China desires recognition of its arrival as a force in the global economy. When the United States failed to make room for China at the head of the table at the International Monetary Fund, Beijing created new international lenders. Chinese leaders continue to push for the inclusion of the yuan in the basket of currencies that back the Special Drawing Right (SDR), the IMF’s in-house unit of exchange. It would be a symbolic gesture, as the SDR has no role in global finance. Symbolism appears to be what China covets.
If it is status Beijing craves, it could take note of the special attention China received at the latest meeting of the United States Federal Reserve’s policy committee on September 16-17, 2015. China played a central role in one of the most anticipated Fed decisions ever. That’s a testament to China’s rise. The Fed keeps a constant watch on global events, but rarely do they influence policy. Alas, Chair Janet Yellen’s comments on the world’s No. 2 economy weren’t exactly a tribute. Policy makers balked again at raising interests rates and China’s troubles were the biggest reason why.
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