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September 16, 2009

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Developing nations must have greater say: China

CHINA wants the G20 summit next week to throw its support behind an increased role for developing countries in the International Monetary Fund and the World Bank, two officials said yesterday.

In a briefing to lay out China's positions ahead of the September 24-25 summit in Pittsburgh, Pennsylvania, Guo Qingping, assistant to the governor of the central bank, said the meeting of the 20 leading economies should "set further specific goals for transferring voting rights from developed countries to developing countries" in the IMF and World Bank, including timing.

Zhu Guangyao, an assistant to the finance minister, said at the same briefing that China expects voting rights in both institutions eventually to be equally distributed between developed and developing countries.

In the IMF, developed countries currently have 57 percent of the voting rights, with developing countries taking the remainder. For the World Bank developed nations have 56 percent of the voting rights, Zhu said.

"These proportions should be altered. They should gradually achieve a balance of 50 percent to 50 percent proportions. We hope that as reform of the international financial system continues, this balance will be achieved," Zhu said.

Brazil, Russia, India and China this month proposed a 7 percent shift in IMF quotas in favor of developing countries, more than the 5 percent the United States is proposing.

The IMF has long been dominated by the US and Europe, but the financial crisis has given fast-growing emerging economies a window of opportunity to press their case.

Guo also made it clear that China would not rush to promote its yuan, also known as the renminbi, as an international currency.

"We maintain a cautious attitude toward the internationalization of the renminbi," Guo said.

He said the market, not the state, would decide on what global role the yuan would take, but that China still had to make progress on three preconditions for having an international currency: a strong economy to back it up, a developed financial market and full convertibility.


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