Emerging economies must have more say in new world order

China's move became clearer last Tuesday when Chinese Premier Wen Jiabao said in Moscow that developing countries should get a bigger voice in international financial institutions and the ability to set rules.

However, the Chinese leader did not specify which institutions, according to an AP report.

His comments came hot on the heels of a US call for China to play a more important role in international financial talks at the upcoming Nov 15 summit in Washington.

Besides China, other major developing economies, especially India and Brazil, should also have a bigger say in the new international financial architecture which will emerge in the wake of the current global turmoil.

The International Monetary Fund, for instance, is often criticised for under-representing emerging economies, especially those in Asia, in terms of voting rights, so it's time for an improvement.

In this context, the Chinese leader suggested that a multi-currency international monetary system should be established so that other currencies can also be promoted, but he did not give details.

At present, the US dollar is the world's pre-dominant unit for trade and investment, followed by the Euro and Japanese yen.

As for the Chinese yuan, China has been urged to gradually liberalise its unit for greater convertibility as a pre-requisite for China to play a greater role in the international financial system.

Earlier, China, Japan and Korea also proposed that the three North Asian economies and the 10-country Asean jointly set up an initial US$80-billion Asian currency pool to provide protection to member countries' currencies during crises.

In following stages, there could be an Asian currency fund set up along with a regional surveillance and coordination body under the auspices of the Asean Secretariat or the Asian Development Bank.

Given the Chinese premier's most recent statement, it's also possible that the existing IMF and sister institution World Bank, pre-dominantly controlled by the US and western Europe, could be reformed to take into account the role of emerging economies in global trade and investment.

In fact, reforms are probably long overdue, since the IMF and World Bank, were founded in the 1940's at the end of World War II.

At present, the US is the largest shareholder, followed by major European Union countries.

Members of the 185-nation IMF earlier this year approved a plan to triple the basic votes of developing countries in this crucial organisation, but analysts said the voting shares of China, India and Brazil do not represent the weight they carry in the global economy.

At present, China has only 3.66 per cent of the total voting rights and one director on the IMF's 24-member executive board, but the Asian giant accounts for nearly 10 percent of the global economy.

While Chinese officials declined to comment more specifically on PM Wen Jiabao's statement in Moscow, analysts believed that China would seek more voting rights in return for greater financial contributions to the IMF.