G20 NATIONS WASHINGTON SUMMIT:Emerging nations such as China will play a crucial role in getting the world out of its economic mire, writes Clifford Coonanin Beijing

WORLD LEADERS heading to Washington this week to find ways to shore up the global economy acknowledge that emerging nations will play a crucial role in getting the world out of the mire.

With days to go until the Group of 20 (G20) summit, China and other rising economic stars announced radical economic stimulus plans aimed at kick-starting their economies.

In a telephone call on Saturday with US president-elect Barack Obama, China's President Hu Jintao said his country was willing to discuss with other participants in this week's summit ways to adopt powerful measures in the world's fourth largest economy to re-establish market confidence as early as possible.

The first of those steps was announced on the State Council website yesterday - a four trillion yuan (€460 billion) stimulus plan to boost the economy. This will give a valuable boost ahead of a summit convened by President Bush last month as the full extent of the global economic mess was revealed.

The Chinese plan loosens credit, cuts taxes and involves a huge infrastructure investment project covering low-rent housing and rural infrastructure as well as road, railway and airport construction projects, the State Council said.

And China will act in concord with other emerging economic powers.

At a meeting of G20 finance ministers in São Paolo aimed at preparing the ground for the meeting yesterday, officials from emerging economies said they would take new measures to tackle the global economic slowdown.

Brazil, Russia, India and China, the so-called BRIC nations, plan co-ordinated measures to increase trade and capital flows between their economies, the finance ministers said.

China makes up 5 per cent of the world economy, significantly smaller than the US which accounts for 28 per cent, but has a major role to play as economic growth in the world's most populous country has helped put a gloss on the globe's financial health in recent years.

China has long been eager to earn the political and diplomatic clout to match its increased economic status, and the fact that the developed world has come knocking on Beijing's door looking for help is a sign China has come of age politically as well as economically.

The major economies are obviously pleased that China and the emerging economies have signalled their readiness to help. Keeping China's economy cooking, as well as those of other economies, is probably the best thing the G20 can do for the world's financial prospects.

"There is a sense of a need for supportive fiscal expansion. China is in a very good position to have a strong fiscal expansion. This is something the Chinese authorities talked about," World Bank president Robert Zoellick said at the meeting, which is laying the ground for the G20 meeting.

The G20 group of nations comprise the leading advanced economies of the G7, the EU, plus some of the world's fastest-growing emerging nations.

China's economy is slowing down, recording less than double-digit growth figures for the first time in six years recently, and if growth falls below 8 per cent for any lengthy period it will have difficulty creating jobs and ensuring social stability. However, it is still considered well placed to survive a recession if China acts to free up its huge reserves and prime the economy.

While the global outlook remains poor there are signs that Asian stock markets and economies may escape the worst of the global downturn. Morgan Stanley said last week that China, Hong Kong and Taiwan were best placed to ride through the turbulence, and South Korea was also in a good position.

"Asia's fundamentals are far stronger," Morgan Stanley's analysts wrote in a research note.

"A combination of easier monetary and fiscal policy and lower commodity prices should enable Asia to avoid the worst of the global downturn."

The question remains what China and the emerging nations do with this power.

China has many alliances with developing nations in Africa, Latin America and elsewhere in Asia, many of them focused on ensuring the country has the natural resources to ensure its economic boom continues, and as such it is keen to paint itself as a champion of the developing world.

This means that China's agreement to help with global economic relief will not come without any strings and has been made contingent on helping developing countries.

"The financial crisis, when it extends, will first hit developing countries, especially those most underdeveloped ones, because they will face decreasing investments and possibly assistance," a foreign ministry spokesman said last week.

Premier Wen Jiabao, speaking at a conference on climate change in Beijing, has linked the financial crisis to global warming. "The developed countries have a responsibility and an obligation to respond to global climate change by altering their unsustainable way of life.

"As the global financial crisis spreads and worsens, and the world economy slows down, the international community must not waver in its determination to tackle climate change."