Asian voices gain force as crisis drags on

Published by rudy Date posted on April 4, 2009

LONDON (AP) — Asian nations, who dominate the roster of industrializing economies, have won a greater say in salvaging and reshaping the global system that brought them unprecedented prosperity but now threatens to reverse that progress.

The sweeping consensus on reviving growth and stepping up surveillance of international financial institutions reached Thursday at the Group of 20 summit of major economies reflects that growing sway.

“I believe people will be encouraged by the fact that China and India and Japan and many countries … we’ve all been able to come together in a way we could never have done even a year or two ago and designed quite detailed proposals that will reshape the global financial system,” a jubilant British Prime Minister Gordon Brown said as the one-day meeting wrapped up with a pledge of $1.1 trillion in loans and guarantees to developing countries.

The statement issued by summit leaders included a pledge, responding to a chief demand from Asian and other developing countries, for reforms of the International Monetary Fund and other institutions to better match global economic and political realities.

“We will reform their mandates, scope and governance to reflect changes in the world economy and the new challenges of globalization,” the statement said.

Such moves are needed, it said, to enhance the credibility and accountability of those organizations.

“China and other countries are right to say that the representation and the quotas of the IMF have to be changed to meet new times. We have set a timetable for doing that,” Brown said.

Developing economies account for nearly half of all exports, and Asia for about half of that total. With trillions of dollars in foreign reserves, China and other countries in the region have unprecedented financial heft.

“We have long called for increasing representation of emerging economies. This is finally taking place, but only very slowly,” said Osamu Sakashita, deputy cabinet secretary for public relations for Japanese Prime Minister Taro Aso.

“There is a welcome shift but there is more to be done in that direction,” he said.

Such changes are imperative given the shift of power and productivity to Asia in recent decades.

The last time London hosted a world economic summit, in 1933 in the midst of the Great Depression, geopolitical and economic power lay squarely in the West — in the United States and European colonial powers.

Today, China has become the world’s third-largest economy and is fast overtaking Japan in total economic output, if not per capita wealth.

“International institutions need to reflect the realities of power in the world,” said Ed Gresser, trade director at the Progressive Policy Institute in Washington.

“To be effective, they have to involve and include the emerging economies. They need to feel they have a voice.”

Beijing has led demands from developing economies for a bigger say in managing the world’s finances and had suggested its contribution to a global bailout fund might be contingent on receiving it.

Ultimately, at the London summit China pledged a contribution of $40 billion in extra funding, Brown said.

In the weeks before the summit, Chinese leaders stressed their desire for fundamental changes to the world financial order, calling for the creation of a new global currency to reduce reliance on the US dollar and claiming advantages in their communist-ruled country’s ability to bypass messy democratic processes.

Thursday’s agreement stopped short of promoting a shift away from the US dollar.

But it did include, as expected, reassurances that rich countries will keep their markets open to exports, the lifeblood of modern affluence for much of the newly industrialized world.

The condemnation of protectionism also carried a pledge to make right, by the end of 2010, any market-restricting moves taken since G-20 countries last issued such a declaration, in November at the last summit.

“Actions that are protectionist will be named and shamed,” Brown said.

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