I enjoyed Philip Bowring’s illuminating opinion piece in The New York Times, “Chinese Exceptionalism,” about the clout China is accumulating on the international financial stage:

For sure, the United States has been in an exceptional position and one that has enabled it to consume more than is good for it. Many countries, with China the most vociferous, wish for a more balanced world in which other currencies play significant roles in trade finance, capital flows and exchange reserves.

But while the cries against U.S. privileges ring out loud and clear, scant notice is taken of the exceptionalism successfully pursued by China. Beijing has so far insisted on maintaining both a pegged currency and controls on capital flows.

Point being, if China wants to be a stakeholder in the new international financial system that is shaping up after the global economic downturn, it is going to have to play by the rules:

All of North America, Europe and Japan have no controls on capital flows and have fluctuating exchange rates. Ditto for South Korea, Taiwan, Australia, South Africa and most of trade-oriented Southeast Asia. India has some exchange controls but a floating currency, which is also the norm in South America.

So much for a level playing field:

This exceptionalism has helped China accumulate over $1 trillion in foreign reserves, that it naturally thinks should give it clout in the world. But where would China be if that exceptionalism were removed?

Its citizens would have higher wages and better living standards, but the government would be unable to boast of such huge reserves. As it is, China boasts of its reserves as the Soviets once boasted of their missiles.

China claims to want its currency, the yuan, to play a role in trade and capital flows. But Beijing continues to underwrite U.S. deficits by keeping its currency pegged and capital movements subject to controls, thereby preventing the yuan from playing an international role.

Time to raise the bar, China.