IMF could be headquartered in Beijing in 10 years…

IMF chief Christine Lagarde said so yesterday:

The International Monetary Fund could be based in Beijing in a decade if growth trends for China and other big emerging markets continue and these are reflected in the Fund’s voting structure, IMF Managing Director Christine Lagarde said on Monday.

Lagarde said at a Center for Global Development event in Washington that such a move was “a possibility” because the Fund will need to increase the representation of major emerging markets as their economies grow larger and more influential. “Which might very well mean, that if we have this conversation in 10 years’ time…we might not be sitting in Washington, D.C. We’ll do it in our Beijing head office,” Lagarde said.

She added that the IMF’s bylaws call for the institution’s head office to be located in the largest member economy. Since the IMF was launched in 1945, that has always been the United States, which currently has an effective veto over IMF decisions with a 16.5 percent share of its board votes.

But economists estimate that China, with growth rates forecast above 6 percent, will likely overtake U.S. gross domestic product sometime over the next decade to become the world’s largest economy in nominal terms. Some, including the IMF, have argued that China already contributes more to global growth on a purchasing power parity basis, which adjusts for differences in prices.

The IMF last revised its quota system, or voting structure in 2010, but is set to launch another review next year.

Hmm..

Despite China sitting on a massive bubble which could burst anytime, we could see so called international institutions move to China. Moreover, there are constant questions over quality of economic data in China and it will be really ironical to see likes of IMF shifting HQ to such a country.

Another issue is that China has already set up its own institutions to challenge likes of IMF and World Bank. So  not sure how open they will be to having likes of IMF wanting to open HQ in their country.

Interesting times for global political economy..

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