Emerging nations deserve more weight in global financial institutions for the world to climb out of its current crisis, Chinese Foreign Minister Yang Jiechi said during the annual ASEAN summit in Thailand, with the presence of United States and Japan.
Changes in this direction for China's top diplomat could be on the agenda of the upcoming G20 summit scheduled for September in Pittsburgh (United States), AsiaNews reported on Thursday.
Yang's proposal, however, offers nothing new but reiterates the demand issued by the so-called BRIC countries (Brazil, India, Russia and China) that want a bigger say in the International Monetary Fund (IMF), sweeping changes in the United Nations (UN) as well as more lending to emerging economies hit by the collapse of private capital lending.
The BRIC nations represent around 40% of the world's population and 15% of its GDP.
China especially has become more vocal in recent months calling for the diversification of international currency reserves and less reliance on the dollar. The move comes as the U.S. dollars failed to perform the function in the crisis saying now it was time for change.
Xiaochuan Zhou, governor of China's central bank, also caused a stir by suggesting in March that the IMF's Special Drawing Right (SDR) could eventually displace the dollar as the principal reserve currency.
China is set to receive about $9 billion from IMF's SDRs, the highest among all emerging nations, to boost its economy.
However, the nation is more concerned about whether it would get a better say in the running of the multilateral body to justify its growing economic weight, experts said.
Under the new SDR allocation, the US will receive about $42.6 billion, Japan about $15 billion, China $9 billion, Russia $6.6 billion, India $4.5 billion and Brazil $3 billion.
This is part of the $250 billion allocation of SDRs by the IMF to provide liquidity to the global economic system by supplementing its 186 member countries' foreign exchange reserves. The funds would be available at the end of August.
The SDRs are disbursed in proportion to each member's IMF quota and can be exchanged for hard currency such as the dollar, yen, euro or pound.
Although China would receive more SDRs compared with other BRIC countries, its share falls far short of those of the US and Japan.
The allocation might be important for some poorer economies, but not China, which now has a massive $2.13 trillion foreign exchange reserve, said Guo Tianyong, director of the Research Center of the Chinese Banking Industry, Central University of Finance and Economics.
China, which would surpass Japan in terms of economic output, will soon top Japan as the world's second biggest economy, and it deserves a bigger share of the IMF quota, equal to its economic position in the world, Guo said, adding that China thought highly of the IMF's growing prominence in global financial transactions.
The Chinese Foreign Minister said he was hopeful that Asia will be first continent to climb out of the global crisis, adding that China will do its best in this process.
China's economy has in fact shown some signs of renewed vitality, a trend welcomed by many economists.
However, others are wondering whether renewed high growth is a sign of a better future or simply the consequence of the government pumping money into the economy, AsiaNews said.
Wu Xiaoling, a former People's Bank of China vice governor and also a well-known domestic expert, was cited as warning against asset bubbles on Thursday. In his opinion the economy might be picking up because of excess money supply by banks which is flowing into the stock and property markets and this, he believes, could lead to higher inflation.
At a forum organized by the National Business Daily Wu said that when there is excess liquidity and few investment opportunities in the real economy funds will flow into the property market and stock market leading to bubbles.
Hence China's central bank may have to raise banks' reserve requirements to mop up excess liquidity.
In the first half of the year Chinese banks have loaned a record 7.37 trillion yuan (US$ 1.08 trillion), almost 25% of the country's annual GDP.
This has spurred growth in the last few months, but the issue remains whether it is real or just the effect of excess liquidity, which might again stoke inflation.