China has won its highest-ever staff position in the IMF in a reflection of its growing economic might and the clamor by emerging nations for a bigger say in global finance.
IMF managing director Dominique Strauss-Kahn notified the fund’s executive board on Wednesday of his intention to appoint Zhu Min (朱民), the deputy governor of the People’s Bank of China, as his special adviser.
It is the highest-level staff position attained by a Chinese national and follows appeals by China and other emerging nations for a bigger say in the running of the IMF and World Bank, the twin Bretton Woods institutions.
Zhu, who joined China’s central bank last year after more than a decade as a senior executive of the Bank of China, is expected to assume his position on May 3, the Washington-based IMF said in a statement.
China hailed the move, saying it would pave the way for better cooperation between the IMF and emerging economies, which have battled for years for a greater voice at the multilateral table to better reflect their growing weight in the global economy.
“With the changing of the international economic structure and international relations, especially the emergence of the G20 after the financial crisis, it is necessary for international economic reform to involve multiple countries,” said Yao Jian (姚健), spokesman for the Chinese commerce ministry.
“I think his appointment is in line with such a trend and task,” Yao said.
Strauss-Kahn said Zhu, who holds an economics doctorate from Johns Hopkins University and was once a World Bank economist, brought “a wealth of experience in government and the financial sector” to the fund.
Zhu would strengthen the IMF’s understanding of Asia and emerging markets, he said.
Most Asian countries are still wary of turning to the IMF for assistance after its heavy-handed actions during the 1997-1998 regional financial crisis.
The IMF had stepped in with major lending programs for Thailand, South Korea and Indonesia, which were among the worst hit by the financial crisis, but the stringent conditions that came attached worsened the situation, critics said at that time.
Malaysia chose instead to peg its ringgit to the US dollar to protect it from currency speculators, a form of capital control that was criticized at the time by the IMF.
But the IMF agreed in a report on Tuesday that some emerging market countries will have to design policies to manage large capital inflows, reversing its past opposition to such government intervention.
“The right policy responses will differ depending on individual country circumstances, and may include ... when necessary, carefully designed temporary capital controls,” the report said.
Zhu’s appointment and the perception shift over capital controls were all part of a broader change within the IMF over the last 18 months or so, said Derek Scissors, an expert on Asia economic policy at the Heritage Foundation.
“IMF has changed its tune over China dramatically,” he said, cautioning that the fund might have to grapple with increasing criticism from the US and Europe that China deliberately undervalues its currency for trade gains.
Zhu’s appointment followed a decision by leaders of the G20 industrialized and emerging nations to give a bigger voice to developing countries at the fund, long considered a rich nations’ club.
The G20 also endorsed a shift of “at least five percent” in quota share, or voting power, to emerging market and developing countries, part of the reform of the governance and structure of the lumbering Bretton Woods institution, founded in the aftermath of World War II to promote financial stability.
Last year, Justin Yifu Lin (林毅夫) of China became the first World Bank chief economist from a developing country.
Key emerging nations have called for the IMF quota share of the most developed countries to be reduced to 50 percent from 57 percent.
The US has proposed that over-represented developed countries — an indirect way of designating European countries — transfer 5 percent of their voting rights to the under-represented.
China, with 3.72 percent of the vote, has less influence than France, at 4.94 percent, although its economy is one-and-a-half times the size, IMF data shows.
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