten China further than many
officials in Washington realize. While the US was invading Iraq, squandering
resources and alienating allies in the 2000s, China was spreading its largess
everywhere. From Africa to Latin America to Southeast Asia, there has rarely
been a road, bridge, port, dam or pipeline project that China won’t finance.
It’s savvy pocketbook diplomacy.

China has quietly reduced the list of governments that
recognize Taiwan as an independent nation. It won significant concessions from
nations such as the Philippines, which in 2010 boycotted the Nobel Peace Prize
ceremony for Chinese dissident Liu Xiaobo. Last month, South Africa made it
impossible for the Dalai Lama, Tibetan Buddhism’s spiritual leader, to attend
Desmond Tutu’s 80th birthday celebration. It wouldn’t be because South Africa
was deferring to the wishes of its benefactors in Beijing, would it?

This may seem like small beer relative to the growing
challenges facing the world economy. Yet China’s ability to go its own way will
only increase if one of the world’s three main currencies is beholden to it.
That’s exactly where we’re heading as Europe so actively seeks Chinese
lifelines. Get ready for Russian overtures, too. This week, the Kremlin’s top
economic adviser said Russia would make a “few billion dollars” available to
help the euro.

China would surely counter that it’s just being a good
global citizen. What the world needs, though, isn’t China in the role of banker
or shareholder. It needs China the stakeholder. China is a global leader and
must accept the responsibility that comes with that status. The world needs
China to be a constructive steward of an international system that has lost its

A more helpful step would be to let the yuan’s value rise.
Not because the US says it should, but because it would be in the best interest
of China - a weak yuan is adding to overheating risks - and developing Asia,

China is focused on raising its 1.3 billion people out of
poverty. There’s no point in dancing around the fact, though, that the
second-biggest economy is doing so at the expense of the rest of Asia.
Officials in Jakarta, Manila and Hanoi are feeling the pressure as rabid
competition from China undermines living standards.

When other countries criticize China, it reflexively defends
all policy as domestic matters that are off-limits to outside scrutiny. That
may be true of China’s aggressive Internet-censorship tactics. It’s not true
when China’s priorities on everything from trade to piracy to finance to
pollution to North Korea make international cooperation more unwieldy than

In the long run, handing over the Mona Lisa makes more sense
than the West’s growing indebtedness to an economic giant intent on relations
where benefits flow in just one direction.

(William Pesek is a Bloomberg View columnist. The opinions
expressed are his own.)