Not surprisingly, participants at the weekend G20 meeting agreed that only a reconstructed financial system can help the world better deal with the present crisis and prevent similar ailments from recurring. But rebuilding or reforming the IMF not only means thorough overhauling of its purposes, functions, and operation and management system, but also changing its US- and Britain-led power structure. For example, the Americans have had the last word on the World Bank president's selection and Europeans have chosen the IMF chief for years. Such an unreasonable practice should be changed, too.
That means the overdue reforms should give proper representation to and increase the say of emerging developing economies. Giving the countries their due can only help increase the IMF's legitimacy.
According to a reform plan approved at a IMF board meeting in April last year, developed countries' share of votes will decrease from 59.5 to 57.9 percent, while those of developing nations increase from 40.5 to 42.1 percent. But the status of the developed countries is not expected to change in the world monetary body. And if that indeed would be the case, then that's not the sort reform the IMF needs to undergo.
Proper representation and a bigger voice for the developing countries are the need of the hour. For instance, being the world's third largest economy and the largest foreign reserves holder, China should get its due place in the monetary body. But before that, the country should get to play a more active role to reform the IMF. It should be made part of the team that works out the new rules for the world body, and should work out its own reform schemes on the basis of the changed international financial scenario and after in-depth studies and review of other countries' suggestions. The team has to ensure that thorny and controversial issues of IMF reforms are resolved appropriately, keeping in mind the interests of all the parties.
To better safeguard its and developing countries' interests, China has to hold dialogue not only with the US-led developed countries, but also coordinate and cooperate with other emerging economies to play the role it deserves. This will protect its national interest and help reconstruct a new global financial market order. And to achieve all this China has to take a pragmatic rather than a rigid ideological stance.
The country's economy has been in relatively good shape despite the downturn since the government adopted a series of timely and workable macroeconomic policies. This has placed China in an advantageous position, and made it more suited to play a leading role in rescuing the struggling world economy.
In all earnestness, China deserves to be an integral part of any reconstructed global financial order. And since the reconstruction of the IMF and the World Bank is imminent, hopefully China's representation is proportional to its economic strength and contribution to the new economic world order.
The author, Yi Xianrong, is a researcher with the Institute of Economics and Finances under the Chinese Academy of Social Sciences.
(China Daily March 24, 2009)