It is unclear how much the leaders of the world's 20 developed and major developing countries actually wanted to accomplish when they gathered in Washington in mid-November to discuss the fast-moving global financial crisis. However one thing the summit did make clear was the reality that the economic map of the world has been reshaped, and that the small Club of the G-8 has been rendered obsolete for dealing with the current financial crisis. One country that many are hoping will help break the global impasse is China.

Pressure is mounting on China, the world's largest holder of foreign currency, to get more involved in combating the global financial crisis. Beijing has already shown its willingness to help stabilize the international financial system by continuing to hold and even buy more U.S. Treasury notes and other assets, acting in concert with other central banks to cut interest rates on three successive occasions, and most recently announcing an enormous $570 billion domestic stimulus package in advance of the so-called G-20 summit in Washington.

Still, many world leaders want China to go beyond the role of immediate stabilizer and do more to reinvigorate the international financial system. There have been calls for China to transfer some of its reserves to the IMF, to help countries in trouble at a time of growing balance-of-payment crises. In the lead up to the G-20 gathering, the European Commission president used the occasion of the biennial summit of Asian and European leaders (ASEM) in Beijing to press China to support new financial rules. Thailand asked China to ease its currency-conversion restrictions in order to facilitate pooling of reserves to create a $350 billion fund to protect the region's currencies, and buy stocks and bonds. Philippine President Arroyo was hoping that Beijing would help back a regional bank-rescue plan.

For China, as well as the other emerging powers, an enhanced voice on the world stage would have to come with enhanced responsibilities. This is a not an easy trade-off for Beijing. Some six months before the global financial meltdown, Premier Wen Jiabao was already quoted by state media as saying that this was "one of the toughest years on record" as rising oil, transport and food costs were causing inflation to surge inside China, cutting into its economic competitiveness, affecting the domestic growth rate and causing unemployment.

It was then that Beijing started reconsidering its approach to economic development, and rethinking the cost/benefit of the strategy of the past 30 years, including high export-dependency. The global financial meltdown could not have come at a worst time for Beijing. Nonetheless, as the global crisis has deepened, Chinese leaders pledged that China would work closely with other countries to safeguard the stability of the global financial system.

Beijing now stresses, however, that as the world's biggest developing country, China's first priority is to manage it own problems well, and that the biggest contribution that it can make in the current situation is to keep the world's fourth-largest economy humming as an engine for global growth. In short, at this point, there are limits to the role that China can take in helping to remake the international financial system.

Nevertheless, Beijing knows that "people are focusing their eyes on China." It is also keenly aware that the U.S. in particular, and the G-7, are too overstretched to provide additional liquidity for the system. At the Washington G-20 summit, Chinese President Hu Jintao pledged that China will do everything it can to help stabilize the global financial system, while emphasizing his domestic concerns.

But what would China like to see in reforming the system? In his opening speech to the ASEM meeting in late October, Premier Wen called for an expansion of the "scope of the regulation of the international financial system," and argued that "we should coordinate the virtual economy with the real economy and enable the former to better serve the latter." One Chinese finance official told the Financial Times in May 2008 that "the western consensus on the relation between the market and the government should be reviewed. In practice, they tend to overestimate the power of the market and overlook the regulatory role of the government and this warped conception is at the root of the subprime crisis."

Early reports of the recent G-20 gatherings are that Chinese and Asian representatives felt less than satisfied with the results of the November summit. Beijing reportedly went in hoping to reach new consensus on lessons-learned on how best to contain international financial crises, and reach agreement on a new loan fund for providing collective support to countries requiring a bailout. Chinese authorities felt it was asking too much of the one-day meeting to reach agreement on the reform of the global financial architecture.

But at the heart of the matter, Asian reservations coming out of the gathering may have less to do with how much time is needed to resolve the big systemic questions than the fact that Beijing, the Asian countries and many of the emerging economies appear to hold a different view than the U.K., Canada and an immobilized Washington, on the optimal regulatory model, and what is needed to ward off the further worsening of the global financial situation. There also appear to be significant differences of opinion on principles for rebuilding the financial architecture, and the scale of the reforms needed in remaking the financial order. The Chinese are speaking of a new financial system that is "fair, just, inclusive and orderly."

