Lagarde says pleased with talks in China

AP News
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Posted: Jun 09, 2011 6:18 AM
Lagarde says pleased with talks in China

French Finance Minister Christine Lagarde said Thursday she is "very positive" after talks with Chinese officials about her candidacy to head the International Monetary Fund and said Beijing's stake in the body should increase.

Lagarde is on a global tour to promote her candidacy to succeed Dominique Strauss-Kahn, who quit after he was charged with sexually assaulting a New York hotel maid, an allegation he denies. The other declared candidate is Mexico's central bank governor, Agustin Carstens, who is due to visit Beijing next week.

China has given no sign whom it supports but says it wants the next IMF managing director to be selected through "democratic consultations."

China, India and other developing countries have called for scrapping a tradition under which the IMF's top post has been a European since it was founded following World War II but they have yet to agree on their own candidate.

Lagarde said she discussed her candidacy Wednesday with Chinese Finance Minister Xie Xuren, Vice Premier Wang Qishan and the central bank governor, Zhou Xiaochuan.

"I am very positive about my trip to China," Lagarde said at a news conference.

Lagarde said she was "very confident" but it was too early to say if she would win. She said the selection should be "open, transparent and merit-based," echoing Chinese statements.

The IMF lends money to countries to help resolve balance of payments problems and has played a key role in trying to solve debt crises in Europe. Nominations for managing director close Friday and the body's 24-member executive board is to vote June 30.

A foreign ministry spokesman said Lagarde and Chinese officials discussed her candidacy and reforms of global financial standards and institutions. But he gave no sign whether Beijing would support her.

"China hopes relevant parties will make the final decision through democratic consultations," said the spokesman, Hong Lei, at a regular briefing.

In a reflection of China's economic importance, interim IMF leader John Lipsky also was in Beijing for separate meetings with officials to discuss a study of the Chinese economy and a joint assessment with the World Bank of changes in its financial system.

The financial assessment is "the start of a deepening engagement with China" on financial reforms, Lipsky said. He said the fund recommended changes including relaxing controversial currency controls to make China's yuan fully convertible.

Lipsky declined to say whether Chinese officials expressed a preference about who should be the fund's next leader.

"The choice of managing director of the International Monetary Fund is completely the responsibility of its membership," he told reporters. "The goal of that process is to be open _ open means to everyone _ transparent and merit-based."

Lagarde expressed support for changes in the IMF structure that are raising the voting power of China and other major developing countries to reflect their increased economic stature. She noted that Beijing's share in the fund has risen from just over 4 percent in 2008 to 6.39 percent.

"If the Chinese economy continues to grow and to be a driver of growth in the world, then clearly that percentage will have to also grow," Lagarde said.

She also expressed support for a leading role for a former Chinese central bank official, Zhu Min, who serves as adviser to the IMF boss. She said it would be "fully appropriate if he played a key role" in the fund's management.

Brazil, Russia, India, China and South Africa issued a joint statement last month calling for "abandoning the obsolete unwritten practice" of giving the top IMF post to Europe.

The current distribution of IMF shares gives Europe and the United States more voting power than developing countries.

On Tuesday, Indian Finance Minister Pranab Mukherjee would say only that the IMF managing director should be chosen on merit, not nationality.

Asked whether she planned to visit Japan, which also has a large voting stake, Lagarde said she is focusing on developing countries.

She said she will travel to Lisbon on Friday to attend the African Development Bank's annual meeting. After that, she goes on Saturday to Jedda, Saudi Arabia, and the following day to Cairo.

Lagarde, a former corporate lawyer, would be the first woman to lead the IMF if elected.

"If I was elected managing director, it would be also a signal of diversity," she said. "I hope if I was elected, I hope it would give other women the courage and confidence to achieve what they can achieve."

On the Europe crisis, Lipsky said Greece has narrowed its budget deficit by about 5 percent of gross domestic product from about 15 percent.

"The essential challenge in Greece is to improve the underlying competitiveness of that economy," he said at a news conference.

Lipsky also said recovery programs in Ireland and Portugal were on track, with recently elected governments in both countries endorsing recent reforms.

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Associated Press writer Louise Watt contributed.