What are the implications for China resulting from Trump’s World Bank presidential nominee?

By Zhao Changhui Source:Global Times Published: 2019/2/13 22:23:40

 

Illustration: Luo Xuan/GT



Former World Bank president Jim Yong Kim suddenly announced his resignation on January 7, with the resignation taking effect as of February 1. Since then, speculation has been swirling as to who will take over Kim's post.

The Trump administration has reportedly considered a number of candidates, which even included President Trump's daughter Ivanka Trump, according to some media reports. Eventually, after a month of careful consideration, on February 6, Trump nominated David Malpass, a top Treasury official, to be the next president of the World Bank, calling him the "right person" for this position. With 40 years of experience in economics, finance, government and foreign policy, Malpass currently serves as undersecretary of the US Treasury for international affairs, overseeing the IMF and the World Bank.

As a Trump loyalist, Malpass is suspicious of multilateral agreements and international cooperation, believing that multilateralism has "gone substantially too far," deviating from the "values of limited government, freedom and the rule of law."

Undoubtedly, in the face of the new globalization, Malpass echoed Trump's views on a number of major issues such as, how to safeguard the superpower status of the US in the changing world and how to maintain the US' overwhelming superiority in terms of economy, technology and military.

According to the accepted process, Malpass' nomination is still subject to a vote by the World Bank's executive board. The board has given its 189 member countries until mid-March to nominate candidates. However, it is deeply regrettable that the presidency of the World Bank has always been given to the US nominee.

From the perspective of history and reality, the "election" of the president of the World Bank can be called "Bretton Woods phenomenon" or "World Bank syndrome" as there is an insurmountable deficiency, namely institutional defects and procedural obstacles, in its governance structure, especially in the way its top leaders are elected. For this reason, while the executive board said the ideal candidate should have the experience in managing large multilateral organizations, have a vision for the World Bank's development mission and be committed to international cooperation, the rhetoric seems pale and unconvincing.

When the world needs the World Bank most in order to maintain, defend and lead multilateralism, Malpass is about to assume the leadership of the organization, which is not a good sign. Under these circumstances, China must recognize the devastating consequences of the US containment to the nation and must implement the Chinese solution wisely and with strategic initiative. In other words, we must keep an objective and realistic attitude.

The World Bank should no longer be the main battleground for China's efforts. While it may receive loans as a recipient country, it is in fact facing increasingly harsh pressure. From the perspective of governance structure, as long as the US still wants to maintain its grip on the World Bank, it would be hard to see any actual reform progress, with major shareholders, other than the US, unlikely to push for any new changes. There is no need for China to rush to spend too much time, efforts and resources on this issue, unless a new opportunity presents itself for World Bank reforms.

China is advised to pay more attention to promoting the construction, development and operations of the Asian Infrastructure Investment Bank (AIIB) along with other member nations. With a focus on infrastructure, the AIIB will perform a role which is entirely complementary to the World Bank. Making the AIIB a successful, new, multilateral financial institution is the hope of all members, which will ultimately make the World Bank no longer the "only choice," and so will also facilitate the buildup of a community for the shared future of mankind.

In some areas, China has already surpassed the World Bank in terms of financial instruments for world development. At the national level, China has a well-established official export credit agency, a variety of commercial financial institutions, policy driven financial institutions that supports global strategy and cooperation under the Belt and Road Initiative, and government agencies in charge of developmental assistance. The strategic use of these national financial entities is a historic task for China, which will eventually overcome both the current and future difficulties.

Such a policy combination means that China, as one of the leading powers in the global economy and world trade, should not fear the so-called "decoupling from China" and will make appropriate adjustments to continue its support for multilateral cooperation and keep developing itself. More broadly speaking, as part of its efforts, China does not intend to challenge the US administrative control over the World Bank, but, to a certain extent, it may still have the room for manoeuvre and use the organization's valuable experience to develop and increase its own abilities.


The author is a member of the council of the London-based International Institute for Strategic Studies. bizopinion@globaltimes.com.cn

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