With the term of World Bank President Robert Zoellick soon coming to a close, there has been much talk of breaking the U.S./European monopoly on the top posts at the bank and the International Monetary Fund (IMF) by naming an emerging market leader as the bank's new chief. I herewith throw my vote to Zhou Xiaochuan, the head of the People's Bank of China.
The U.S.-European deal under which an American always heads the World Bank while a European heads the IMF is musty with old age and is arguably in violation of the technical rules of the bank and possibly of the IMF as well. In the bank's structure the percentage of share ownership and voting power is supposed to be allocated according to GDP size. This has always resulted in the dominance of the United States. But the truth is that the GDP of the EU is nearly a third larger than that of the United States. So technically, it should be a European heading the bank instead of an American.
But the real point is that size of GDP should not be the determining factor. At the moment, the United States has 15.85 percent voting power with Japan next at 6.82 percent and China next at 4,42 percent, but China's GDP has already surpassed that of Japan and is set, according to several forecasts, to overtake that of the United States within the next three to six years. That kind of economic momentum should be recognized. More importantly, China has by far the world's biggest financial reserve holdings and is increasingly being turned to for various kinds of financial assistance by other countries, especially the developing countries of Africa. Perhaps the bank's rules should be altered to allocate voting power on the basis of reserve holdings rather than simply sheer size of GDP. That would unequivocally put China in charge.
Such a move would be particularly appropriate at this moment in as much as Zoellick is the originator of the phrase: "China must become a responsible stakeholder" in the global system. This way, he could give his stake to China.
No country has ever been more successful than China in achieving rapid economic development. Such a move at the bank would give it a platform upon which to develop more fully and apply more broadly its ideas for development and balanced globalization. At the same time, U.S. backing for a Chinese at the head of the bank would allay fears of a new U.S. containment policy raised by the Obama administration announcement of its "Pivot to Asia." It would also be a signal to other developing countries that America welcomes a larger role for them. At the same time, it would signal Americans that there is a new emphasis in Washington on Pivoting to America and its much needed re-development.
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Clyde Prestowitz is the president of the Economic Strategy Institute and writes on the global economy for FP.