Vice president choice is decisive step for IMF

12:14, November 11, 2009      

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The world is entering its second year of financial crisis amid rising global trade disputes. Some people put the blame on the inaction of the International Monetary Fund (IMF) and World Trade Organization (WTO) during the recession. Some people say not only did IMF not give an early warning of the financial crisis, but to some extent it has become "executioner" and "accomplice" of the crisis. If we do not carry out reform, IMF and WTO will die. With the rise of emerging countries, the IMF plans to adjust management. This is not a simple rotation, but is a game being played out over interests between countries.

Rumors the Bank of China (BOC) Vice President Zhu Min will serve as IMF vice president has been a hit subject in the Chinese and foreign media as early as mid-October 2009. Although on October 20 Zhu Min was confirmed as deputy governor at China's central bank, many people still won't "give up" and have taken the move as his transition towards the IMF post. This assumption may make sense because the IMF Board of Governors generally accepts Ministers of Finance or governors of Central Banks as members.

During the meeting between G20 finance ministers on November 14, 2009, IMF President Dominique Strauss Khan confirmed in an interview with Phoenix TV that the IMF is indeed working with the Chinese government to talk about personnel issues, but who will be "the Chinese representative" remains in doubt. When Kahn's remarks appeared, on November 8, another round of rumors about Zhu Min becoming IMF vice president appeared in the media.

Zhu Min maybe the perfect choice. He not only has a background of studying abroad and international perspective, but is familiar with the current U.S. presidents' think-tank team. He has also worked in China's most international commercial bank for years, and is quite accomplished in macroeconomic research. Taking all this into consideration, Zhu Min is a suitable candidate for the IMF assignment.

In the third G20 financial summit held in Pittsburgh in September this year, the participants committed to improving the share of emerging markets and developing countries in the IMF to 5% or more, which means that the proportion of voting rights of developed and developing countries changes from 57:43 to 52:48, close to equal. New York and Tokyo's power in the IMF has gradually decreased during the financial crisis. Western media believes that China will be the biggest winner after the voting rights share adjustment to become the fourth largest IMF voting power after the United States, Japan and Germany. Regardless of whether Zhu Min will be the final candidate for IMF vice president, it is certain that China's discourse power in international affairs is increasing, and its status in the international financial community is elevated to a new level.

Representatives from 24 countries serve as IMF executive directors and they are elected every two years. President is elected by the Board of Governors with a term of 5 years. In addition there are three vice presidents. So far no Chinese people have held senior positions in the IMF. Currently there are already three vice presidents. Which IMF vice president will be replaced and by whom is still in doubt.

While the IMF strongly supports the developed countries to transfer at least 5% of the voting to emerging markets and developing countries, no one is willing to give up their vested interests.

China has decided to purchase no more than 50 billion U.S. dollars IMF bonds, while the EU countries announced to increase their contributions to IMF from 100 billion U.S dollars to 175 billion U.S. dollars, far beyond the United States and Japan who each pledged 100 billion U.S. dollars. This has been interpreted as the European Union would like to gain the initiative in the IMF vote adjustment process in order to avoid their power decline.

Japan, regardless of their economic plight, also decided to fund IMF in mid-February this year. Reviews say this motive is not that simple.

Before the crisis, IMF voting rights are largely owned by the United States, the European Union and Japan. When the former "funders" fall into deficit difficulties, IMF can only pin their hopes on China to protect itself. In the selection of vice president, IMF is facing a tough choice. The economic crisis might help the IMF to make the final choice. In fact, after the financial crises, IMF no longer only follows the lead of the United States.

By People's Daily Online
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