With China at G-7, new leverage

Welcome to the club, China. At least to the dining room.

Chinese officials, for the first time, are slated to dine Friday night with finance ministers of the Group of Seven, the world's most powerful industrial democracies.

It's the latest sign not only of China's rising industrial might, but also of the G-7's impetus to keep closer tabs - and exert more influence - on a nation that is fast becoming an economic colossus.

The Washington dinner, which precedes a meeting of G-7 finance ministers and central bankers, is regarded as adding pressure on China to meet its international economic "responsibilities."

Translation for today: Revalue the yuan so it's not so cheap. But the broader message is: Association with the G-7 club has a price - conformity with the rules of global trade and finance.

The focus on China has implications far beyond the world of white tablecloths and stemware. China's explosive growth is being blamed for everything from lost manufacturing jobs to a troubling surge in US trade deficits. But it's also providing jobs for Minnesota iron miners and cutting consumer prices from clothing to hardware.

Last year China accounted for nearly one-fifth of the growth in world trade. Its imports grew 40 percent. Yet its long-standing bilateral trade imbalance with the US mushroomed to $132 billion last year, more than one-quarter of America's global trade deficit of nearly $500 billion.

"China is emerging as a very significant player in the world economy," says Marcus Noland, an economist at the Institute for International Economics in Washington.

In 2001, China was accepted into the World Trade Organization, the body which regulates international commerce. Beijing has "by and large" lived up to its WTO obligations, says Frank Vargo, a trade expert at the National Association of Manufacturers in Washington. The G-7 invitation is further recognition of the clout of China and its 1.3 billion people.

"Very important and very encouraging," Mr. Vargo says. As a major economic player, China should "act like one."

China's decade-old practice of fixing the value of its currency against the US dollar will almost certainly be one issue at the Treasury banquet. Perhaps foreseeing this, on Tuesday in Beijing, Premier Wen Jiabao told a group of US corporate executives that China will loosen its control over the exchange rate to give market forces a bigger role in determining the yuan's value. He didn't say when that would happen. But it's the first time China's No. 1 leader has talked, at least obliquely, of a revaluation of China's currency.

The International Monetary Fund, too, this week called on China to let the yuan "float" in world currency markets.

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