Crisis boosts China's international financial clout
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Zhu Min, group executive vice president of the Bank of China, has recently found himself in the public eye. A heavyweight on the world stage, Zhu, who studied for many years in America, is undoubtedly one of China's most influential economic representatives. His experience is impressive. He has a doctorate in economics from a famous American university, and has held important posts in China, the World Bank, the United Nations, and many other domestic and international organizations, winning fame both as a scholar and in his financial career. Zhu is one of China's trump cards in international finance.
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Zhu Min |
Zhu's emergence is a sign of progress in the Chinese government's policy of peaceful development. The concept of a multi-polar world is becoming more widely accepted, and the status of developing countries represented by China is rising. But developed countries, lead by the U.S., have no wish to see China and other developing countries grow in strength, because this undermines their right to determine policy and defend their political and economic interests around the world.
The trend since the end of the cold war has been for the unipolar world led by the U.S. to lose its grip on global production, trade and finance. The role of the dollar as international reserve currency is weakening. China recently signed currency swap deals with South Korea and Japan, and Renminbi (RMB) settlement accounts were established for trade with Hong Kong and the Chinese mainland. These are signs that the hegemony of the US dollar is collapsing.
When the financial crisis broke out, the authority of the U.S. was further undermined. The US strategy failed to create supervisory mechanisms for the financial markets, and instead contributed to the creation of new credit bubbles. Foreign exchange reserves held by China lost value as a result.
The US failure to act pushed China into a difficult position. But China defended its interests. This September, China announced it was to buy US$50 billion IMF bonds, which was a signal that it was determined to protect the value of its holdings. At the same time, emerging economies, represented by China, acted resolutely to resuscitate the global economy and financial system, which strengthened China's status in international financial markets.
Faced with recurrent troubles in recent years, the IMF has looked to reform itself. During the financial crisis, the calls for reform became louder. A greater voice for newly emerging economies in the international financial system became inevitable. At the annual IMF-World Bank conference this October, the IMF International Monetary and Financial Committee (IMFC) announced an increase in developing countries' voting power and quotas in the IMF and the World Bank of at least 5 percent. It was a sign that China was playing a major role in the reconstruction of the international financial system.
Successfully dealing with the financial crisis has won China international respect. China is now an indispensable player in today's international financial system. This is the world consensus, based on international recognition of China's practical actions.
(This article was translated by Zhou Jing.)
