China has been rising in the global economy, but not in the ranks of global organizations like IMF, still dominated by US and Japan.
That’s according to a recent A. T. Kearney Global Business Council report. China accounts for 18.72% of the global economy, but it has only 6.06% of IMF votes.
That’s in sharp contrast to the US, which accounts for 15.17% of the global economy, but has 16.52% of the IMF votes; and Japan which accounts for 4.17% of the global economy, but has 6.16% of IMF votes.
“China’s role in the IMF has expanded in recent years, including a Chinese national serving as deputy managing director and the renminbi being added to the basket of currencies that make up the Special Drawing Rights,” says Courtney Rickert McCaffrey, manager of thought leadership in strategy and management for consulting firm A.T. Kearney’s Global Business Policy Council, and co-author of the report. “But China’s voting rights remain woefully small relative to its economic prowess.”
That makes it difficult for China to get the IMF come to the rescue of heavily indebted countries where it has strong interests, like Pakistan. In that case, America has raised concerns that a bailout of the country would, in essence, be a bailout of China.
China isn’t the only emerging market economy that is under-represented in the IMF voting system. India accounts for 7.69% of the global economy, but it has just 2.64% of IMF votes.
| Country | Share of IMF votes | Share of global economy |
| United States | 16.52 | 15.17 |
| Japan | 6.15 | 4.17 |
| China | 6.09 | 18.72 |
| India | 2.64 | 7.69 |
| Russia | 2.59 | 3.09 |
China’s Terms of TradeKoyfin
There are a few good explanations for this asymmetry. One of them is that America is the primary founding member of IMF, and therefore, it set up the rules of the game, including a veto power.
Then there’s America’s long dominance in world trade and the global financial system, long before China opened up to world trade.
And there are several other factors included in the IMF’s formula for allocating voting rights, explains McCaffrey. Like “openness, variability, international reserves, and GDP measured at market exchange rates—on which measure China accounts for a slightly smaller share of the global economy.”
Still, China deserves a stronger voice in IMF than America and Japan. “So, while the devil is clearly in the details, there is a strong case to be made that China (not to mention other large emerging markets) deserves a stronger voice at the IMF,” adds McCaffrey.