In a rare interview the governor of the People’s Bank is conciliatory on the need to improve the representation of developing countries in the institutions of global governance.
Chinese central bank governor Zhou Xiaochuan resisted the temptation to urge immediate progress in his country’s bid for more voting power at the International Monetary Fund, underlining China’s refusal to respond in kind to demands from the US and Europe for a revaluation of the yuan.
In an interview with Emerging Markets Zhou showed sympathy for the political sensitivities involved in implementing long overdue reforms to update the IMF’s voting structure.
“We’re not in a hurry because we know an international organisation like the IMF is a very complicated mechanism. It should be a set of very gradual changes,” Zhou remarked yesterday. “Its also difficult for different parties to reach agreement on that,” he noted.
His comments come as finance chiefs gear up this weekend to consider reforming the institution to give key emerging countries more voice and expanding the IMF's position as dispenser of world policy advice. IMF managing director on Thursday pledged to make deep-seated changes at the Washington-based institution, widely expected to include increasing granting China and India more influence.
China has led a group of developing countries calling for more influence at the 60-year-old multinational lender following shifts in the make-up of the global economy during the past decade. The issue will be discussed at the lender’s shareholders at its spring meeting on Sunday (23rd April) and will again be on the table at September’s annual get-together in Singapore.
The US, as the world’s biggest economy, holds 17% of the IMF’s voting rights, Japan, the No. 2, has a little over 6%, just ahead of Germany in third place.
The controversy begins there because the UK and France are the next largest shareholders even though China’s economy overtook both countries last year. Perhaps the most glaring of the disparities is the representation of Belgium, population 10 million, which holds more sway than India and Brazil.
While the UK, US and Canada have all made conciliatory remarks about the need to improve developing countries’ representation, it is unclear how this will be achieved. Mainland Europe in particular hasn’t offered any concessions.
Zhou’s reluctance to push the issue or set a deadline – “It’s not dependent on us, we try not to predict or estimate the timing,” he says – contrasts with the pressure exerted on him by European and US politicians over the value of the Chinese currency.
Belgian finance minister Didier Reyndiers in January gave China a 6-month ultimatum to allow an appreciation of the yuan and US officials up to the President himself have used the visit of a Chinese delegation this week to up the ante in their demands.