Why aren't China and India in the G7 or G8?

[AAbsolute]

Why aren't China or India being included in the G7 or G8 global talks? I know they would have to change the name to the G9 or G10 or replace one of the existing member countries, but come on. Ignoring China and India in these global finance talks seems stupid. China and India are the fundamental reason for the lack of equity in the G7 member countries.

Putting financial patches into the system that don't deal with China, India and even Saudi Arabia will be fruitless.

 

[Smiling JOe]

They aren't included because when the G6 was formed, it included only the world's most industrialized democracies. Canada was quickly added, then much later, Russia was added. China is still far from being a democracy, but both China and India are included as guests in some talks via the G8+5. France has been trying to make China, India, Mexico, Brazil, and South Africa on board to become the G13, but I don't think they have much support from the other 7 countries, with maybe the exception of the United Kingdom. So, for now, they are known as the Outreach Five.

 

[Allifunn]

They aren't included because when the G6 was formed, it included only the world's most industrialized democracies. Canada was quickly added, then much later, Russia was added. China is still far from being a democracy, but both China and India are included as guests in some talks via the G8+5. France has been trying to make China, India, Mexico, Brazil, and South Africa on board to become the G13, but I don't think they have much support from the other 7 countries, with maybe the exception of the United Kingdom. So, for now, they are known as the Outreach Five.

I would thank you for this post...but we can't "thank" in the lounge.

 

[AAbsolute]

They aren't included because when the G6 was formed, it included only the world's most industrialized democracies. Canada was quickly added, then much later, Russia was added. China is still far from being a democracy, but both China and India are included as guests in some talks via the G8+5. France has been trying to make China, India, Mexico, Brazil, and South Africa on board to become the G13, but I don't think they have much support from the other 7 countries, with maybe the exception of the United Kingdom. So, for now, they are known as the Outreach Five.

Does anyone onboard think the G7 or G8 can make an effective global financial recovery program without full compliance of China and India? I think the US can inject a Trillion dollars and not fix the underlying imbalance dynamic.

 

[traderx]

Does anyone onboard think the G7 or G8 can make an effective global financial recovery program without full compliance of China and India? I think the US can inject a Trillion dollars and not fix the underlying imbalance dynamic.

The current meetings include China, India, Brazil, etc. so there appears to be a globally coordinated effort to resolve the liquidity crisis. As for the G7, its members consist of developed nations that have a private economy while China still controls its economy hence does not play by the same rules. For example, China does not allow the Yuan to float against other world currencies. I am guessing here but I assume that China does not let the Yuan trade because it knows the Yuan value will shoot through the roof. If the dollar fell because of our trade deficit, it seems that the Yuan would rise because of the huge China trade surplus. So, if the Yuan increases in value versus other currencies, suddenly the magic of Chinese goods - that they are so cheap - would erode.

As for the imbalance, the only current imbalance between the US and China is the trade deficit. Yes, we need China and Japan to buy our bonds and float our ever increasing huge debt but they are likely to continue. BTW, Japan holds more of our paper than China. There are negative consequences to being the market for the world's exporters, but a key benefit is that China has a fundamental interest in ensuring that the US remains propped up hence they finance our debt. And we get to buy children's toys with lead paint in them.

 

[AAbsolute]

It sounds to me that at a time of China's choice they can change everything. They are nearly completely set up for self sufficiency. It has taken many generations of government based (forced) commitment and planning for them to get to where they are today. They can unpeg their currency at any time they chose and immediately thereafter that currency itself will become another "product" to sell at an exhorbatant gain for a short time. Immediately following that phase they can use that currency to encumber strategic financial sectors and the borrowers would be at their practical mercy.

"Subjugating your enemy without fighting is the true pinnacle of excellence in warfare." Sun Tsu 544 BC - 496 BC