China must follow 'rules of the game' if it is to progress, says Lagarde
China must take hard decisions and make trade-offs as it embarks on major restructuring as the world's second largest economy aims for higher quality and more sustainable growth, International Monetary Fund (IMF) chief Christine Lagarde said yesterday.
The country's ruling Communist Party held its Third Plenum, a meeting of leaders, in November, setting out a blueprint for reform in a 60-point document pledging to give markets a "decisive role" in allocating resources.
Ms Lagarde said China was about to embark on the next phase of its "remarkable journey", which had propelled it to the top tier of the global economy and lifted millions of people out of poverty.
"This new transformation will come with three key dimensions – a firm destination, a clear roadmap, and a deep sense of global responsibility," she said.
"After showing great economic leadership, especially during the recent global financial crisis, China has its eyes fixed firmly on its next destination – aiming for higher quality, more inclusive, and more sustainable growth," Ms Lagarde added.
"As China's share in the global economy continues to rise, so will its responsibility in supporting the global common good – global financial stability, environmental sustainability, and the global rules of the game."
Ms Lagarde told the China Development Forum that she believed in the reform programme as set out by the country's leaders, describing them as ambitious and requiring "hard decisions and trade-offs".
At a separate event in Beijing, the IMF boss also said that there was not much she could do to push reform at the global lender and give emerging economies a bigger say without the support of the United States.
In January, China called on IMF member nations to stick to a commitment to give emerging markets more power at the global lender – after US politicians set back historic reforms that would give developing countries a greater say.
The remarks by China's foreign ministry were an indirect criticism of the United States, the biggest and most powerful IMF member – where politicians that month failed to agree on funding measures needed for the reforms to move forward.
The US Congress must sign off on the IMF funding to complete 2010 reforms that would make China the IMF's third-largest member and also revamp the IMF board in such a way as to reduce the dominance of Western Europe. (Additional reporting Reuters)