China presses Congress on stalled IMF re­forms Of­fi­cial says sys­tem must be re­formed or it will fal­ter

The Washington Times Weekly - - Geopolitics - BY PA­TRICE HILL

Congress should move quickly to ap­prove re­forms giv­ing China and other emerg­ing economies a greater say in the In­ter­na­tional Mon­e­tary Fund to show that the U.S. is in­tent on pre­serv­ing its lead­ing role in gov­ern­ing the world’s econ­omy, Chi­nese Vice Fi­nance Min­is­ter H. E. Guangyao Zhu said Wed­nes­day.

In a speech be­fore the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics, Mr. Zhu said China is com­mit­ted to work­ing within the frame­work of global gov­er­nance set up by the U.S. and its al­lies after World War II, but the sys­tem must be re­formed or it will fal­ter in the face of chang­ing re­al­i­ties such as the grow­ing eco­nomic clout of China and other emerg­ing coun­tries.

“The ad­min­is­tra­tion has made a lot of ef­fort to try to con­vince Congress, but un­for­tu­nately un­til to­day, it’s still not ap­proved,” he said. The Obama ad­min­is­tra­tion played an in­stru­men­tal role in draft­ing the re­forms in 2010 and per­suad­ing most other IMF mem­bers to ap­prove them, but dis­agree­ments with Repub­li­cans on Capi­tol Hill have held up the leg­is­la­tion be­cause of op­po­si­tion from some con­ser­va­tives to ex­pand­ing the IMF’s lend­ing au­thor­i­ties.

Mr. Zhu, in his re­marks, made it clear China sees it­self as equal to the U.S. but does not seek to dis­place the U.S. on eco­nomic and se­cu­rity mat­ters. Congress, there­fore, must do what’s in the best in­ter­est of both the U.S. and the rest of the world by ap­prov­ing the re­forms, he said. Wash­ing­ton would con­tinue to have the dom­i­nant voice in IMF af­fairs un­der the re­form leg­is­la­tion.

U.S. GDP “is more than $16 tril­lion and it has the largest econ­omy in the world. I don’t think any­body can re­place that,” Mr. Zhu said.

While China’s econ­omy has vaulted to $9 tril­lion and con­tin­ues to grow strongly at around 7.5 per­cent a year, it is still smaller than the U.S. econ­omy, he said, down­play­ing es­ti­mates by the World Bank and some pri­vate think tanks that by some mea­sures China is close to over­tak­ing the U.S. as the world’s largest econ­omy.

“My judg­ment is peo­ple [out­side China] are more se­ri­ous than do­mes­tic peo­ple about say­ing China has grown beyond the U.S.,” he said, adding, “We still see a big gap.”

China “is still a de­vel­op­ing coun­try,” Mr. Zhu said. “One big gap is the en­vi­ron­ment. We re­ally paid the cost for 10 per­cent growth, par­tic­u­larly on the en­vi­ron­ment side,” as China’s mas­sive ex­port-ori­ented in­dus­tries fouled the air, wa­ter and land in their head­long rush to mar­ket, he said.

China is now fo­cus­ing on “qual­ity growth,” and will tol­er­ate lower growth rates in the 7 per­cent range in the in­ter­est of im­prov­ing both the econ­omy, the en­vi­ron­ment and liv­ing stan­dards so they are closer to those in the U.S. and the de­vel­oped world, he said.

Mr. Zhu said he was open to pro­pos­als to ex­pand trade and in­vest­ment be­tween the U.S. and China, in­clud­ing one by the Peter­son In­sti­tute to even­tu­ally in­clude China in the Trans-Pa­cific Part­ner­ship (TPP) trade agree­ment the U.S. is cur­rently ne­go­ti­at­ing with other Pa­cific Rim na­tions.

“We need mo­men­tum build­ing up in U.S.-China re­la­tions. That will con­trib­ute to global peace,” he said.

But he said that China would con­tinue to closely guard its in­ter­ests. China has held up fi­nal agree­ment on an in­for­ma­tion tech­nol­ogy agree­ment be­ing ne­go­ti­ated through the World Trade Or­ga­ni­za­tion be­cause it wants to pro­tect fledg­ling Chi­nese in­dus­tries that are try­ing to com­pete with es­tab­lished Western tech gi­ants.

Mr. Zhu did not in­di­cate China was will­ing to of­fer any­thing more to move that agree­ment to­wards a con­clu­sion, as sought by the Obama ad­min­is­tra­tion. He held out hope, how­ever, that Wash­ing­ton and Beijing might be able to con­clude a bi­lat­eral in­vest­ment treaty be­fore Pres­i­dent Obama leaves of­fice.

He also held to the Chi­nese gov­ern­ment’s in­sis­tence that it is not us­ing anti-mo­nop­oly en­force­ment to se­lec­tively pun­ish U.S. firms op­er­at­ing in China — a fre­quent com­plaint of Amer­i­can busi­nesses th­ese days. He in­sisted that the vast majority of an­titrust ac­tions taken by the gov­ern­ment have been against do­mes­tic firms.


China’s fi­nance min­is­ter Zhu Guangyao said Congress should move quickly to ap­prove re­forms giv­ing China and other emerg­ing economies greater in­put in the In­ter­na­tional Mon­e­tary Fund to show the U.S. is in­tent on pre­serv­ing its lead­ing role in gov­ern­ing the world’s econ­omy.

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