China expected to advance IMF reform at G20 summit

By Chen Xia
Print E-mail, September 3, 2016
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The G20 summit is about to open in Hangzhou on Sunday. Yi Gang, vice governor of the People's Bank of China (PBOC), announced on Thursday that, in its role as the rotating chair of the G20, China plans to continue its efforts to advance IMF reforms including changes in its quota allocations and overall governance.

In January, more than six percent of the shares were re-allocated to dynamic emerging market and developing countries as part of an effort to achieve a better balance between over-represented and under-represented members. With the adjustment, four emerging economies -- Brazil, China, India and Russia – joined the ranks of the top 10 members of the IMF.

Yi's announcement was lauded by Chinese and foreign scholars who believe the current allocation of IMF shares -- in effect, its equity capital -- fails to reflect the changes in global economic governance and has not been conducive to addressing the weak global economic recovery since 2008.

However, the latest adjustment is still regarded as insufficient for developing countries, which are demanding a bigger say on international developments, said Ruan Zongze, executive vice president and senior research fellow at the China Institute of International Studies.

"Under the current world economic structure, the voice of developing countries remains weak. This situation needs to be changed, so that developing countries can have a stronger presence in global economic governance," he said.

China should serve as a bridge between the developing countries and the G20, and help create more opportunities for more countries, thus injecting new life into the sluggish world economy, he added.

Ruan's opinion was echoed by John Ross, senior fellow of the Chongyang Institute for Financial Studies.

The BRICS countries' share of world GDP based on current exchange rates is 22.2 percent, or 30.8 percent when calculated by PPP; however, their IMF voting share, which is determined by their quota, is only a combined 14.1 percent.

BRICS countries represent the most important developing economies, and are thus greatly under-represented, Ross said.

Kim Sangsoon, senior researcher at the Charhar Institute and the president of the South Korea-based East Asia Peace Research Association, also expected China to work to further improve global economic governance at the Hangzhou summit.

As the world's largest developing country, China is dedicated to protecting the rights of developing countries in the current global governance system, he said.

The Hangzhou summit is scheduled to be held on Sept. 4-5. Its theme of working "Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy" has been designed to reflect the development needs of all countries, so as to provide additional impetus to the sluggish world economy by exploring new paths, tapping new forces and stimulating new sources of vitality.

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