China raises financial status at G20

(Xinhua)
Updated: 2009-04-04 14:49

BEIJING -- After a mere four-and-a-half hours, world leaders at the G20 summit in London decided to devote about US$1 trillion to supporting world economic growth and trade, an outcome that surprised many analysts with its scale.

But in that scant time, China had a chance to showcase its growing importance in the world economy. China said it would contribute US$40 billion to the International Monetary Fund's (IMF) increased financing capacity. That's only a small portion of the total, but it could take China's IMF voting rights to 3.997 percent from 3.807 percent.

China's new voting share would still far behind that of the United States, which is first with about 17 percent.

However, since many countries' voting shares in the IMF are well under 1 percent, any incremental change gives a member just a little extra say in the workings of the multilateral organization. And so the potential change is a small step toward China's goal of having more influence on how the IMF, and the world financial system, operates.

HIGHER FINANCIAL STATUS

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Economists said China's proposed contribution of US$40 billion was in line with its current development level and would mean a more influential voice for Beijing in international financial institutions and in shaping the world economic order.

"China's promise of extra funding was a contribution to the world economy and showcased the country's clout," said Zhao Jinping, an economist with the State Council's (cabinet's) Development Research Center.

Tang Min, deputy secretary general of the China Development Research Foundation, said the country's voting rights and quota of contributions to multilateral bodies still fell short of its status as the world's third-biggest economy.

He said China would further step up its contributions, and influence, as its economic power grew and reforms of the international financial system went forward.

Zhao said it was part of a long-term trend for developing countries like China to have more influence in decision-making at international financial institutions, noting that the "obsolete mechanism and structure of world financial organizations" failed to reflect an evolving world economy.

British special G20 envoy Mark Malloch-Brown was quoted in the China Securities Journal on Thursday as saying that an overhaul of the world financial system should start with international financial institutions and reforming the IMF meant China's voice must be bigger.

The G20 leaders' statement was a "positive signal" in that it gave a timetable for reforming the IMF and the World Bank, said Zhang Bin, an expert with the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, a government think tank.

Zhao said China's obligations to international financial institutions should reflect not just the country's size but also the fact that China is still a developing country.

He urged China to expand its influence by actively joining multilateral or regional dialogues and offering more proposals on international issues.

"It should be a step-by-step process for China to shoulder more responsibility. It can't be accomplished in just one move," said Zhao.

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