The International Monetary Fund (IMF) is opening a regional centre in Shanghai to strengthen its engagement and partnership in the Asia-Pacific region, it announced on Wednesday.
The Shanghai Regional Centre will serve as a hub to promote research that can inform policies in areas of interest to emerging-market and middle-income countries, according to an IMF statement.
The centre will help deepen the IMF’s dialogue with member countries and other stakeholders in the region, including international financial institutions, academics, think tanks, civil society organisations and the private sector, it said.
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The IMF announcement was made on the first day of the annual Lujiazui Forum in Shanghai, and ahead of the Central Committee of China’s Communist Party’s third plenum in July – a highly anticipated political gathering that will roll out plans for the country’s economic development in the next decade.
The Lujiazui Forum is its 15th edition and is regarded as an influential finance industry gathering.
“We welcome the establishment of the IMF Regional Centre in Shanghai,” said Pan Gongsheng, governor of the People’s Bank of China (PBOC), at the launch ceremony.
“We believe the Shanghai Regional Centre will deepen cooperation between the IMF and China, enhance macroeconomic policy exchange and coordination among the Asia-Pacific countries, and support regional and global financial stability.”
IMF managing director Kristalina Georgieva welcomed “this important initiative with the People’s Bank of China to establish the Shanghai Regional Centre”.
“The centre will further strengthen the IMF’s engagement in the dynamic Asia-Pacific region, deepen our understanding of perspectives from member countries, and foster international economic cooperation,” she said.
One of the founding nations of the IMF, China saw its yuan added to the basket of currencies that make up the Special Drawing Rights (SDR) – comprising supplementary foreign exchange reserve assets – in October 2016, making it the first developing country to join the group.
Late last month, the IMF revised up its estimate for China’s economic growth this year, to 5 per cent – a 0.4 percentage point increase from its previous projection in April. The move put the IMF’s projection in line with Beijing’s full-year economic growth target announced in March.
The IMF attributed its revision to China’s strong economic data in the first quarter, and to a policy package that the government has implemented to stimulate the property market.
However, structural reforms are still needed to achieve high-quality growth in the medium and long term, according to Gita Gopinath, the IMF’s first deputy managing director.
“Key priorities include rebalancing the economy towards consumption by strengthening the social safety net and liberalising the services sector to enable it to boost growth potential and create jobs,” she said.
China now holds 6.09 per cent of the IMF’s voting share, ranked third after the United States and Japan. In March, the PBOC’s Pan reaffirmed Beijing’s desire to have more say in the international financial system to match China’s economic prowess, as the nation’s share of global economic output is around 18 per cent.
Gary Ng, senior economist with Natixis Corporate and Investment Bank, said that while establishing the regional centre will help foster communication and mutual understanding, whether the hub can help China garner more influence with the IMF remains to be seen.
“Even though it has seen some challenges in growth recently, China remains one of the most important economies globally,” Ng said.
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