China wants a successful G20 but suspects West may derail agenda

[September 02, 2016]  By Ben Blanchard and Michael Martina

BEIJING (Reuters) - China is hoping to cement its standing as a global power when it hosts leaders from the world's biggest economies this weekend, but suspects the West and its allies will try to deny Beijing what it sees as its rightful place on the international stage.

Ensuring that this does not happen will be one of President Xi Jinping's priorities, and a key mark of how successful China will judge the G20 summit to be.

Beijing wants to use the Sept 4-5 meeting in the tourist hub of Hangzhou to lay out a broad strategy for global growth, but talks are likely to be overshadowed by arguments over everything from territorial disputes to protectionism, diplomats said.

"From where China sits, it looks like the Americans are trying to encircle them," said a senior Western envoy, describing conversations with Chinese officials ahead of G20 as being dominated by the South China Sea row and an advanced U.S. anti-missile system to be deployed in South Korea.

In recent months, China has been incensed by a ruling against its claims in the South China Sea by an international court, a case initiated by Manila but blamed by Beijing on Washington.

While China wants to make sure its highest profile event of the year goes off successfully, Xi will be under pressure at home to ensure he is strong in the face of challenges to his authority on issues like the South China Sea, going by reports in state media.

China has already made clear it does not want such matters overshadowing the meeting, which will be attended by U.S. President Barack Obama, Japanese Prime Minister Shinzo Abe, and other world leaders.

State media has given great play to the idea that G20 is for China to show leadership in shaping global governance rules and forging ahead with sustainable global growth, with the official People's Daily saying this could be one of the G20's most fruitful ever get-togethers.

"Let's make cooperation ever higher," it wrote in a commentary last week.

But the state-run Study Times wrote in mid-August that Western countries were trying to deliberately exclude a rising China and deny it a proper voice on the world stage with schemes like the U.S.-led Trans-Pacific Partnership.

"Trying to get back their right to global governance, they are forging a new 'sacred alliance', striving to establish new rules," the influential paper, published twice a week by the Central Party School, wrote in a G20 commentary.

"These new rules will exclude China."

ANGERED BY BRITAIN, AUSTRALIA

Overseas, China has been angered by questions raised by Britain and Australia over strategic Chinese investments in their countries, saying it smacks of protectionism and paranoia.

Australia has blocked the A$10 billion ($7.7 billion) sale of the country's biggest energy grid to Chinese bidders, while Britain has delayed a $24 billion Chinese-invested nuclear project.

But Western officials have their own concerns about access for their companies in China and are increasingly not afraid to talk about it.

Joerg Wuttke, the President of the European Union Chamber of Commerce in China, said there has been a change in tone as European officials having been expressing more dissatisfaction with China's overcapacity problems and a lack of reciprocal market access for European companies. "It has reached the point where people are not afraid to speak up any more. They feel like they have to be tougher in front of their own constituencies," Wuttke told Reuters.

A European official involved in trade issues with China expressed exasperation at China's attitude on protectionism.

"The Chinese would shut you down at once if you said you wanted to buy one of their grids. You wouldn't get to the end of the sentence," the official added.

None of this will make for plain sailing at G20.

"China is angry with almost everyone at the moment," said a second Beijing-based Western diplomat familiar with the summit.

To be sure, China does want G20 to go smoothly, said a third Western diplomat.

"It's very important from the stance of national pride," said the diplomat, pointing out it was not uncommon for G20s to be hijacked by issues other than economics.

"It's a minefield for China."

JAPAN WORRIES

Then there is Japan, a country with which China has been embroiled in disputes for much of the last decade over their wartime past and a spat over a group of uninhabited islands in the East China Sea.

Last week, China's top diplomat called on Japan to be "constructive" at G20, with the deeper fear in Beijing that Japan is angling to become involved in the South China Sea dispute as well, at the behest of its ally the United States.

Wang Youming, the head of the developing countries program at the Foreign Ministry-backed China Institute of International Studies, wrote in the widely-read Chinese tabloid the Global Times that the closer G20 got, the more Japan was trying to cause trouble.

"Japan is getting entangled in the South and East China Sea issues, cozying up to the Philippines, and urging China to respect the result of the so-called 'arbitration' case," Wang wrote.

"Japan is up to its old tricks, and it's hard not to think they are trying to mess things up."

(Additional reporting by Gao Liangping and Beijing newsroom; Editing by Raju Gopalakrishnan)

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