BEIJING: China came away from Thursday’s G-20 meeting looking ‘pretty good,’ said experts.
Beijing strengthened its image as a responsible global stakeholder by extending a reported US$40 billion (S$60.6 billion) loan to the US$500 billion in new funding pledged to the International Monetary Fund (IMF).
It also saw the world’s developed nations heed calls from emerging economies, including China, for more say on the global economy.
And the creation of a US$250 billion overdraft facility in IMF’s ‘currency’, the Special Drawing Rights (SDR), instead of US dollars showed that China’s voice on the issue had been heard, observers noted.
China had called for the greenback to be replaced by the SDR as the global reserve currency in the lead up to the summit.
Beijing is ‘showing that it is willing to play its part when times are hard’, Mr. Ken Peng, a Citigroup economist in Shanghai, said of the country’s US$40 billion to the IMF.
That China is contributing even before the issue of increasing its voting rights at the IMF is settled, signals that China ‘is being practical, and not dogmatic’, said Ms. Wang Tao, an economist at UBS Securities in Beijing.
‘It certainly wants more say but is willing to leave it to future discussion,’ she told The Straits Times.
China itself also benefits from an expansion of the IMF’s coffers.
The tripling of IMF resources is ‘a big indirect win’ for China, as it should ‘result in a significant stabilisation of external demand much sooner than would have been the case otherwise, and therefore offer a major boost to China’s growth prospects,’ said Standard Chartered economist Stephen Green in a note to clients.
Much depends on the details and quality of implementation, but ‘given that some 30 per cent of China’s (gross domestic product) growth in recent years has been driven by external demand, we believe that China will benefit significantly,’ he added.
What got the domestic media cheering at home was also the pledge by G-20 nations to undertake ‘representation reforms’ in global financial institutions.
‘Emerging and developing economies, including the poorest, must have greater voice and representation,’ said the summit communique.
The Beijing Youth Daily noted in a commentary: ‘This is the first time that developed countries were not the sole guiding force (at the G-20). Emerging market countries got the chance to participate in a summit on formulating and revising global rules.’
Experts say a review of China’s IMF voting quota could be carried out soon. An increase of China’s permanent contribution to the fund, currently 3.7 per cent, could see it gain more say in the Fund.
Currently, the European Union have about 32 per cent of IMF voting rights, while the US has 17 per cent.
1 comment:
China looking stronger after G-20 summit
By Tracy Quek
4 April 2009
BEIJING: China came away from Thursday’s G-20 meeting looking ‘pretty good,’ said experts.
Beijing strengthened its image as a responsible global stakeholder by extending a reported US$40 billion (S$60.6 billion) loan to the US$500 billion in new funding pledged to the International Monetary Fund (IMF).
It also saw the world’s developed nations heed calls from emerging economies, including China, for more say on the global economy.
And the creation of a US$250 billion overdraft facility in IMF’s ‘currency’, the Special Drawing Rights (SDR), instead of US dollars showed that China’s voice on the issue had been heard, observers noted.
China had called for the greenback to be replaced by the SDR as the global reserve currency in the lead up to the summit.
Beijing is ‘showing that it is willing to play its part when times are hard’, Mr. Ken Peng, a Citigroup economist in Shanghai, said of the country’s US$40 billion to the IMF.
That China is contributing even before the issue of increasing its voting rights at the IMF is settled, signals that China ‘is being practical, and not dogmatic’, said Ms. Wang Tao, an economist at UBS Securities in Beijing.
‘It certainly wants more say but is willing to leave it to future discussion,’ she told The Straits Times.
China itself also benefits from an expansion of the IMF’s coffers.
The tripling of IMF resources is ‘a big indirect win’ for China, as it should ‘result in a significant stabilisation of external demand much sooner than would have been the case otherwise, and therefore offer a major boost to China’s growth prospects,’ said Standard Chartered economist Stephen Green in a note to clients.
Much depends on the details and quality of implementation, but ‘given that some 30 per cent of China’s (gross domestic product) growth in recent years has been driven by external demand, we believe that China will benefit significantly,’ he added.
What got the domestic media cheering at home was also the pledge by G-20 nations to undertake ‘representation reforms’ in global financial institutions.
‘Emerging and developing economies, including the poorest, must have greater voice and representation,’ said the summit communique.
The Beijing Youth Daily noted in a commentary: ‘This is the first time that developed countries were not the sole guiding force (at the G-20). Emerging market countries got the chance to participate in a summit on formulating and revising global rules.’
Experts say a review of China’s IMF voting quota could be carried out soon. An increase of China’s permanent contribution to the fund, currently 3.7 per cent, could see it gain more say in the Fund.
Currently, the European Union have about 32 per cent of IMF voting rights, while the US has 17 per cent.
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