Turning up the Heat

Some people think the G20 summit in London will actually be the G2 -- the spotlight on presidents Hu Jintao and Barack Obama.

While it will be the first time the two meet, there are a lot of expectations that the United States and China will work out a strategy to get the world out of the economic doldrums.

In recent days China has been trying to push the US off its footing, with Chinese bank governor Zhou Xiaochuan suggesting that a "super-sovereign reserve currency" replace the US dollar.

While Zhou spun it by saying the goal is to "create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run," US Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke oppose the idea.

However, there are some European states that are interested in the shift too, but this radical proposal with significant economic and political implications may take time to be realized.

So what does China do in the meantime?

The Middle Kingdom has begun signing swap agreements with Hong Kong, Indonesia and now Columbia so that there is no need to do business in US dollars anymore, but in renminbi.

But despite these memorandums, China still continues to buy US Treasury bonds, now estimated to be at $2 trillion. It has become inextricably linked to the US whether it likes it or not.

When I first arrived in Beijing, I remember reading articles proudly spouting how much China had in US reserves. I wondered why China was so eager to put all its eggs in one basket -- why not invest in other currencies? Or better yet, take a few billion and improve its woefully inadequte healthcare and education systems?

Now two years on with the global financial crisis, the Chinese are wondering why their investments in the US have gone sour and why China keeps pouring money there. They also wonder even though China has this mind-boggling amount, why is the country still relatively poor?

The heat is on which is why Chinese leaders are also turning up the temperature with the Obama administration. From the beginning China has blamed the global economic downturn on the United States and its frivolous spending, but really, it's that consumption that has fueled China's economy.

So many contradictions, yet no easy answer.

It will be interesting to see what, if anything comes out of the G20 summit. We, the world, are tired of the photo calls and other pithy statements.

We want change, and we want it now.