The International Monetary Fund was launched in 1944 with the world’s new superpower, the United States, in position as the key force and shareholder in the global crisis bank. Today, China is on the verge of becoming the world’s largest economy.
But its voice at the IMF -- wrapping up its annual meeting this weekend in Washington -- remains that of a minor country, and some worry this could undermine the crucial, 70-year-old institution, Yahoo news reported.
The IMF estimates that by the end of 2014, China’s economy will surpass the US in size: $17.63 trillion versus $17.42 trillion, based on the purchasing power parity standard.
On a more traditional basis, linked to current prices, the clearly much more affluent United States still leads by a wide margin. But there is no debate about China’s rise to power in the industrial world. And its growth rate, at 7.4 percent in 2014, still far outpaces that of the rest of the advanced economies.
The IMF has had difficulty conforming to this new global power balance. The US holds 16.7 percent of the voting power in the Fund, which gives it an effective veto over any major changes in its structure and activities. China meanwhile has a 3.8 percent voting share, not far from Italy’s, which has an economy one-fifth the size.
The US Congress’s repeated refusal to ratify a four-year-old set of reforms that would boost China, India and other emerging powers at the institution is beginning to cut into the Fund’s stature.
Surge in Imports/Exports
China’s exports and imports both rose more than expected in September, Customs data showed Monday in a positive signal for the world’s second-largest economy, but analysts warned that fundamentals remained weak.
The country’s trade surplus more than doubled year-on-year to $31.0 billion as exports rose 15.3 percent to $213.7 billion, the General Administration of Customs announced, while imports climbed 7.0 percent to $182.7 billion, AFP reported.
The rise in exports accelerated from August’s 9.4 percent and was ahead of the median forecast of 12.5 percent in a poll of 15 economists by Dow Jones Newswires.
The survey had predicted a fall of 2.4 percent in imports, matching a surprise decline in August. The positive figures are the latest contradictory indicator for China’s economy, a key driver of global growth.
Customs spokesman Zheng Yuesheng attributed the improvement to major economies recovering and external demand strengthening. “The good momentum is expected to continue in the fourth quarter,” he added.
Property Risks
Recent reports have suggested expansion in China -- which stood at 7.7 percent last year, maintaining its slowest pace in more than a decade -- is weakening even after authorities took limited stimulatory measures.
Industrial production growth slowed sharply in August to its lowest level for more than five years, official data said last month, while house prices have fallen for five consecutive months.
Officials are targeting economic growth of “about 7.5 percent” this year, the same as last year’s objective. The goal is normally exceeded, but senior officials have repeatedly sought to play down its significance this year.
Last week the World Bank cut its forecast for Chinese growth to 7.4 percent for 2014 and 7.2 percent for 2015, while the International Monetary Fund left its predictions unchanged at 7.4 percent and 7.1 percent but warned of “near-term growth risks”, especially in real estate.
