Growing role of China in G8

When G8 leaders meet in Scotland this week, the star is arguably Chinese President Hu Jintao, an outsider whose booming Communist-run country is transforming the world economic order.

Whether the G8 club can meet the challenges of the 21st century is no longer a purely academic debate, analysts say.

It is a burning question when China's insatiable energy demands push oil prices sky-high, creating tension over fuel supplies that add to other disputes with Beijing, such as currency controls that make its cheap exports even cheaper.

Hu is invited to the annual G8 summit because others can no longer ignore a country of 1.3 billion people where one city alone churns out most of the world's plastic pens and lighters and another city exports a big portion of the world's computers.

Current G8 leaders have invited leaders of large developing nations to its meetings, even if just as guests and not members. Another way of including China could be a change in membership as a possible solution.

Balance of power shifting

Alliance Trusts, an investment company, estimates that China will be the world's second biggest economy in 2050, second to the United States, with India taking third place.

Just a few years ago, diplomats from G8 countries would laugh at the idea of making China a full, official member of their club.

But some developing nations played a big role last year in helping the global economy expand at its fastest rate in 30 years - 5.1 per cent - despite slow growth in Europe and Japan.

The other big objection is that China is not considered a democracy in the sense that G8 membership entails.

But Russia was invited to join the group to anchor it in the world economic order after the Soviet Union collapsed, despite some questioning its commitment to democracy. Russia presides over the G8 for the first time next year.

Chinese demand for oil

When the G5 first met 30 years ago, oil prices were a big worry because of supply cuts caused by the 1973 Arab-Israeli war.

Today high oil prices are blamed on roaring Chinese demand. But it is hard to tell a country it should not develop.

Adding to the tension, Chinese state-controlled oil company CNOOC Ltd has just offered $18.5billion to buy US oil company Unocal Corp, sparking objections in the US Congress.

"I'm particularly interested in discussing energy with China," US President George W Bush said ahead of the G8 summit.

Britain also wants a pledge to complete the Doha round of trade liberalisation talks. That will be tough when Washington and Brussels are squabbling over farm export aid and aerospace subsidies, and both are unhappy with Chinese textile exports.

China is chairing the G20 this year, a forum set up in 1999 but meeting only at the level of finance ministers. It brings industrialised and developing nations together.

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