Bigger say for China not pressure tactic: IMF
(China Daily)
Updated: 2006-09-18 06:56

SINGAPORE: A plan by the International Monetary Fund (IMF) to boost China's voting rights is not aimed at putting more pressure on Beijing to make its exchange rate flexible or undertake other policy changes, IMF chief Rodrigo de Rato said yesterday.

The 184-member institution plans to adjust its existing structure by immediately boosting the quotas of China, South Korea, Turkey and Mexico and later rework the voting rights of all member nations within two years.

While most countries back the plan, ensuring its passage today, the Group of Seven industrialized countries that dominate the IMF have at the same time been urging China to ease its controls on the currency exchange rate.

Welcoming the IMF changes, Zhou Xiaochuan, governor of the People's Bank of China, reiterated that China would reform its foreign exchange regime in a "gradual, effective, and controllable" way.

Zhou said that China is a big country and has to consider many aspects in its policymaking.

He downplayed the role of the yuan's exchange rate in resolving global trade imbalances.

"Structural policy plays a much larger role compared with the exchange rate," he said.

De Rato said the move to boost China's voting share was just a recognition of its economic strength and was not linked to any reciprocal action.

"The international community recognizes that China has increased its role in the world economy," de Rato told reporters. "I don't think ... a bigger role in the institution (IMF) makes you subject to more pressures."

Being a member of the IMF, China is already under its surveillance and the fund regularly communicates its view on the challenges confronting the Chinese economy just as it does with all other member countries, he said.

De Rato, however, acknowledged that more power often brings more responsibility.

A bigger voice at IMF "would allow you to express your views but, of course, you will listen to the views of others," he said. "That happens to the first share holder and the last shareholder."

The plan to overhaul the 61-year-old IMF, whose balance of power still largely reflects the economic landscape at the end of World War II, was given the green light by the IMF's International Monetary and Financial Committee.

Under the proposals, China would see its share of total IMF voting rights raised to 3.65 per cent from 2.94 per cent now while South Korea's share would increase to 1.33 per cent from 0.76. Mexico would go to 1.43 per cent from 1.20, with Turkey's participation climbing to 0.55 per cent from 0.45.