The international financial community is fretting over who will replace disgraced French politician Dominique Strauss-Kahn, as head of the IMF. The retirement of John Lipsky, the first deputy managing director of the IMF, opened up another position. But global opinion is turning against the notion that the chief positions at the IMF and World Bank should always be held by Westerners. Isn’t it time for someone from the emerging countries to take charge?
So it’s possible that China, which has had an increasingly powerful voice in the IMF in recent years, could produce the next president.
Since they were established, the World Bank has been headed by an American and the IMF by a European. This unwritten rule has been more fiercely challenged since the global financial crisis erupted in 2008. Critics argued that candidates from the emerging countries, such as China and Brazil, should be given a chance at the role. In fact, Strauss-Kahn has worked to raise the profile of the emerging countries within the organization since he took charge of the IMF in 2007.
Today, all involved parties are looking to follow an “open, merit-based and transparent process” rather than convention when selecting the leaders of the two organizations. It would be an appropriate response to the transition of the global economic pattern if the IMF presidency was held by a member of the financial elite from emerging countries like China, Turkey, Brazil and India.
The current IMF reform has produced the largest modification to its voting system since World War II. Last November, China won the third largest proportion of IMF voting rates, 6.394 percent, only 0.07 percentage points less than Japan. China’s share is still lower than that of the US, which has a voting share of 16.407 percent, but is higher than any single European country.
Its growing share of the vote means that China has more space to provide suggestion for IMF, and also that China has the right and obligation to dispatch more senior officials to the IMF to influence its macro-economic decisions. One of the most important responsibilities of IMF is to supervise trade and to provide funds to countries in need, which are advantages a growing China can provide. Chinese taking the IMF presidency will greatly promote economic communication.
In recent years, there have been criticisms that the IMF responded too slowly to the financial crisis and the collapse of the banking systems in various countries. It has also been blamed for paying too little attention to financial growth in developing countries.
The IMF is thus expected to reform. Bringing more Chinese in at a senior management level can offset these defects. And China’s increasing presence will also reinforce the attention of the IMF to the emerging economies as well as improving the economic and trading relationship between developing and developed countries.
Many outstanding financiers and bankers have emerged in China in the past decade. For instance, Justin Yifu Lin became World Bank vicepresident years ago, and Zhu Min, who was both vice president of the Bank of China and People’s Bank of China, has been an IMF special consultant for a year now. Therefore, China has plenty of talented people who could hold the post.
If the 24 executive directors who hold the voting right in the IMF could clearly realize this and select a Chinese citizen as the president, it will be an acknowledgement of China’s development and contribution, and even more, a symbolic step in reorganizing the global financial order.
By Shan Renping
The author is a commentator with the Chinese edition of the Global Times.