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3rd Jul 2022

Chinese leader urges EU to give up more IMF power

  • Mr Wen Jiabao (third from left) and other leaders at the ASEM summit (Photo: Belgian presidency)

Chinese Premier Wen Jiabao has hinted that Europe may need to sweeten its offer on reforming the International Monetary Fund before a deal can be agreed next month.

The issue was one of several topics to be addressed by Asian and EU leaders (ASEM) meeting in Brussels on Monday (4 October) as part of a two-day session of talks, with an ongoing territorial row between China and Japan adding spice to the atmosphere.

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The EU last week offered to reduce its number of seats on the board of the IMF. Developing nations have criticised the slow pace of reform at the international lending organisation, whose structure has changed little since its set-up in 1945.

European countries currently hold eight of the board's 24 seats, with another chair revolving between European and non-European directors. This has led to a gross over-representation of the region in recent times, even as developing countries increase their share of global GDP.

EU finance ministers agreed last Friday to share two of the continent's eight executive-director seats on a rotating basis with emerging nations, but the offer does not appear to have met with China's approval.

"We need to improve the decision-making process and mechanisms of the international financial institutions," Mr Wen told his Asian and European counterparts in Brussels. The Chinese leader added that there was a need to "increase the representation and voice of developing countries, encourage wider participation and fully accommodate each other's interests and concerns".

A South Korean official, whose country is set to host the next G20 leaders' meeting in November where the matter is set to be finalised, welcomed the European offer as an improvement however.

"I think the fact that Europeans show flexibility and willingness to negotiate is an important advancement," Changyong Rhee, head of the committee preparing the G20 meeting, told journalists.

China-Japan dispute comes to Brussels

With no bilateral meeting currently scheduled between Mr Wen and Japanese Prime Minister Naoto Kan, all eyes attentively followed the two individuals to see if they would talk in the margins of the event.

But the game of diplomatic tip-toeing did not prevent Mr Kan from holding a short bi-lateral with European Council President Herman Van Rompuy, during which he secured the Belgian politician's signature on his recently published book of haiku poetry, a style of Japanese verse famous for its brevity.

"Different colours,/tongues, towers and gods./I search my way," one of the verses, about Brussels, says.

Elsewhere in the sidelines of the summit, Japanese officials were discretely explaining their side of the dispute with China, which centers on a group of islands located to the north-east of Taiwan.

Japan says its ownership of the islands dates back to the late 19th century, while Chinese interest dates to the 1970s when exploitation of oil deposits on the East China Sea's continental shelf started.

Another thorny issue, the value of China's renminbi currency, is set to be discussed by EU and Chinese officials on Tuesday morning.

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