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China has embarked on a series of subtle moves ahead of the G-20 Summit in London, scheduled for April 1-2. It really wants to make its presence felt by the world leaders of the G-20, which altogether controls more than 80 per cent of the world's gross domestic product. China's aim is to declare fully that it is a global economic power, which should be treated with equal if not higher status among the global elite. And China looks confident that the G-20 Summit will mark the launch of its evolving role in the 21st century while industrialised nations fall victim to the banking crisis, which will be their own undoing.

To prepare for the G-20 Summit, China has announced an array of fiscal stimulus measures to keep its GDP growth above 7 per cent and ensure employment opportunities for the young Chinese entering the workforce. Its stimulus effort is gigantic, larger than the US proportionately.

Second, China has offered subsidies to farmers for purchasing white goods. This is aimed at stimulating domestic consumption. Third, China has initiated a credit extension policy to spur demand. State banks have been instructed to lend money more aggressively to prop up investment, particularly for infrastructure projects or job creation programmes.

By doing so, China is also attempting to shore up real estate prices, boost consumer demand and keep the stock market alive. Stock prices have so far risen by 30 per cent through state-sponsored buying.

China's economic stimulus programme has gained credibility in the eyes of the international community. At a time of global recession, China's moves provide a cushion in propping up demand.

Yet all of these steps have been designed to pave the way for China to rise as a global economic power to be reckoned with. As the US struggles with its banking crisis and deep recession and Europe faces a slump and its own banking crisis, China is in relatively better health. It still lays claim to the world's largest foreign exchange reserves of US$2 trillion (Bt72 trillion). With its deep pockets, China would like its voice to be heard, its role to be recognised.

China has made its point clearly heard that it would like the special drawing right, a currency unit managed by the International Monetary Fund, to serve as the world's reserve currency. This is to reduce the foreign-exchange risk associated with the US dollar, which is likely to weaken significantly along with the deterioration of US economic fundamentals. China holds $1.4 trillion of US dollar assets and is afraid that dollar weakness or a dollar crisis will erode its wealth.

The US will resist at all costs to prevent China's move to downplay the role of the dollar, which has been serving as the anchor of international transactions since post-World War II. The US can print the dollar literally at almost no cost.

If the dollar were not serving as a world reserve currency, the US would have plunged into a severe foreign exchange crisis by now.

China has been planning to enhance the role of the yuan in the international arena all along. By calling for the SDR to become a world reserve currency, China would like the yuan to be included in the SDR's basket of currencies, which now holds the dollar, euro, yen and pound. If the G-20 agrees to this, the yuan will make its way into the SDR. Then the yuan will have to become fully convertible so that any country can hold the yuan as another reserve currency.

To facilitate this move, China has over the past five months pegged its currency to the dollar at the exchange rate of 6.83. Japan is also keeping its yen steady at 97-98. The stability of these world currencies is important in this transition period to prevent market shocks.

Most countries, particularly in Europe, welcome China's new role because of the fiscal burden. Now several emerging-market economies, notably the Eastern European countries, are seeking bailouts from the IMF. But the IMF does not have enough financial resources to look after all of them. It needs at least $500-$700 billion in fresh funding to undertake a support programme on a grand scale to avert a meltdown.

If China is allowed to take on a greater role, it will be ready to pour money into the IMF's fundraising drive. At this point, only China and Japan are in a position to recapitalise the IMF. Most other countries, in Europe or the US, are in bad fiscal shape. Europe is constrained by deficit spending of not more than 3 per cent of GDP. The US is carrying the prohibitive cost of bailing out its banking institutions, not to mention a huge budget deficit lasting from now to the next 10 years.

The world is changing fast. The G-20 Summit will decide the new look of the global financial landscape. China is knocking at the door. Like it or not, China is going to take the global stage by storm.