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China wants more say in global financial bodies

China wants more say in global financial bodies

China will want a bigger say in any new global financial order emerging from the current economic crisis, but will likely move cautiously in contributing to a proposed bailout fund for economic reeling countries, economists said Wednesday.
British Prime Minister Gordon Brown has called on China and oil-rich Persian Gulf states to fund a major increase to a bailout fund at the International Monetary Fund, the latest call for Beijing to use some of its $1.9 trillion of reserves.
Beijing's leaders have said they are willing to cooperate internationallly, but have said China's responsibility lies in keeping its economy going by boosting domestic demand.
China has already cut interest rates _ including by just over a quarter point Wednesday _ and economists predict it will take further measures to boost domestic consumption. However, weaker export demand from Western markets means China must remain cautious with its money. The majority of its foreign currency reserves are invested in U.S. Treasury securities, which is also lending support to the U.S. economy.
If China doles out money as part of any kind of international rescue fund, it should get more influence in bodies such at the International Monetary Fund, said Zuo Xiaolei, chief economist with China Galaxy Securities Company.
"They think China is rich by only looking at the $1.9 trillion foreign exchange reserves. But China also has to pay external debts and keep the stability of its own financial safety," she said.
"Let's assume, if China does give money to the IMF, of course China should ask for more rights," she said.
In a speech Tuesday in Moscow, Chinese Premier Wen Jiabao said developing countries should get a bigger voice in international financial institutions and the ability to set rules, though he did not specify which institutions. His comments come as the U.S. hopes China will play an important role in international financial talks at a summit in Washington next month.
"The right of emerging and developing countries to know what's going on, have a voice, and the right to set rules should be improved," he said, according to a transcript on the Foreign Ministry's Website.
Wen called for the establishment of a new international financial order because of the financial crisis, and called for the establishment of a multi-currency international monetary system, saying other currencies should be promoted. He did not give details.
China's Finance Ministry did not respond to calls and a fax for comment Wednesday. The People's Bank of China refered calls to the Ministry of Foreign Affairs, who did not respond to calls. Foreign Ministry spokeswoman Jiang Yu said Tuesday the financial system needs to be reformed effectively.
Brown said Tuesday that countries with the largest reserves should do the most, and argued that the IMF needs much more than its current $250 billion set aside to assist struggling countries. He did not specify how much more.
"China also has very substantial reserves. There are a number of countries that actually can do quite a lot in the immediate future to make sure that the international community has sufficient resources to support countries that get themselves into difficulties," he said. Brown said he would hold telephone talks with Wen later this week.
The IMF and its sister institution, the World Bank, were founded at the end of World War II and have been dominated by the United States, the largest shareholder, and the major European Union countries.
Earlier this year, members of the IMF gave final approval to an overhaul that triples the basic votes of developing countries in the 185-nation organization.
But the voting shares of China, India and Brazil do not approach the weight they carry in the global economy. China has one director on the IMF's 24-member executive board, but only 3.66 percent of the total voting rights even though it accounts for nearly 10 percent of the world's economy.
The IMF monitors the global economy, provides economic advice to members and makes loans to countries trying to deal with financial crises.
The IMF's executive board is expected soon to consider streamlining its emergency loan programs ahead of a stream of petitions from countries seeking support. It has already agreed to loan Iceland $2.1 billion and Ukraine $16.5 billion, and said Tuesday it is willing to give Hungary $15.7 billion.
Huang Weiping, an economics professor at Renmin University, said that the financial crisis and the blows it has dealt to Western financial institutions has given developing nations a new opportunity to exert greater influence.
"In the past if developing countries wanted to raise their voice and take more of a stake in the IMF, developed countries wouldn't have agreed," he said. "But the financial crisis has changed the global economic structure."
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Associated Press researcher Bonnie Cao contributed to this report.