IMF deputy: China is likely to get what it long lobbied for: a deputy managing director position at the International Monetary Fund. But the promotion is largely a symbolic one, while creating a fourth deputy position dilutes the job’s value.
Moreover, this could give the United States and Europe less incentive to support more meaningful reforms for China in the future.
The promotion of Zhu Min to the managing director job doesn’t give Beijing much more power. He is already part of IMF’s five-person management team, and a de facto deputy managing director in terms of responsibilities.
He joined the IMF as a special advisor to the managing director in 2010, taking charge of the important financial stabilisation task.
The promotion looks like a bargain China has struck with the traditional powers, at the expense of its emerging market former allies, who called for more drastic changes. The United States and Europe are likely to back Zhu’s promotion and the old powers to hold on to the fund’s top two jobs.
Latin America, which used to hold one of the spots in the top management team, is hardly going to be enthusiastic about the change. After this newly created position, the top will look unbalanced. Two of the four deputy managing directors will be from Asia. The chair of the IMF’s top advisory committee is from Singapore.
Now that China has got what it wanted, the United States and Europe may be less willing in pushing for reforms that will be more meaningful for it.
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China has wanted to break the United States’ effective veto power at the IMF, and to promote the yuan as part of the global reserve currency SDR.
Creating a new position to accommodate China may not reflect well on the IMF. The move fails to break Japan's long-lock on one of the deputy managing director posts. China deserves more representation, but Japan deserves less.
The promotion may also raise future concerns about the IMF’s appetite for hard-nosed evaluations on China's policies, such as the tightly managed exchange rate.
Zhu Min’s promotion might please Beijing, but it looks like a mixed blessing for both China and the IMF.
