EDITORIAL : THE GLOBAL TIMES, CHINA

                   

 

BRICS are wise to challenge IMF together

The IMF executive directors for Brazil, Russia, India, China and South Africa, known as the BRICS, issued a joint statement Wednesday, saying that the choice for the new IMF chief should be based on competence, not nationality. Slamming the "obsolete unwritten convention" of the European grip on the IMF, the unusual statement poses a challenge to the traditional financial hegemony.

As emerging economies have long decried, the backroom deal between Europe and the US to respectively head the IMF and the World Bank has eroded the legitimacy of global financial institutions. Dominating the global financial layout, the US and Europe are grabbing colossal benefits in international labor division. Though developed countries appear high on the supporter list for financial reforms, their dominance seems immune.

Pragmatically, China is not capable of seeking more interests for emerging countries alone. It is wise to join hands with other BRICS members to express complaints, though BRICS members are still weak in IMF voting shares - the US takes up 17 percent of voting share, and the EU 36 percent leaving the BRICS with only 11 percent.

It may take a few decades before the BRICS are able to bring substantial changes to the ingrained financial order. Besides, due to historical and practical reasons, BRICS countries still have misunderstandings and divergences among themselves, which may be taken advantage of by the US and Europe to disintegrate the group. However, by issuing the joint statement, the BRICS have initiated a protracted battle to oppose Western financial dominance.

The world is witnessing a profound shake-up of its traditional patterns. It is true that emerging countries still find it hard to put up a very experienced and competent candidate. However, they will be making contributions as long as they reinforce solidarity in standing up to traditional economic powers at this time.

At the moment, China is able to protect its territory and sovereignty, but still appears vulnerable to global financial risks. A healthy and orderly domestic financial market has not yet been established. Inflows of hot money from overseas may easily cause fluctuations here.

China has a lot to do. It needs to build a financial market with risk resistance capacity, to further enhance the international position of the yuan, and to safely realize the full convertibility of the yuan. Most importantly, it needs to foster a batch of financial talent with sharpened international insight.

It is still early to stress the status of the BRICS members in the IMF. However, as the trend of rising economic strength in emerging countries continues, the BRICS will gain momentum in serving as an important counterweight. Their latest joint statement is but the beginning.