A proposal to boost China's voting rights by the International
Monetary Fund (IMF) wasn't designed to increase pressure on Beijing
to make its exchange rate more flexible or undertake other policy
changes, IMF chief Rodrigo de Rato said yesterday.
The 184-member institution plans to adjust its existing
structure by immediately boosting the quotas of China, South Korea,
Turkey and Mexico. They'll rework the voting rights of all member
nations within two years.
While most countries back the plan, ensuring its passage today,
the Group of Seven industrialized powers dominating the IMF have at
the same time been urging China to ease its controls on the
currency exchange rate.
Welcoming the IMF's move, Zhou Xiaochuan, governor of the People's Bank
of China, reiterated that the country would reform its foreign
exchange regime in a "gradual, effective, and controllable"
way.
Zhou said China was a big country and had to consider many
aspects in its policymaking. He downplayed the role of the yuan's
exchange rate in resolving global trade imbalances. "Structural
policy plays a much larger role compared to the exchange rate," he
said.
De Rato said the move to boost China's voting share was simply
recognition of its economic strength and was not linked to any
reciprocal action. "The international community recognizes that
China has increased its role in the world economy," de Rato told
reporters. "I don't think a bigger role in the institution (IMF)
makes you subject to more pressures."
Being an IMF member China is already under its surveillance and
the fund regularly communicates its view on the challenges
confronting the Chinese economy just as it does with all other
member countries, De Rato said. However, he acknowledged that more
power often brought more responsibility.
A bigger voice at the IMF "would allow you to express your views
but, of course, you'll listen to the views of others," he said.
"That happens to the first shareholder and the last
shareholder."
Plans to overhaul the 61-year-old IMF, the balance of power
still largely reflects the economic landscape at the end of World
War II, has been given the green light by their International
Monetary and Financial Committee.
Under the proposals China's share of total IMF voting rights
would rise to 3.65 from 2.94 percent, South Korea's would increase
to 1.33 percent from 0.76, Mexico would go to 1.43 percent from
1.20 with Turkey's rise to 0.55 percent from 0.45.
The plan now goes to the full 184-strong IMF membership for
final approval with an announcement of the result expected
tomorrow.
On Saturday, Hu Xiaolian, deputy governor of the People's Bank
of China, called for a greater say for the voices of developing
countries to be heard within the IMF. "Developing countries not
only account for a majority of the Fund's membership but are also
main participants in its program," said Hu at the 76th G24
Ministers Meeting.
She noted the IMF's quota reform was at a critical juncture and
developed countries should adopt a pragmatic and flexible approach
to enhance the voices of developing countries. "We call for a large
increase in basic votes and the establishment of a stable mechanism
whereby those votes account for an appropriate percentage of the
quota," Hu said.
Asian nations, backed by Japan, as well as developing countries
have long been pushing for a greater say within the IMF which,
during its six-decade life, has been dominated by the US, Europe
and Japan.
The four countries to benefit from a boost in voting stature are
said by the IMF to be the only members under-represented on all
four of its criteria that determine a nation's voting rights. Those
criteria are the member's gross domestic product, its openness to
trade, the "variability" of its economy -- how volatile its growth
is -- and the level of its financial reserves.
(China Daily September 18, 2006)