China wants the G20 summit next week to throw its support behind an increased role for Beijing and other developing countries in the International Monetary Fund and the World Bank, two officials said on Tuesday. In a briefing to lay out China's positions ahead of the September 24-25 summit in Pittsburgh, assistant central bank governor Guo Qingping said the meeting should "set further specific goals for transferring voting rights from developed countries to developing countries" in the IMF and World Bank, including on timing.
Zhu Guangyao, an assistant finance minister, said at the same briefing that China expects voting rights in both institutions eventually to be equally distributed between developed and developing countries.
In the IMF, developed countries currently have 57 percent of voting rights, with developing countries taking the remainder; for the World Bank developed nations have 56 percent of voting rights, Zhu said. "These proportions should be altered. They should gradually achieve a balance of 50 percent to 50 percent proportions. We hope that as reform of the international financial system continues, this balance will be achieved," Zhu said.
Brazil, Russia, India and China this month proposed a 7 percent shift in IMF quotas in favour of developing countries, more than the 5 percent the United States is proposing. The IMF has long been dominated by the United States and Europe, but the financial crisis has given fast-growing emerging economies a window of opportunity to press their case.
While China is gradually demanding a bigger voice in the global financial system to match its economic might, Guo also made it clear that Beijing would not rush to promote its yuan, also known as the renminbi, as an international currency. "We maintain a cautious attitude towards the internationalisation of the renminbi," Guo said, adding that China wanted to see basic stability in the international monetary system to help the world recover from the financial crisis.
He said the market, not the government, would decide on what international role the yuan would take, but that China still had to make progress on three preconditions for having an international currency: a strong economy to back it up; a developed financial market; and full convertibility.
"We feel, by these standards, that the yuan still has some way to go," Guo said. Zhou Xiaochuan, China's central bank governor, caused a stir in financial markets earlier this year when he said the dollar should eventually be replaced by a new global reserve currency, but Chinese leaders have since said that this was mainly an academic idea for now.
A new scheme for allowing some trade with neighbouring economies to be settled in yuan had led to only about 70 million yuan ($10.2 million) in such transactions so far, Guo said, but he added he was confident that scale would increase as more supporting policies are put in place. The finance ministry's Zhu also said that countries should not talk lightly about exiting from economic stimulus policies, and that China would continue with its proactive fiscal policy and appropriately loose monetary policy with an eye to achieving its target of 8 percent growth this year.