What might happen if the U.S. or the G-7 try to slip back into their traditional roles as "agenda-setter" or "rule-maker" in the rethink on rules and architecture, and try to treat China, Asian representatives and the other emerging powers as "junior partners"? Or if the G-7 becomes distracted by older 20th century squabbling? Some recent and unprecedented regional developments suggest that China and other alternative groupings have begun to diversify their options, and are forging their capacity for coordinated action.

At the ASEM Summit in late October, China, Japan, South Korea and Asean announced their agreement to jointly establish an $80 billion fund to shore up Asian currencies. This was followed on Dec. 13 by the watershed summit of the leaders of China, Japan and South Korea in Dazaifu, in Japan's Fukuoka Prefecture, to discuss key issues including the ongoing global financial crisis and how to deepen their cooperation. Both of these recent developments can be traced back to spring-summer 2008 as Asian leaders watched the U.S. subprime mortgage crisis worsen, and their concern grew about the possibility of economic recession spreading throughout the world.

In some respects, the Asian states have been preparing for this situation since their last exposure to international financial crises in 1997-98, the "Asian Financial Crisis." At that time, they drew collective lessons and signed a 13-country bilateral currency swap, the Chiang Mai Initiative, and agreed to push forward coordination and dialogue on monetary and financial policies, including a framework for monitoring their progress.

The recent $80 billion Asian fund thus builds on earlier foundations and lessons learned-within the region-on how best to manage financial crises. It should also be noted that memories inside the region of the IMF's conditionality and the U.S. government's response to the '97-'98 Asian Crisis have lingered. If Asian representatives were to be treated as junior partners or "wallets with no real voice" in forthcoming financial discussions or talks on international payments imbalances, it would be tempting for them to turn to strengthening their nascent non-global initiatives. They could furthermore welcome other emerging economies into the fold, as they have with India, Russia and even Brazil, in other new regional initiatives.

At the same time, China is putting serious effort into its bilateral Strategic Economic Dialogue (SED) with the U.S. Beijing now sees this as the primary channel for dealing with pressing economic issues. Since its inception in 2005, China's leaders have shown a strong preference to rely on this "top-level" mechanism for strategic dialogue, setting priorities, negotiating and building consensus between the "G-2." Beijing sees this bilateral mechanism as a channel for directly reaching agreements on issues pertaining not only to the interests of both nations but, as one Chinese researcher emphasized, "vital to all countries on earth." And issues of global economic and financial cooperation were placed high on the agenda of the two-day SED meetings that recently took place in Beijing.

The G-8 should wake up to the prospect that if China's role is not appropriately handled by the Club of traditional powers, Beijing could de facto wind down its engagement in the G8+5 process, leave it the U.S. to manage its G-7 partners, and build internal consensus within the G-7 finance grouping, before coming to G-2 meetings. One Chinese researcher from a top Beijing think tank recently wrote in the People's Daily that "the world today has a global dialogue mechanism which does not suffice to cope with the current crisis," whereas the SED is seen to offer "important replenishment." The perception in Beijing is that the significance of the G-8 has been discounted by the deadlock in U.S.-Russian relations, and with Europe and the U.S. vying to lead the new global financial setup today.

Nor has the G-20 won over many inside Beijing, where the perception is that the recently concluded G-20 summit is merely a forum for member countries to air their views and promote dialogue between advanced and emerging countries on financial markets, but that despite the elements of consensus that was reached at the summit, the member countries failed to achieve concrete and rapid outcomes in their bailout efforts. In contrast, the SED is said to "hit the nail on the head" and "strives to seek actual effect."

Beijing, the Asian nations, and the emerging powers are all being very cautious not to overextend their reach or their emerging economic, political and diplomatic capacities at this point. There continue to be serious limits to how far China would be willing to go in pushing alternative agendas. However, it's clear that China, Asia and the emerging powers have begun to diversify their options, and have established a number of alternative processes, which are now gaining momentum. It would be useful for the G-7 to heed the changing global economic map, recognize the emerging diversification strategies in different parts of the world, and rise to the challenge of charting new global consensus, before it too late for the G-7.

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