Asia Wants More Power, And Gets It At G20

Asian nations, who dominate the roster of industrializing economies, are demanding a greater say over how to salvage and reshape the global system that brought them unprecedented prosperity but now threatens to reverse that progress.

They appear to be getting it.

As leaders of the Group of 20 leading economies haggled Thursday over details of a declaration on reviving stalled growth and reforming international financial institutions, it was clear there would be no meaningful agreement if the Asian countries were not heard.

"We have long called for increasing representation of emerging economies. This is finally taking place, but only very slowly," said Osamu Sakashita, deputy cabinet secretary for public relations for Japanese Prime Minister Taro Aso.

"There is a welcome shift but there is more to be done in that direction," he said.

Meeting on the eve of the summit, President Barack Obama handed Chinese President Hu Jintao a diplomatic coup when, according to a senior American official, he agreed on the need to reform the International Monetary Fund to give China and other developing countries "an appropriate role."

President Obama has three tangible goals for the summit, White House Press Secretary told CBS' The Early Show Thursday. Among them are tighter financial regulations and increased help to emerging economies - two ideas largely embraced by other leaders. But Mr. Obama also wants to see other nations, particularly in Europe, step up their own stimulus programs.

Also Thursday, President Obama and his South Korean counterpart, Lee Myung-bak, agreed Thursday on the need for a "stern, united" international response if North Korea goes ahead with a planned rocket launch.

Developing economies account for nearly half of all exports, and Asia for about half of that total. With trillions of dollars in foreign reserves, China and other countries in the region have unprecedented financial heft.

Beijing has led demands from developing economies for a bigger say in managing the world's finances and has suggested its contribution to a global bailout fund might be contingent on receiving it. <!-OBAMA MAP EMBED WILDCARD -->

In return, there will likely be an acceleration of efforts to give China and others greater clout on the IMF, they said.

Such changes are imperative given the shift of power and productivity to Asia in recent decades.

The last time London hosted a world economic summit, in 1933 in the midst of the Great Depression, geopolitical and economic power lay squarely in the West - in the United States and European colonial powers.

Today, China is fast overtaking Japan as the world's third-largest economy in terms of economic output, if not per capita wealth.

"International institutions need to reflect the realities of power in the world," said Ed Gresser, trade director at the Progressive Policy Institute in Washington.

"To be effective, they have to involve and include the emerging economies. They need to feel they have a voice."

In the weeks before the summit, Chinese leaders stressed their desire for fundamental changes to the world financial order, calling for the creation of a new global currency to reduce reliance on the U.S. dollar.

Beijing's Central Bank governor, Zhou Xiaochuan, touted the "superior system advantage" communist-ruled China claims in bypassing messy democratic approval processes to take action.

Japan was proposing a "significant increase" in funds available for lending to developing nations, and a topping up of support to the International Monetary Fund, Sakashita said.

Japanese Prime Minister Aso planned to announce an increase in trade finance funds and development assistance, he added.

Thailand's prime minister Abhisit Vejjajiva, representing the Association of Southeast Asian Nations (ASEAN), planned to stress the region's readiness to contribute to the global financial reforms, drawing from lessons learned from the Asian financial crisis in the late 1990s, the Thai newspaper The Nation reported.

Critical to all Asian nations: reassurances that rich countries will keep their markets open to exports, the lifeblood of modern affluence for much of the newly industrialized world.

At the same time, China in particular is striving to reduce reliance on exports by encouraging its thrifty consumers to spend more.

By the time the London summit opened, the focus had shifted to how to restructure the world financial system to prevent the market meltdowns similar to the one that brought on the current crisis.

Other measures under discussion and likely to be in the summit declaration include a call to set up a new international financial oversight body to supplant the Financial Stability Forum, and another to register hedge funds and credit ratings agencies to more closely oversee risk-laden financial instruments.