Lu Ning’s comment first appered on the Guardian.

While the financial crisis is deepening and spreading, attention is turning to the east. A cartoon in the Australian shows a character saying that western capitalists are looking for eastern socialists to save them.

To Kevin Rudd, the Australian prime minister, this is not a joke. He argued during a Radio Australia interview that the steady growth of China’s economy would be extremely helpful for getting Australia out of the financial crisis.

According to the International Monetary Fund’s economic forecast published last week, most western countries are facing recession next year, while China’s economy will keep growing at 9%. Rudd believes this is good news for Australia. China’s demands for ore, coal and other materials has fuelled the growth of Australia in the recent years. At the moment, China is Australia’s largest trading partner.

Last week’s announcement of interest rates cuts by China was part of a coordinated effort by the world’s central banks. It was seen by most media commentators not as a necessary step to protect China’s financial system, but as a signal showing China’s willingness to take more responsibilities on the international stage.

It is obvious to China that in economic, political and diplomatic terms, it is now in good position in relation to Australia, US and Europe.

President Hu Jintao told President George Bush in a phone conversation that the success of America’s rescue plan would be good for China as well. However, even if the plan doesn’t work quickly, or the crisis spreads, China is still relatively safe because its financial system is largely isolated from the rest of the world, and its economy is growing steadily. The big drop in commodity prices also means inflationary pressures is partially lessened. In short, the global financial crisis presents China with more opportunities than difficulties.

In terms of China’s relationship with Australia, this means not only that China has more bargaining power over the price of raw materials, but it also raises the possibility that Australia will allow more Chinese companies to invest in the commodity industry. In political terms, this means that since winning China’s cooperation is important, Australia will have to pay more attention to China’s stance on Taiwan and other Asia-Pacific issues.

From America’s point of view, China’s help is needed to get out of the current crisis. To cope with the economic downturn and high unemployment, America will have to increase its exports to China. One way to do this is to relax some of the unreasonable restraints on exporting to China. The current deficit is partly a result of America’s post-cold war mentality. If the US could get rid of some of its outdated containment policies towards China, and allow the selling of some advanced equipment and technologies, the trade deficit could easily turn to surplus.

Unfortunately European policy-makers have the same mentality as their American counterparts. Enjoying cheap imports from China, they complain about the trade deficit; while at the same time they still impose restrictions on exports to China. Under the Labour government, the UK is reluctant to sell China what it thinks are sensitive products. A list by China’s ministry of commerce shows China wants to import but can’t get products, technologies, and patents in the area of aviation, electronic equipment and carbon fibre materials from the UK. What western leaders should see is that in the long term, China will be a partner rather than a potential competitor or even enemy. Kevin Rudd has realised it, what about Gordon Brown?

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