China has overtaken leading European nations in World Bank voting power in a move designed to give emerging economies greater influence in the global development institution.
AFP - In the latest sign of Beijing's rising global influence, the World Bank on Sunday granted China new clout, making it the institution's third biggest member, behind the United States and Japan.
Tokyo agreed to a marked decrease in its voting rights at the global financial institution, but one analyst said that Japan would remain a preeminent player at the bank along with the US and European Union members.
Chinese Finance Minister Xie Xuren welcomed the bank's vote reform, saying in a statement that it "represents an important step towards equitable voting power between developing and developed members."
Xie stressed however that the decision was "only part of the ongoing process" of giving emerging nations a greater say, the official Chinese news agency Xinhua reported.
The decision was hailed by World Bank president Robert Zoellick and other global leaders, but Brazilian Finance Minister Guido Mantega downplayed its importance and cautioned that "developing countries are still significantly underrepresented based on their weight and role in the world economy."
Zoellick defended the new arrangement in a press conference, saying the bank had "made important strides in increasing the voice and influence of developing countries."
The change "recognizes that we need to consign outdated concepts like 'Third World' to the history books," he said, adding that the shift would not detract from Japan's important contributions to the bank.
"The first thing I would say is that Japan is number two and the US remains number one," he said.
The United States will now hold 15.85 percent of the bank's voting rights while Japan will control 6.84 percent after accepting the biggest decline in share, leaving China with 4.42 percent.
US Treasury Secretary Timothy Geithner said the change in voting weights marked a justified shift of influence away from developed economies.
"The new formula will better reflect the weight of the developing and transition countries in the global economy, while protecting the voice of the smallest and poorest countries," he said.
But Mark Weisbrot, co-director of the Center for Economic Policy and Research in Washington told AFP: "Developing and borrowing countries will not have a significant voice" at the bank, despite the change.
"The reforms we need are not really happening" because the United States, Europe and Japan jointly hold a dominant position both at the bank and the International Monetary Fund, which has also mulled a transfer of voting rights.
China would make itself heard above all because Beijing's growing economic might gives it greater bargaining power, Weisbrot said.
Beijing is also an IMF board member, and as such will now have some say in a landmark financial rescue plan being drafted for Greece, the first time the Fund has intervened to help a member of the 16-nation eurozone.
China "will be instrumental in terms of the IMF decision," Greek Finance Minister George Papaconstantinou acknowledged.
At the World Bank, emerging economies now control 47.19 percent of the voting rights in its decisions, and Zoellick expressed hope they would achieve parity in the future.
Another review is scheduled in 2015, but international aid agency Oxfam said it was disappointed by the decision.
"It's smoke and mirrors to count Saudi Arabia and Hungary as developing countries and then claim a three percent shift in voting power will give poor countries more say," an Oxfam statement said.
Date created : 2010-04-26