Shifting power balance sees China, Japan dig deep to save the West
News On Japan via The Australian -- Jun 20
The arrival of the Asian century has been underscored with news that China will kick in $43 billion to the International Monetary Fund's global firewall.
China's commitment, which is the third largest after Japan ($US60bn) and Germany ($US54.7bn), compares with a weighty contribution from the mighty US -- zero.
The US is clearly wrestling with its own problems, and a donation to Europe's begging bowl would be political poison in an election year. Even so, the latest commitments to the new $US430bn fund, which were announced during the G20 summit in Mexico, highlight the anomaly of the US and Europe controlling key global institutions such as the IMF and the World Bank, when the centre of economic power is tilting east.
China's contribution was eagerly awaited, given it has the world's deepest pool of foreign reserves at $US3.2 trillion. It meant that total commitments from emerging economies came to $US95.5bn.
This helped the IMF raise an extra $US430bn -- almost doubling its lending capacity.
In return for that investment, though, the powerful BRICS countries (Brazil, Russia, India, China and South Africa) have made it clear that they want a dividend.
Meeting on the sidelines of the G20 summit, they said the new contributions were made in anticipation that reforms agreed in 2010, including a comprehensive shift in voting power, would be implemented in a "timely" manner.
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