Economy

Chinese economist to be IMF chief?

By Wang Xiaotian (China Daily)
Updated: 2011-05-19 09:46

BEIJING - The speculation about whether a Chinese candidate could step forward as the chief of the International Monetary Fund (IMF) has been picking up steam across China after Dominique Strauss-Kahn's arrest over an alleged sexual assault on a hotel maid.

The Associated Press (AP) reported on Wednesday that China's Zhu Min, a special adviser to Strauss-Kahn at the IMF, is one of the potential candidates for the position.

Zhu declined to comment on the issue. "I have meetings all day," he was quoted as saying by AP.

Zhu assumed his position at IMF in May 2010, after serving as deputy governor of China's central bank and after a six-year stint at the World Bank. He holds a PhD and an MA in economics from Johns Hopkins University.

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According to tradition, a European chairs the IMF while the United States provides the leader at the World Bank. But voices supportive of a candidate from the emerging economies are growing louder, as the developing nations become a driving force in the world economy.

"Europe's history of chairing the IMF may be broken this time, given several strong reasons: The IMF chief is usually not promoted internally; the alleged sexual assault followed by the arrest happened suddenly; and voices from the emerging markets have become louder in recent years," said Guo Tianyong, an economist, and director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics.

He said if China could win a nomination qualification, the other suitably qualified Chinese candidate should be Zhou Xiaochuan, the central bank governor, who possesses international perspective and has good proficiency in English.

AP reported that four Europeans stand a possibility of replacing Strauss-Kahn. They include the French Finance Minister Christine Lagarde, the former head of the German central bank Axel Weber, the head of Europe's bailout fund Klaus Regling, and Peer Steinbrueck, a former German finance minister.

From the developing regions, potential candidates include Turkey's former finance minister Kemal Dervis, Singapore's finance chief Tharman Shanmugaratnam, the Indian economist Montek Singh Ahluwalia, South Africa's former finance minister Trevor Manuel, Mexico's central bank governor Agustin Carstens, and a former Brazilian central bank president Arminio Fraga. In Europe, officials including the Austrian Finance Minister Maria Fekter have urged the 62-year-old Strauss-Kahn to resign to avoid further damage to the IMF.

Li Daokui, an adviser to the Chinese central bank's monetary policy committee, agreed that the chances of a European stepping in to the position are slim this time, but he said supporting a Chinese candidate is not a best choice for the country.

"I think a talent from a neutral and small country would accord more with the interests of the world including China, because big countries such as India and Brazil have too many national interests," he said.

Developing countries have spent years attempting to reform the IMF's voting system. In December 2010, the 187 member states adopted a set of voting right reforms that will double quotas and lead to a fully elected executive board.

Brazil, China, India and Russia will be ranked among 10 largest shareholders as a result, and China is expected to take third place, following the US and Japan.

British Prime Minister David Cameron suggested earlier that the IMF should look for its next chief outside Europe and the US to increase its global standing.

"If you think about the general principle, you've got the rise of India, China and South Asia, a shift in the world's focus, and it may well be the time for the IMF to start thinking about that shift in focus," he told BBC Radio.

But Europeans won't readily give up leadership of a key financial institution that is overseeing global economic stability, particularly with Greece, Ireland, and Portugal facing a debt crisis.

On Monday, German Chancellor Angela Merkel said she preferred another European to lead the IMF, given that the institution is already deeply involved in the bailouts of struggling European countries.

President of the European Commission Jose Manuel Barroso told Dutch television on the same day that he would not engage in speculation but if a successor is necessary, the European Union should propose a candidate.