Sunday, October 28, 2007

China criticizes the IMF

Source: China slams the IMF over forex, calls for bigger role

China is upset at the IMF over what it feels is unwarranted concern over the valuation of the yuan while more pressing matters are needing the Fund’s attention. China is particularly concerned with the lack of growth in major developed countries (like the U.S.) and the risks that status might pose. China also slammed the IMF over what it regards as an unbalanced global development picture, particularly countries in the Northern hemisphere experiencing significant development while those in the Southern do not.

The attack by China came after the Group of Seven wealthy nations pressed the former to allow the yuan to appreciate faster, citing concerns over trade. However, China’s concerns with the IMF are deeper than just the current fracas over the yuan: China believes that the IMF, in attempting to enforce its own exchange rate regime on countries, disrespects those countries autonomy, and that developing countries like it have a disproportionate hand in the management of the IMF and World Bank. Both institutions have promised greater control for developing countries, but China is unhappy with the “lack of progress” in ensuring those promises come to fruition.

Question: Despite its legitimate concerns over the IMF, should China nonetheless concede the point on the valuation of the yuan? Is this current controversy a bargaining chip with which China hopes to spur along the "progress" of greater control over the IMF by countries like itself?

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