Source: Global Times Published: 2017-7-5
China is playing an increasingly important role in the global system of financial governance, even though Western countries retain a dominant position in the area, experts told the Global Times on Wednesday.
"China`s enhanced role is embodied in many ways, including increasing commodity pricing rights in the global markets, rising freedom in global trade and a greater say in the International Chamber of Commerce," Liu Zhiqin, a senior research fellow with the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Wednesday.
Cheng Shi, a senior economist at ICBC International Research, told the Global Times on Wednesday that China`s role in the global financial governance system is to "reflect and fight for the common interests of emerging markets, while pushing the rebalancing of the global financial system."
The comments came in the run-up to this year`s G20 Summit, which will be held on Friday and Saturday in Hamburg, Germany.
According to Cheng, China`s responsibility in the global financial governance mechanism is to push efforts to reduce risk by consolidating domestic financial security, coordinate global financial supervision and push regional financial and economic integration.
In recent years, China has made a lot of efforts to fulfill those responsibilities. In 2013 China proposed the establishment of the Asian Infrastructure Investment Bank as a supplement to the global financial order. So far 80 countries around the globe have signed up as members of the bank. China also proposed the Belt and Road initiative to activate regional economic interaction.
As a result of these efforts, China now has a greater say in the global financial governance system, which is reflected in changes such as the yuan`s inclusion in the IMF`s Special Drawing Rights (SDR) currency basket in 2015.
But Liu stressed that it is too early to anticipate a leading position for China in the global financial governance system. "The current financial governance system is still, to be frank, dominated by Western countries, and it might be a long time before China can take a leading role; I don`t think the government has put that goal on the agenda yet."
According to Liu, yuan-denominated transactions currently account for less than 10 percent of the total global currency settlements.
Cheng said that in terms of the global financial system, the influence of emerging markets has increased a lot. "Pluralism has become a characteristic of changes in the world`s financial structure," he said.
According to Cheng, the G20 Summit has done a lot to promote reforms in the global financial governance system, and China has made many contributions to the reforms via the platform.
At the 2016 G20 Summit, which was held in Hangzhou, capital of East China`s Zhejiang Province, China pushed a series of initiatives for financial reform, which were detailed in the final communique from the summit.
For example, it urged the IMF to form a new quota formula by the end of 2017, which will increase the influence of emerging markets in the IMF.
It also urged other countries to make pledges on exchange of tax information as soon as possible in order to increase global tax transparency.
The communique also noted that the G20 supported the study of expanding the use of SDRs.
"In the short term, those initiatives might face obstacles, but in the long run, they will be carried out for sure," Cheng noted.
The G20 has previously pushed forward many reforms for the global financial governance system, such as completing IMF quota reforms in 2010 and amending lending formats to improve global financial safety.
"The G20 is evolving from a mechanism to cope with financial crises (which was effective for the 2008 financial crisis) into a long-term system for improving the global financial market," Liu noted.
The discussions about green finance during the Hangzhou G20 summit will continue this year, according to media reports.
Liu Zhiqin is a senior fellow of the Chongyang Institute for Financial studies at Renmin University of China (RDCY).