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China's larger IMF role poses questions
By Xin Zhiming (China Daily)
Updated: 2009-10-20 09:20 New rights often bring new responsibilities and, with China set to take on a larger decision-making role at the International Monetary Fund (IMF), experts warn it may be pressured to shoulder a heavier burden. Daisuke Kotegawa, IMF senior resident representative in Japan, said on Friday the organization was bringing in reforms that would mean China's voting power at the IMF table would be second only to that of the United States.
"China must know what are the duties it should have and what are not," replied Zhao Xijun, a finance professor at Renmin University of China. "It should not shoulder responsibilities that are unaffordable for it." Neither Kotegawa nor Zhao could be sure when China's share of voting power might increase. "It's something to be discussed and decided at the negotiating table," said Zhao. "A deal could be struck soon, but it could also take a very long time everything is possible." Currently, at the IMF table, the US holds about 17 percent of votes and, consequently, has the de facto veto on decisions because, to make a decision, the organization requires 85 percent of overall votes. At the moment, Japan, with more than 6 percent of votes, is the second-most influential voting block, with China holding just 3.72 percent. EU member states as a whole have 32 percent of voting rights. Experts have also warned that even if China gets a larger share of the votes, it may not necessarily get more say around the IMF board table. Zuo Xialei, chief economist with China Galaxy Securities, said that as a developing country, China must continue to enhance its overall national standing and learn to explain its position in a more effective way if it hopes to persuade other countries to support it. China has taken on a larger role on the world stage since the start of the world financial crisis, in part because the country has continued to enjoy relatively strong economic growth and maintained an unscathed financial system. Some in the international community have pinned hope on China helping to construct an improved global economic order through major international organizations, such as the World Bank and IMF. China agreed to buy a new type of bond issued by the IMF, investing about $50 billion, in a bid to help the organization tackle financial challenges. And Bank of China Executive Vice-President Zhu Min, a former World Bank economist, is reportedly being tipped as a future vice-president of the IMF. Joining the call for reforming the voting mechanism of the IMF, Yi Gang, China's central bank vice-governor, said early this month that China supports a "reasonable automatic quota adjustment process" to "reflect changes in the relative economic positions of its members and avoid serious quota share misalignment". |
