As the sparring continues over whose international financial system will predominate – the West’s or China’s – China has entered into a 3-year agreement with the International Monetary Fund to strengthen its fiscal institutions & capacity.
IMF managing director Christine Lagarde signed the agreement in Beijing on 23 March, as various western governments were considering whether to join the Asian Infrastructure Investment Bank, which China has proposed and will hold a controlling stake in.
The US has opposed the new bank, largely because it would undermine the roles of the World Bank & International Monetary Fund. But Britain applied to join the new bank this month, France, Germany & Italy said they’d also join it, and Australia’s Government changed its mind last week and decided to join.
The agreement signed by Ms Lagarde & Chinese Finance Minister Lou Jiwei supports a comprehensive package of reforms, outlined by China in 2013 and aimed at fundamentally modernising Chinese fiscal institutions.
The package includes developing a medium-term expenditure framework, modernising government accounting, strengthening local government finance, designing tax policy reforms and identifying options for pension & health care reforms.
Attribution: IMF release.